JP2002529824A - Method, system and computer program for auditing a financial plan - Google Patents

Abstract

(57) [Summary] The method of evaluating a financial plan (financial plan) includes personal information (102), account (account) properties (104), opening balance (balance) (108) of each account, and The step of setting The opening balance represents the actual present value of the account. Next, the planned contribution (110), the planned collection (112) and the collection information (116) of each account are set (determined) by the user. The allocation of assets according to the category (120) and the collection information (116) is performed by the user. The performance for the predetermined value of the investment over the selected time period is then calculated separately for each asset allocation and tax situation (126) based on the change in value over the first historical time period, and Seek investment value. The changed investment value is updated based on the second period to determine a further changed investment value. The investment value is then adjusted based on at least one of the investment amount and the recovery amount.

Description

DETAILED DESCRIPTION OF THE INVENTION

[0001]

TECHNICAL FIELD OF THE INVENTION

The present invention relates to a computer program for a personal financial plan (asset management plan) and a method and system related thereto.

[0002]

BACKGROUND OF THE INVENTION

For most people, it is important to have a financial plan to plan for retirement (retirement, retirement) or to save for important expenditures, such as education for children. It is. If you save too little or make a mistake, you may not be able to maintain your retirement lifestyle, send your children to the school they want, or exhaust their savings. Or On the other hand, if you try to save more than you need for the future, you will have to endure the small luxury that you and your family want, such as vacations and large homes. Professional financial planners and individuals create financial plans in many ways. Financial
The service industry has adopted standardized means of creating personal financial plans. At present, there is no program or structure that allows individuals to retroactively recognize exactly what their financial plans might have been like. Indeed, instead of doing this (albeit a bit inadequate), the financial services industry has adopted standardized means. The basic deficiencies of these standard instruments are that (1) they adopt one expected return on investment over the entire period, and therefore receive a profit calculated on a yearly basis, as can be proved mathematically. If possible, there is no indication of what the future value is, or (2) statistical calculations
Since we are trying to make a statistical forecast of revenue distribution, the essence of statistical estimation is that the estimated profit has no relevance to what actually occurred. In any case, whether using simple annual revenue as a means of predicting future value or statistically predicting future value, we used any of these standardized tools. Even so, a fundamental problem with financial plans that have been created is that they cannot accurately predict the future wealth of an individual using the financial plan. For example, currently existing prior art tools help the user (user) calculate the acceptable risk, and then the revenue that the user of the plan predicts, or should be, for that acceptable risk. Is requested from the user. The tool then advises the user that certain results can be predicted based on certain revenues, or certain revenues in anticipation of planned cash flows.

[0003] As mentioned above, the lack of accuracy of prediction poses a major problem. Some individuals may not be able to reach their financial goals or may miss the opportunity to reach their financial goals. Certain funding plans may instruct certain individuals to save more than they need, or to instruct them to retire later if necessary. There is. Certain funding plans may recommend an individual to retire earlier than needed or to raise more money than necessary from an investment. All such recommendations are the result of misguiding as a result of using any of the current industry standards.

[0004] Financial plans are generally reviewed and reviewed every few years. Financial plans and forecasting tools are used to determine, on a daily basis, what the consequences of an individual client's decision on asset allocation, purchase, or retirement. Not intended. Such decisions, by their nature, should be considered for a very long period of time and tend to be updated very rarely. Even if such tools are accurate, predictions are made only after investment, consumption or retirement decisions have been made. Its unique feature is that these tools are not updated regularly. Such plans are of little use to investors in making investment decisions.

[0005] For example, some investors feel that they have received significant transaction revenue and are financially well off. The plan he adopted required saving $ 20,000 a year. And he intends to continue this. According to his current plan, he was supposed to have $ 2,000,000 at some point, but he has $ 2,500,000 now because of the high transaction revenue. There he makes a large purchase decision using a portion of the $ 500,000 added. He neglects to reactivate his financial plan. He does not know how the purchase decision will affect his likelihood of achieving his long-term planning goals.

[0006] It is an object of the present invention to provide a method of evaluating a financial plan to determine the likelihood that an investor will be able to achieve its asset goals.

