Method of risk management and of achieving a recommended asset allocation and withdrawal strategy, and computer-readable medium, apparatus and computer program thereof
First Claim
1. A method comprising:
- obtaining data comprising rates of return for a plurality of asset classes and at least one rate of inflation;
obtaining for a particular individual a financial portfolio to be evaluated based on an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount having a fixed dollar amount and a fixed percentage amount;
generating in a computer a prohabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the rates of return for the asset classes and the rate of inflation; and
determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount.
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Accused Products
Abstract
The new and improved method and apparatus of the invention generates a hypothetical illustration of a distribution of possible portfolio values and withdrawal amounts for a designated time period. The invention also provides a new and improved method and apparatus for determining a hypothetical distribution of investment outcomes for a specified portfolio based on a Monte Carlo analysis of historical rates of return for the portfolio and historical rates of inflation. The invention further provides a new and improved method for determining a withdrawal strategy using a combination of fixed dollar and fixed percent withdrawals. The hypothetical illustration of the invention is generated by interacting the combinations of fixed dollar and fixed percent withdrawals, with the hypothetical distribution of investment outcomes for a specified portfolio to facilitate a recommended asset and withdrawal strategy.
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Citations
38 Claims
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1. A method comprising:
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obtaining data comprising rates of return for a plurality of asset classes and at least one rate of inflation; obtaining for a particular individual a financial portfolio to be evaluated based on an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount having a fixed dollar amount and a fixed percentage amount; generating in a computer a prohabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the rates of return for the asset classes and the rate of inflation; and determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount. - View Dependent Claims (2, 3, 4, 5, 6, 7, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36)
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8. A computer-readable medium having computer-executable instructions, comprising instructions for:
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obtaining data comprising rates of return for a plurality of asset classes and at least one rate of inflation; obtaining for a particular individual a financial portfolio to be evaluated based on an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount having a fixed dollar amount and a fixed percentage amount; generating a probabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the rates of return of the asset classes and the rate of inflation; and determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount. - View Dependent Claims (9, 10, 11, 12, 13, 14)
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15. An apparatus for facilitating asset allocation and withdrawal strategy, the apparatus comprising:
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a storage device; a processor connected to the storage device; a program stored in the storage device and configured to control the processor; and the processor operative with the program to; obtain data comprising rates of return for a plurality of asset classes and at least one rate of inflation; select for a particular individual a financial portfolio to be evaluated having an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount having a fixed dollar amount and a fixed percentage amount; generate a probabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the rates of return of the asset classes and the rate of inflation; and determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount. - View Dependent Claims (16, 17, 18, 19, 20, 21)
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22. A computer program in a computer-readable memory device, the computer program comprising:
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first program means for obtaining data comprising rates of return for a plurality of asset classes and at least one rate of inflation; second program means for obtaining for a particular individual a financial portfolio to be evaluated based on an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount having a fixed dollar amount and a fixed percentage amount; and third program means for generating a probabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the rates of return of the asset classes and the rate of inflation, and determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount.
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23. A method comprising:
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obtaining data comprising historical rates of return for a plurality of asset classes for a plurality of historical periods and data comprising at least one rate of inflation; obtaining for a particular individual a financial portfolio to be evaluated based on an initial investment allocated to at least one of the asset classes, and a desired withdrawal amount comprising a fixed dollar amount and a fixed percentage of the projected portfolio value; generating in a computer a probabilistic distribution of investment outcomes for the financial portfolio on an incremental basis within a designated time period by determining a plurality of projected portfolio values using the historical rates of return of the asset classes and the rate of inflation; and determining, for each of the projected portfolio values, a projected withdrawal amount that corresponds to the desired withdrawal amount by adding together the fixed percentage amount of the projected portfolio value and the fixed dollar amount and adjusting for the rate of inflation.
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37. A method of selecting a withdrawal strategy and asset allocation that best balances a desire for income with a risk of running out of money for a specific client given their individual financial situation and financial obligations, the method comprising:
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receiving (1) a client'"'"'s name, (2) a client'"'"'s total initial investable assets, and (3) a withdrawal amount having a fixed dollar withdrawal amount and a fixed percentage withdrawal amount; determining a recommended asset allocation of the initial investable assets; and generating in a computer a probabilistic distribution of investment outcomes for the recommended asset allocation and the withdrawal amount on an annual basis for 30 years, from the worst 10% of the time, to the best 10% of the time. - View Dependent Claims (38)
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Specification