Method and apparatus for enabling individual or smaller investors or others to create and manage a portfolio of securities or other assets or liabilities on a cost effective basis

• US 20040024679A1
• Filed: 07/28/2003
• Published: 02/05/2004
• Est. Priority Date: 03/11/1998
• Status: Active Grant

• Current Assignee: Folio Financial Incorporated (Goldman Sachs Group Incorporated)
• Original Assignee: Steven M.H. Wallman
• Inventors: Wallman, Steven M.H.
• Granted Patent: US 7,552,082 B2
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

Smaller investors can create and manage on a cost-effective basis a complex portfolio of securities using a mechanism that enables the investor to provide to the system the investor'"'"'s preferences regarding his portfolio, to generate a portfolio, including fractional shares, that reflects the investor'"'"'s preferences. The system then permits aggregation of the orders, and netting of orders, generated by multiple investors at various times during the day for execution. In addition, the structure of the computer-based system of the present invention allows its cost to be based on access to or usage of the system (such as a monthly fee) as opposed to by securities orders entered into the system as per common brokerage. The result is that the investor can create a portfolio of directly owned securities with attributes, such as diversification, similar to a mutual fund. As compared with the problems with existing systems, the computer-based system of the present invention provides complete control for the investor over what securities can be selected, and in what weights and amounts, as well as control over the tax effects of purchases or sales of the securities comprising the portfolio, preventing the investor from being presented with unwanted taxable effects due to discretionary sales transactions of fund managers. In addition, the computer-based system of the present invention provides all the information necessary to monitor and manage tax effects and capability to sell or buy the individual securities in his portfolio to obtain desired tax benefits, all shareholder rights with respect to each security in the portfolio to the investor and full ownership and control over all investment, voting and other decisions regarding such securities. The computer-based system of the present invention also allows for parameters to be set with respect to a portfolio to ensure that it stays within certain diversification or risk limits. Furthermore, the computer-based system of the present invention provides direct control over the charges and expenses that will be incurred, and the possibility of making multiple intra-day investment decisions by the investor, if he wishes. Moreover, the computer-based system of the present invention provides control over all factors in the portfolio and modification of them as the investor sees fit.

Claims

1. A method for adjusting investments in an existing portfolio of investments comprising the steps of:

modifying a desired overall characteristic of the existing portfolio of investments; and

determining automatically, in response to the step of modifying, a plurality of necessary modifications to the existing portfolio of investments so that the existing portfolio of investments as modified has the desired overall characteristic.

2. A method for rebalancing a portfolio of investments to comply with a user selectable risk/reward characteristic comprising the steps of:

determining a plurality of modifications to make to the portfolio of investments so that the portfolio of investments as modified matches the user selectable risk/reward characteristics; and

transmitting the plurality of modifications to a central controller over a computer network in response to a user clicking a command to do so.

3. A method for trading instruments comprising the steps of:

selecting a desired characteristic of a desired portfolio of investments;

allocating an investment amount to the plurality of trades to obtain the desired characteristic of the portfolio; and

transmitting a plurality of trades to a central controller in a single transaction as a portfolio of investments.