[0007] An advantage of the present invention is that such a method is provided. Other objects and advantages will become apparent from the following detailed description of the preferred embodiments.

[0008]

Summary of the Invention

A method for evaluating a financial plan includes the step of calculating a change in a predetermined initial value of an investment over a period of time based on a change in value over a first historical period to determine a changed investment value. Updating the changed investment value based on the selected amount and time to obtain a further changed investment value; and further changing the second investment period based on the change over the second history period. Calculating a change in investment value to obtain a further investment value; repeating the above calculation step, update step and recalculation step for the third and fourth history periods, respectively; After the calculation, adjusting the investment value based on at least one of the investment amount and the recovery amount.

The method may include providing a result of the calculation as a report to an individual. The method is preferably performed by suitable computer software. The investments are categorized into one or more asset categories, and individual historical data is used in calculating each asset category. The result of the calculation is compared with the selected financial target (asset target). Adjustments to the investment value can be made after each calculation on the historical data to simulate the effects of taxes.

A system for evaluating a financial plan calculates a change in a predetermined initial value of an investment over a period of time based on a change in value over a first historical period to determine a changed investment value. Updating the changed investment value based on the selected amount and time to determine a further changed investment value; and determining the changed investment value over the second period based on the change over the second history period. Calculating the change to determine further investment value, further calculating for the third historical period and the fourth historical period, respectively;
It includes a computer programmed to perform updates and recalculations and, after at least one calculation, adjust the investment value based on at least one of the investment amount and the payback amount.

[0011] The storage medium has stored therein instructions which, when executed by the processor, direct the processor over a period of time based on a change in value over a first historical period. Calculating a change in a predetermined initial value of the investment to obtain a changed investment value; and updating the changed investment value to obtain a further changed investment value based on the selected amount and time. Calculating the further changed investment value change over a second time period based on the change over a second history time period to determine a further investment value; a third history time period and a fourth history time period; With respect to each of the steps of repeating the above calculation step, update step and recalculation step, and after at least one calculation, And adjusting the investment value based towards causes execution.

[0012]

DETAILED DESCRIPTION OF EMBODIMENTS OF THE INVENTION

Referring to FIGS. 1A-1C, the method of the present invention is shown in block diagram form.
Generally, the first step is to provide the program with sufficient information about the individual, the individual's current investment, planned future contributions, and planned withdrawals to execute the method. Make it possible. Step 10
At 2, the user is instructed to determine (set) personal information. Preferably, the personal information includes information important for creating a financial plan. The basic information includes the individual's birthday, the individual's intended retirement age, and the end age for the plan. The information also includes whether the individual has a spouse, the spouse's birthday,
Retirement) age, and the spouse's end age for the plan.

As shown at block 104, the user is prompted to determine one or more accounts. Preferably, the account is in the name of the user. As shown in block 102, the user is instructed to determine the properties (property, assets, characteristics, attributes) of each account. The most important property of the account is the tax (tax) treatment of the account. For example, the gain on that account is subject to current taxation. Alternatively, the gain on the account may be delayed until collection. Pull down
Provide menus, for example 401 (k), 403 (b), individual (individual) retirement accounts, savings accounts, educational IRA, Roth
A selection from a variety of different investments may be offered, such as (loss) IRA, investment fixed assets, and other investment types.

At block 108, the user is instructed to set an opening balance for each account. For an effective financial plan, the opening balance preferably represents the current actual value of the account.

As indicated at block 110, the user is instructed to set a planned annual investment for each account. The program may change the planned annual investment in each account at different time periods in the future, or change the selection of the starting and ending age of investment in various accounts. The default value may be a level (equal, level) investment that starts immediately and continues until retirement.

As indicated at block 112, the user is instructed to set a planned retirement distribution. This is the desired retirement income (income) level. The user
Further, the improvement may be made by setting a specific distribution from a specific source (source). For example, such a source may include a determined benefit retirement plan.

In a preferred embodiment, the user is then prompted to set information regarding social security and other sources of retirement income, as shown in step 114. The user may select a desired retirement age. The program then displays the annual social security benefits based on the formula or table accessed by the program. Such formulas or tables are constructed from publicly available social security benefit information.

