FIELD OF THE INVENTION

[0001] The present invention relates to providing information for investors to compare, judge, select, and maintain best multi-portfolio plans for their long-term financial plans and goals.

BACKGROUND OF THE INVENTION

[0002] With respect to comparison and selection of investment portfolios for long-term plans and goals, there are two quite different bodies of methods and tools that one could consider prior art. One is a body of theoretical writings presented in terms of mathematical equations addressed to financial theorists, the other a body of methods and tools presented to the investing public and to financial planners who advise investors.

[0003] While the theoretical writings provide methods for selecting portfolios for long-term investments, the nature and intended use of these methods are so different from those of the present invention that they simply do not meet the invention's purpose. In contrast to the present invention's purpose of informing investors on how portfolio plans compare in relevant measures, to enable investors to judge, select, and follow good portfolio paths toward their goals and priorities, the methods in the theoretical writings put the portfolio selection in the hands of equations, based on simplified mathematical representations of investor plans and artificial mathematical abstractions to represent investors' priorities and goals. Investors get portfolio recommendations based on mathematical abstractions, without the information and understanding essential for accepting and maintaining good investment paths toward long-term goals.

[0004] In the theoretical methods, investor plans are standardly represented by equations that omit essential common realities in real investors' plans, such as major cash flows in particular future years, different portfolios to take advantage of differences in taxations of different investment accounts, and changes to more conservative portfolios in investors' older years. Investors' goals and priorities are standardly represented by theoretical equations such as logarithmic or hyperbolic utility functions, which cannot adequately represent real investors' goals and priorities for all the following reasons: investors are concerned with more dimensions, measures, and characteristics of portfolios and their prospects than such formulations represent, such as concern with the tradeoff between long-term prospects and short-term ups and downs along the way; investor goals and priorities commonly have discontinuities that utility function formulations do not represent, such as major concern that results reach certain levels at certain times and far less interest in additional gains; and most important, investors do not and cannot define their goals and priorities in terms of the mathematical utility functions the theoretical methods require. The result that these theoretical methods deliver to the investor is simply identification of a recommended portfolio, with no information in defense of the recommendation but mathematical formulations that investors do not understand.

[0005] In the most fundamental aspects of both purpose and method, the approaches in the theoretical writings are exactly the opposite of the present invention. Relative to the core question, “Who is in charge and being served?”, the methods in the theoretical writings are computer-mathematics-centered, while the invention is investor-centered. Those theoretical methods put the computerized mathematics in charge of weighing the alternatives and making the portfolio selection, requiring and using abstracted formulations of investor plans and goals for the convenience of the computerized mathematics. This is the opposite of the purpose and method of the present invention, which puts the investor or user in charge of weighing the alternatives and making the selection, with the role of the computer and its mathematics being development and presentation of the most appropriate information to inform the investor or user for his/her understanding, consideration, and selection decision.

[0006] Based on unrealistic simplifications of investors plans and artificial abstractions of their goals, chosen for mathematical convenience and elegance more than to fit investors' plans and goals, the recommendations produced by these methods are not validly selected for and unlikely to be best for real investors' real plans and real goals. Furthermore, to effectively help investors with long-term goals, a portfolio recommendation is not enough. It's essential to show investors why the recommended portfolios are best, to build likelihood that the investor will adopt a good portfolio plan and stay on track in the face of short-term ups and downs that frighten uninformed investors off track. This the methods in the theoretical writings do not do.

[0007] The body of theoretical writings is so different in purpose, method, and output from the present invention, and so remote from what most investors need, that relative to the present invention it should not even be considered relevant prior art.

[0008] In the face of unsuitability of the theoretical writings for the investing public, another quite different body of methods and tools for portfolio comparison and selection is provided to the investing public and to financial planners who advise investors. But this prior art is based on a misconception so fundamental it makes the prior art not only inadequate but dangerously misleading. This misconception is, in comparisons of best-diversified portfolios for selection for investors with long-term plans and goals, omission of the time-horizon dimension of the investor's plans and goals. In prospects and risks for the dollar results investors seek, time horizon is a most important factor in portfolio comparison and selection. For the various longer time horizons typical of individuals' and families' financial plans and goals, portfolios compare differently, and very differently than for a single year. For this reason, it is most essential to base selections on comparisons for the full time horizons of investor's plans and goals, and to enable the investor to direct the comparison to portfolio plans that comprise different portfolios in different years of the plan as the time horizon shortens. In omitting the time-horizon dimension, the prior art fails to do either of these essential things. Instead, for the investor with long-term plans and goals, it misleads investors to select a single portfolio for the length of the time horizon of the plan, and to base this selection on a comparison of best-diversified portfolios in only annual rate of return for the individual single investment year.

[0009] Because this body of prior art methods and tools is intended for the present invention's purpose of providing information for investors and their financial advisors to understand and use, for selecting investment portfolios for long-term plans and goals, it is the relevant prior art for consideration relative to the present invention. It deserves discussion not only to describe its inadequacies that the present invention overcomes, but also because it includes elements of analysis that the present invention combines in a novel way to overcome the prior art's inadequacies.

