Patent ID: 7925565

Claim:
A computer-implemented method for generating a recommended a control action policy in a multi-year planning setting, the method including: retrieving mean return, variance and covariance data for multiple of classes of prospective investments; electronically calculating, from the retrieved data, returns on alternative diversified portfolios that include the prospective investments; setting up a computer-solvable problem, including assigning a search grid spanning and subdividing at least a time horizon, potential resource values for an investor's portfolio, a range of spending levels that satisfy essential goals of the investor and are then applied to satisfying the investor's non-essential goals, and the range of risk taking levels; and working backwards through the time horizon, using a computer to evaluate potential control actions for particular times and resource values within the search grid, selecting recommended control actions for the particular times and resource values, the control actions setting spending and risk taking levels for the particular times, and combining the control actions into a control action policy that includes the recommended spending and risk taking levels for combinations of the particular times and resource values; wherein using the computer to evaluate the potential control actions for the particular times and resource values includes calculating a utility of potential spending and risk taking levels, such that the utility at a specific time and resource value for the potential spending and risk taking levels combines at least a utility in the specific time of the spending and a future expected utility through an end of the time horizon of future spending and risk taking levels; and such that the utility calculation recognizes a greater utility of satisfying the essential goals than of satisfying the non-essential goals; and outputting at least part of the control action policy for the time horizon and the potential resource values, including recommendations for the spending and the risk taking levels.