At block 116, the user is prompted to enter additional collection information. For example, a form may be provided to enter the age of each child, what level of education the individual has paid, and the expected annual cost.
The amount and timing of its expected return on the investment may then be calculated immediately. Other expected high expenditures (expenses) may be included as options.

As shown in block 120, the user is then prompted to enter the allocation of the asset by asset category. The asset categories are preferably large capital stocks, small capital stocks, and large categories such as foreign investment, fixed income and treasury securities and cash. The selection of a particular category may change. The desired category should be the category regarding what significant historical (historical) data is available. Rather than looking at the historical (past) returns (returns, profits) of a particular managed investment, it is generally preferable to assume a passive investment. Depending on the desired future (futures), the asset allocation may be selected separately for current taxable and tax deferred investments. Another feature to add would be changes in asset allocation at different times in the future. The user may also be prompted to enter expected, optimistic and pessimistic returns on the investment.

The user may also be instructed to input a large number (plurality) of investment expenditures (expenses). If your investment spend is given a positive percentage,
It has historically only performed below the market (underper
form) would indicate an investment. If your investment spend is given a positive percentage,
It may indicate an investment that has historically outperformed the market.

As shown at block 122, the user is then prompted to enter tax information. This information preferably includes federal tax return status (status, status), state of residence, and any local tax rates. The program refers to applicable federal regular and capital gains tax rates and state tax rates (lookup)
You may access a table to do so. Further, the local tax rate may be input as an option. The tax rates are looked up separately for pre-retirement and retirement tax rates.
It may be entered from a table.

It will be appreciated that the order of the above information may be changed without affecting the method. The information preferably includes as much information as possible relating to the individual's projected (designed) cash flow to or from investments and other retirement income.

An option may be provided to select an assumed inflation rate. Different inflation rates may be used for different investment categories. The options are inflation-adjusted ($) or actual ($)
May be an option to set the result in.

When all the desired information has been entered, the user is instructed to perform the calculation. The program stores a series of value changes for each distinct category of asset over a selected number of time periods. The time, for example, year,
It may be months, or shorter or longer periods as desired. The performance of the plan is then determined (determined) assuming a number of different starting points (points).
As indicated by block 124, a starting value and each tax status for each asset allocation is calculated based on the input asset allocation and the current value of the shareholding. As shown in block 125, the program selects a time. Then, as shown in block 126, performance at the first selected time is calculated based on historical data separately for each asset allocation and tax status. Its performance may be adjusted either after or before the calculation by investment assumptions. As shown in block 128, for the current taxable investment, the gain is adjusted by deducting the appropriate amount based on the assumed tax rate. The gain is added to the value in each category as shown in block 130. An investment at the end of the period is then added to each category based on the asset allocation and the previously determined investment amount. As an alternative, if the year of the plan requires retirement for retirement needs, education or other, appropriate adjustments are made to its value. This is indicated by block 132. This value is stored as the final (end) value. The method then checks whether the last year of the plan has been reached, as indicated at decision block 136. If the last year of the plan has not been reached, the method returns to block 125 where a new time period is selected and the historical data from the next year in the applicable table, and the next data in the plan. The calculation is repeated using the investment, recovery, allocation and tax information from the year. The method is repeated until the last year of the plan is reached. When the last year of the plan has been reached, the method checks whether the total number of starting points is the last number of starting points, as indicated at decision block 138. . If the total number of starting points is not the last number of starting points, the whole method is repeated, starting from different starting points, using the same allocated opening balance. This is repeated until the desired number has been completed. The lowest possible number is 32 starting points. The calculation is performed for successive years. For example, the years of the plan may exceed the years of the historical data. In one embodiment, each test is run continuously from the starting point until one-half of the time of the plan is reached, and the calculation returns to the starting point. If the years of the plan exceed the years of the history data, another method may be used.

To determine the appropriate amount to be collected, social security and other sources may be deducted from the desired annual retirement income.

The program that the company executes the method for comparison with standard calculations is:
Without referring to historical data, returns can be calculated based on a uniform (average) annual rate of return.