[0010] In a paper published in 1952, Harry M. Markowitz introduced a major advance in comparing and selecting investments in terms of result probabilities. He presented a concept and method for determining a range of best-diversified mixes of a set of investments, offering a range of expected returns for a single investment period each with minimal uncertainty or probabilistic variation from the expected result as measured by variance or standard deviation of the result for the single investment period. This analytical method has become known as Modern Portfolio Theory, and is commonly applied to portfolios comprising sets of broad and fundamentally different types of investment called asset classes in a process called asset allocation. The result of the analysis is standardly presented on a graph as an efficient frontier curve along which the points represent the range of best-diversified investment mixes or portfolios. The efficient frontier graph standardly presents and compares these portfolio points in probabilistic measures of annual rate of return, for the individual year. The vertical axis represents mean or expected rate of return, and the horizontal axis represents return-rate standard deviation, a probabilistic measure of variation above and below the expected return rate for the individual year. The process of planning and analysis often called asset allocation and summarized by the efficient frontier graph offers two very valuable advantages: it leads the investor toward effective diversification, spreading investment funds among differing investments to reduce uncertainty and risk, and it narrows the best-portfolio search from a vast number of potential portfolios to a range of the best-diversified portfolios along a curve.

[0011] Use of Modern Portfolio Theory for asset allocation has become widely accepted and applied in comparing and selecting investment portfolios for individuals and families with long-term financial plans and goals. For this purpose, a second step is required: from the range of the best-diversified portfolios represented by the efficient frontier curve, a particular portfolio must be selected. For this purpose, in standard current practice the vertical axis of the efficient frontier graph is labeled “return”, the horizontal axis is labeled “risk”, and the graph is presented and used as a “risk/return” comparison of the portfolio points along the curve as if valid for any time horizon. To select a particular portfolio for the investor from those along the curve, commonly the investor's “risk tolerance” is judged from a multiple-choice questionnaire and used to determine the choice. In this approach, the “risk” basis for the selection is actually return-rate standard deviation, a measure of individual-year return-rate variation. For comparing, selecting, and recommending investment portfolios for individuals and families with long-term financial plans and goals, this process is the prior art. It is standardly taught in college courses on investment, taught in training and continuing education of professional investment-financial planning advisors, incorporated in professional and governmental regulations and guidelines for such professionals, and performed by widely used software tools for professional financial planners who advise investors and now increasingly for individual investors on the Internet.

[0012] However, the second step in this process, by which the portfolios along the curve are compared and one selected, is fundamentally misconceived, mislabeled in ways that tend to conceal the misconception, and unacceptably misleading. The fundamental misconception is failure to consider the time-horizon dimension of the investor's plans and goals. Due to two powerful long-term effects, compounding and the tendency of individual-year return-rate variations to balance out, over longer time horizons the advantage of higher expected return rate increasingly outweighs the disadvantage of larger return-rate standard deviation. As a result, for longer time horizons portfolios that appear far too “risky” on the single-year efficient frontier become far more favorable in overall long-term prospects, and even more favorable in measures of long-term risk. The second step in the prior art, selecting one portfolio for a long-term plan and goal based on the individual-year “risk/return” comparison of the efficient frontier and “risk tolerance” criterion, amounts to choosing a portfolio for long-term plans and goals based on investor fear of individual-year ups and downs as measured by individual-year standard deviation, without even considering multi portfolio plans or how the portfolio plans considered compare in probabilistic prospects and risks for the investor's long-term plans and goals. Therefore this prevalent prior art is rejected as not only inadequate but dangerously misleading.

[0013] To adequately incorporate the time-horizon dimension in comparisons for portfolio selection, to enable investors to select portfolio plans that are best in probabilistic prospects and risks for their long-term plans, goals, and priorities, it is necessary to (1.) consider portfolio plans comprising pluralities of best-diversified portfolios held in different time phases of the financial plan as the remaining time horizon shrinks, and (2.) compare the portfolio plans in probabilistic measures of results for the investor's financial plan over its full time horizon.

[0014] Further, because these probabilistic assessments are multi-dimensional, with more than one meaningful measure of comparison on which portfolio plans commonly compare differently, and because investors may also consider other portfolio-plan characteristics important for the selection, simply identifying a “best” portfolio plan is not sufficient. Instead, it's essential to (3.) with respect to a probabilistic measure of financial plan results, show the investor how a series of best-diversified portfolio plans compare, to help investor find a portfolio plan that represents offers the best combination of attractions in that measure and one or more other criteria relative to his/her plan, goals, and priorities.

[0015] There is nothing in the prior art that fulfills these three essential requirements.

[0016] However, systems have been introduced that include or claim to include both portfolio selection and probabilistic assessment for long-term plans and goals, which deserve further discussion, to summarize their inadequacies and also for discussion of methods these systems use which the present invention applies in a novel way.

[0017] In recent years, methods have been proposed in which portfolios are assessed and compared for long-term plans in terms of long-term final wealth probabilities determined according to the assumption that the final wealth probability distribution is a lognormal distribution, or stated another way that the probability distribution of the log of the final wealth is a normal distribution. However, for almost every long-term financial or investment plan, this assumption is not valid. Almost every such plan includes cash flows in or out, from investor to portfolio or portfolio to investor, in each of a plurality of the years of the plan, and for such plans the lognormal final wealth distribution assumption is not valid. Therefore, for the purpose of the present invention methods based on the lognormal final wealth distribution assumption are not satisfactory.

[0018] Other methods and tools have been introduced to assess final wealth probabilities of long-term investment plans using Monte Carlo simulation. Monte Carlo simulation was pioneered by Stanislaw Ulam for assessment of nuclear process result probabilities at Los Alamos half a century ago, at essentially the same time that Harry Markowitz originated concepts and methods of Modern Portfolio Theory. