Patent ID: 7461021

Claim:
In a computerized method for financial planning, comprising: a. a computer; b. a computer program to optimize an investor's portfolio in order to maximize total return for any level of risk; c. assuming certain rates of return for various types of investments in the portfolio; d. defining several accounts within the portfolio, each of which accounts have assets, each of which asset in the account being characterized in one or more asset classes, the assets in a particular asset class having tax characteristics in common with one another and the assets in each asset class having a market value, a tax basis, an expected effective tax rate upon liquidation, investment characteristics, including after-tax expected returns and volatility estimates, and pre-tax investment constraints, which investment constraints have the effect of applying upper and lower limits to a financial value of the asset class that must be maintained; e. determining the contingent tax on each asset class by calculating the difference between the market value of the asset class and its tax basis multiplied by the expected effective tax rate upon liquidation; f. determining pre-tax and after-tax constraints on what asset classes are to be contained in the portfolio; g. transforming the pre-tax constraints and pre-tax investment characteristics into a set of after-tax constraints and investment characteristics, including after-tax expected returns and volatility estimates; h. adjusting market values of each asset class to reflect the effect of the contingent tax on the asset class; and i. selecting an optimized portfolio.