The method then provides the result to the user in the form of a display. Only one result is selected and displayed. For example, the tests may be ranked by final value. An intermediate final value that ranks with a 50% probability may be selected. The final value represents a better result than all but 1% of its results. All final values may be selected and labeled as having a 99% probability of success. The results may be displayed in various formats in a tabular format or graphically (in pictorial format). For example, the results may be displayed in a graph showing the age versus value of the investment. The results of the sample for the hypothetical assumption are shown schematically in FIG. Line 202 represents the standard result based on a stable yearly increase in value. Line 204 represents a value based on a result that is worse than 99% of the starting point. Line 206 represents the result at the midpoint of the performed analysis.

The results may be displayed as a table, as shown in FIGS. 3A and 3B. The table shows the plan year from the date the plan is executed, as shown at 302, the age of the individual at the time of the plan, as shown at 304, and 3
A final value as indicated by 06 may be indicated. For example, additional information such as the cash flow to and from the investment (cash flow), the return on the investment for one year, the valuation or undervaluation of the value of the investment, and taxes, is added to each plan year. May be shown.

The report may include a detailed analysis listing the final value and market period for each test performed. One sample is shown as FIG. The tests are ranked in order from highest final value to lowest final value. Column (column) 402 displays the probability of obtaining at least the listed final value. Column 404 displays the final value of each test. Column 406 displays a ranking of each test from highest asset to lowest asset.

Other indications include an indication of the flow of cash to and from the investment, showing the contribution, recovery and retirement distribution to the investment, on a yearly basis.

The program and system, along with the results of the plan, provide the user with the opportunity to adjust various variables and see changes in historical results. For example, an input may be provided so that the user can change the asset allocation, retirement age, investment amount, allocation amount, and other collection amounts.

[0032] The program may be accessed by a user at a client computer connected over the World Wide Web (WWW) to a server executing the program. A web-based form may instruct the user to supply required and optional information. The result of the analysis may be displayed on the page. The results may be presented as a report in a convenient format, such as Portable Document Format (pdf), for download to the client computer, or may be electronically sent from the server to an address identifiable by the user at the client computer. It may be sent by e-mail. This format is advantageous in that a table containing historical data can be readily supplemented and a table containing tax rate information can be updated immediately. Also, financial planners and clients can share reports on a web server with appropriate security.

FIG. 5 shows a system according to the invention. Processor 505 runs on a server computer. The program 505 is connected to the client computer 510 via the Internet 515. As described above, data may be exchanged using the World Wide Web. Processor 505 accesses program file 520 for instructions. The program file 520 is stored on a suitable storage medium such as a hardware drive, a CD-ROM or other storage medium. The processor 505 is a general file 5
Access 25. The file 525 non-exclusively includes historical performance data for different categories of investment, tax data and social security data, as indicated by block 530. Processor 505 also accesses client file 535. The file 535 non-exclusively includes investment value, asset allocation, equity, age, and retirement age as shown in block 540. Processor 505 executes the client system 51 according to the instructions contained in program file 520.
Update and modify the data in block 540 based on the data received from 0.

The use of the methods, systems and programs of the present invention is not limited to running a web server only. Copies of the program may be distributed on physical media or by electronic transmission.

While testing this method, the inventor has determined that the present and prior art may be subject to a pattern of individual funding and withdrawal (capital raising) and the resulting periodic balance of investment. Found that there are many differences between them.

The result can be expressed as a percentage of the result that the intended financing (asset) goal was actually achieved. The financing goal can be, for example, a certain amount of property up to a certain date, or a required series of withdrawals. The likelihood of achievement can be expressed as a percentage. By analyzing financial plans using the method of the present invention, individual investors can obtain advice on the possibility of achieving their targets regardless of the annual rate of return (return). Are thinking.

The method of the present invention provides an investor with information (allocation) about the outcome of any financial plan based on the outcomes of historical transactions. The possibility of obtaining certain outcomes (outcome) depends on this information (allocation).
Can be taken from By performing this analysis, some financial plans will indicate that the investor will run out of assets before the plans indicate. Thereby, the investor knows, for example, that he will most likely fail to achieve his goal. Based on this information, the investor decides to adjust its financial plan to reduce the risk.

