MORTGAGE AND EDUCATION FINANCIAL OPTIMIZATION
First Claim
1. A computer system for determining an investment strategy for an entity with assets in a taxable account, assets in a tax-free account, and a mortgage, the system comprising interface components, a database, and an optimizer system, wherein the system is configured to:
- accept into the database information regarding;
a total asset amount, an amount of assets in a tax free account, an amount of assets in a taxable account, a mortgage, a plurality of investments, an indicated percentage of the total assets to invest in each of the plurality of investments, and a time horizon;
select, using the optimizer system, amounts to invest from the taxable and tax-free accounts randomly or using Genetic Algorithms (GA), such that the amounts substantially match the indicated percentage of total assets to invest in each of the plurality of investments;
select, using the optimizer system, a value for a mortgage variable; and
calculate, using the optimizer system, a return on investment for the entity based on the selected amounts to invest, the selected value for the mortgage variable, and the mortgage being paid out of the total asset amount;
thereby determining an amount from the taxable and tax-free accounts to invest in each of the plurality of investments and a value for the mortgage variable that produce a maximal after-tax accumulation for said entity at the time horizon.
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Abstract
The invention relates to systems and methods for optimizing investments in view of anticipated education or mortgage expenses. One an allocation of assets among investments is determined, and education or mortgage costs are to be considered, systems and methods of the invention assist in optimizing a tax treatment by allocating the chosen investments from accounts based on the tax treatment of those accounts. The invention includes a computer system and methods of the invention run on a computer system.
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Citations
23 Claims
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1. A computer system for determining an investment strategy for an entity with assets in a taxable account, assets in a tax-free account, and a mortgage, the system comprising interface components, a database, and an optimizer system, wherein the system is configured to:
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accept into the database information regarding;
a total asset amount, an amount of assets in a tax free account, an amount of assets in a taxable account, a mortgage, a plurality of investments, an indicated percentage of the total assets to invest in each of the plurality of investments, and a time horizon;select, using the optimizer system, amounts to invest from the taxable and tax-free accounts randomly or using Genetic Algorithms (GA), such that the amounts substantially match the indicated percentage of total assets to invest in each of the plurality of investments; select, using the optimizer system, a value for a mortgage variable; and calculate, using the optimizer system, a return on investment for the entity based on the selected amounts to invest, the selected value for the mortgage variable, and the mortgage being paid out of the total asset amount;
thereby determining an amount from the taxable and tax-free accounts to invest in each of the plurality of investments and a value for the mortgage variable that produce a maximal after-tax accumulation for said entity at the time horizon. - View Dependent Claims (2, 3, 4, 5, 6)
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7. A method of determining an investment strategy for assets of an entity, comprising:
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receiving into a computer database in a computer system information regarding;
a plurality of investments available in a taxable account as well as a tax-deferred account;
a total amount of available assets available to invest; and
, for each investment, a corresponding percentage of the total to be invested;receiving into the computer database information regarding a time horizon and information regarding a mortgage including at least one mortgage variable; defining within an optimizer system in the computer system an effectiveness of an investment strategy as its calculated yield at the time horizon after deducting a mortgage amount; where a chromosome is defined as a string of numbers comprising, for each investment, an allocation of the corresponding percentage of the total between the taxable and the tax-deferred accounts and a value for the mortgage variable, selecting, using the optimizer system, a sample chromosome and calculating a first effectiveness; selecting, using the optimizer system, an additional chromosome and calculating a second effectiveness; for N generations, N>
2;selecting, using the optimizer system, an Nth chromosome; calculating, using the optimizer system, an Nth effectiveness of the Nth chromosome; and choosing, using the optimizer system, the investment strategy yielding the highest effectiveness. - View Dependent Claims (8, 10, 11, 12)
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13. A computer system for determining an investment strategy for an entity with assets in a taxable and a tax-free account, the system comprising interface components, a database, and an optimizer system, wherein the system is configured to:
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accept into the database information regarding;
a total asset amount, an amount of assets in the tax free account, an amount of assets in the taxable account, a plurality of investments, an indicated percentage of the total assets to invest in each of the plurality of investments, a time horizon and an education time horizon; andselect, using the optimizer system, amounts to invest from the taxable and tax-free accounts randomly or using Genetic Algorithms (GA), such that the amounts substantially match the indicated percentage of total assets to invest in each of the plurality of investments; such that the determinations will produce a substantially maximal after-tax accumulation for the entity at the time horizon, after producing a pre-determined accumulation for the entity at the education time horizon. - View Dependent Claims (14, 15, 16, 17, 18)
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19. A method of determining an investment strategy for assets of an entity, comprising:
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receiving information regarding;
a plurality of investments available in a taxable account as well as a tax-deferred account;
a total amount of available assets available to invest; and
, for each investment, a corresponding percentage of the total to be invested;receiving information regarding a time horizon and information regarding an education time horizon; defining an effectiveness of an investment strategy as its calculated yield at the time horizon after producing a predetermined yield at the education time horizon; where a chromosome is defined as a string of numbers comprising, for each investment, an allocation of the corresponding percentage of the total between the taxable and the tax-deferred accounts, selecting a sample chromosome and calculating a first effectiveness; selecting an additional chromosome and calculating a second effectiveness; for N generations, N>
2;selecting an Nth chromosome; calculating an Nth effectiveness of the Nth chromosome; and choosing the investment strategy yielding the highest effectiveness. - View Dependent Claims (20, 21, 22, 23)
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Specification