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ASSET ALLOCATION BASED ON EXPECTED UTILITY OF TIME AND WEALTH

  • US 20100017342A1
  • Filed: 07/01/2009
  • Published: 01/21/2010
  • Est. Priority Date: 07/01/2008
  • Status: Active Grant
First Claim
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1. A method of providing financial advice to an individual, comprising:

  • computing a utility function, a critical wealth and a retirement wealth of an individual,determining whether said individual is in a wealth maximizing phase or a critical wealth phase, said determining step comprising,categorizing said individual in a wealth maximizing phase if said individual has a current wealth equal to or greater than said critical wealth, andcategorizing said individual in a critical wealth phase if said individual has a current wealth less than said critical wealth;

    computing a target asset allocation for a current wealth of said individual; and

    outputting said target asset allocation for said individual and at least one of said critical wealth, said retirement wealth, and said utility function, wherein said target asset allocation is computed using a function analyzing a trade-off between retirement time and retirement consumption of said individual, said target asset allocation comprising a target securities allocation.

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