Unlike conventional analysis, the results obtained by the method of the present invention are unique to each user's asset management, planned stakes and raises, beginning wealth and risk tolerance . For example, for some investors, small capital (s
Reducing mall capital stock / foreign allocation may increase the likelihood of running out of property. For another investor, increasing small capital stock / foreign allocation may increase the likelihood of running out of property.

The software can be enhanced to include a configuration that allows investors to prioritize their asset management results. For example, an investor may have a target of $ 10,000,000 at age 85 with some probability. The investor wants to retire at the age of 65 if possible, but thinks he may retire at the age of 70. The same investor may be able to save up to $ 40,000 a year, but never want to save more than $ 20,000 a year. By weighting the various variables, the investor can draw a series of scenarios using the program of the present invention. And this gives the investor a number of different options that meet the criteria.

The method of the present invention can be used dynamically as guidance for investors to make investment decisions and purchase decisions. For example,
Some investors find that by withholding certain purchases (purchase), they can retire earlier, or that they do not buy what they are thinking about now, increasing their chances of achieving their savings goals at retirement. be able to. Investors thinking about investing will know that, depending on the type of investment, the likelihood of meeting their asset goals is higher or lower.

The plan creation software of the present invention includes historical data on which the calculations are based, and allows the investor to update based on actual current data on the value of the investment. Data can be automatically transferred from the financial service provider to a customer (client) file on the server,
Thereby, updates can be made without the need for the investor to enter data.

The processor can be an Intel Pentium or similar microprocessor. The method of the invention may be implemented by custom software or by spreadsheet software such as Excel®. A computer program with commands that cause a computer to perform this method can be stored on any existing or future developed storage medium, including hard disk drives, floppy disks, and CD-ROMs. Computer programs can also be transmitted as digital signals over telephone lines, other transmission lines, or by radio waves. This signal can be transmitted in packets over a packet switched network, for example, the Internet.

The computer program according to the present invention can be distributed and stored on any suitable recording medium, for example, a hard disk, a portable disk, a CD-ROM or other read-only memory. Also, the method described as being executed by software running on multi-purpose computer hardware may be implemented in hardware. It is understood that various changes to the materials and construction details of the methods and systems described and illustrated above for the purpose of describing the nature of the invention may be made by those skilled in the art without departing from the principles and spirit of the invention. Like.

[Brief description of the drawings]

FIG. 1A is a part of a flowchart showing steps in a method according to the present invention.

FIG. 1B is a part of a flowchart showing steps in a method according to the present invention.

FIG. 1C is a part of a flowchart showing steps in a method according to the present invention.

FIG. 2 is a graphic representation of a sample of the result of the method according to the invention.

FIG. 3A is a portion of a sample chart illustrating another result of the method of the present invention.

FIG. 3B is a portion of a sample chart illustrating another result of the method of the present invention.

FIG. 4 is a sample chart showing another result of the present invention.

FIG. 5 is a block diagram illustrating features of a system according to the present invention.

[Procedural Amendment] Submission of translation of Article 34 Amendment of the Patent Cooperation Treaty

[Submission date] November 13, 2000 (2001.11.13)

[Procedure amendment 1]

[Document name to be amended] Statement

[Correction target item name] Claims

[Correction method] Change

[Correction contents]

[Claims]

──────────────────────────────────────────────────続 き Continuation of front page (81) Designated country EP (AT, BE, CH, CY, DE, DK, ES, FI, FR, GB, GR, IE, IT, LU, MC, NL, PT, SE ), OA (BF, BJ, CF, CG, CI, CM, GA, GN, GW, ML, MR, NE, SN, TD, TG), AP (GH, GM, KE, LS, MW, SD, SL, SZ, TZ, UG, ZW), EA (AM, AZ, BY, KG, KZ, MD, RU, TJ, TM), AE, AL, AM, AT, AU, AZ, BA, BB, BG, BR, BY, CA, CH, CN, CU, CZ, DE, DK, DM, EE, ES, FI, GB, GD, GE, GH, GM, HR, HU, ID, IL , IN, IS, JP, KE, KG, KP, KR, KZ, LC, LK, LR, LS, LT, LU, LV, MD, MG, MK, MN, MW, MX, NO, NZ, PL, PT, RO, RU, SD, SE, SG, SI, SK, SL, TJ, TM, TR, TT, TZ, UA, UG, UZ, VN, YU, ZA, ZW (71) Applicant 207 Michaux Crossing Lane, Midlothian, Virginia 23001, Unite d States of America

Claims (18)

[Claims] (A) calculating a change in a predetermined initial value of an investment over a period based on a change in value over a first history period to determine a changed investment value; Updating the changed investment value based on the determined amount and time to determine a further changed investment value; and determining the further changed investment value over a second period based on the change over a second history period. Calculating a change in value to obtain a further investment value; repeating the above calculation step, update step and recalculation step for a third history period and a fourth history period, respectively, at least one calculation Subsequently adjusting the investment value based on at least one of the investment amount and the recovery amount, and evaluating the financial plan. 2. The method according to claim 1, further comprising the step of providing the result of said step to an individual. 3. The method of claim 1, wherein the investments are categorized into one or more asset categories, and individual historical data is used in calculations for each of the asset categories. 4. The method of claim 1, wherein the result of the calculation is compared to a selected financial goal. 5. The method of claim 1, wherein an investment value adjustment is made after each calculation on historical data to simulate a tax effect. 6. The method of claim 1, further comprising the step of: inputting an initial investment value to the user and prompting an allocation to an asset category. 7. A means for calculating a change in a predetermined initial value of an investment over a period of time based on a change in value over a first historical period to determine a changed investment value, and a selected amount of money. Means for updating the changed investment value based on the time and the time to obtain a further changed investment value; and a change in the further changed investment value over a second period based on the change over a second history period Means for calculating the further investment value by calculating the following: means for further calculating, updating and recalculating the third and fourth history periods, respectively; Means for adjusting the investment value based on at least one of: and a system for evaluating a financial plan comprising: 8. The system according to claim 7, further comprising means for providing the result of the above steps to an individual. 9. The system of claim 7, further comprising means for classifying the investment into one or more asset categories and using individual historical data in calculations for each of the asset categories. 10. The system according to claim 7, further comprising means for comparing the result of the calculation with a selected financial goal. 11. The method of claim 7, further comprising means for adjusting an investment value to simulate a tax effect after each calculation on historical data. 12. The system of claim 7, further comprising means for inputting an initial investment value to the user and prompting allocation to asset categories. 13. A storage medium storing a plurality of instructions, wherein the plurality of instructions are:
Calculating a change in a predetermined initial value of the investment over a period of time based on the change in value over a first historical period to the changed investment value when processed by the processor; Determining, based on the selected amount and time, updating the changed investment value to obtain a further changed investment value; and determining the changed investment value over a second period based on the change over a second history period. Calculating a change in the investment value that has further changed to obtain a further investment value; and repeating the above calculation step, update step, and recalculation step for a third history period and a fourth history period, respectively. Adjusting the investment value based on at least one of the investment amount and the recovery amount after at least one calculation; and Media. 14. The storage medium of claim 13, wherein the instructions, when executed by the processor, cause the processor to further perform the step of providing the result of the above steps to an individual. 15. A plurality of instructions, when executed by a processor, for the processor, and for investments classified into one or more asset categories, separate instructions for calculation for each of the asset categories. 14. The storage medium according to claim 13, causing a step in which history data is used to be executed. 16. The storage medium of claim 13, wherein the plurality of instructions, when executed by the processor, cause the processor to further perform the step of comparing the result of the calculation with a selected financial goal. 17. The instructions, when executed by the processor, cause the processor to further perform an adjustment of investment value to simulate a tax effect after each calculation on historical data. The storage medium according to claim 13. 18. The method of claim 13, wherein the plurality of instructions, when executed by the processor, cause the processor to further execute a step of entering an initial investment value for the user and prompting allocation to an asset category. The storage medium according to the above.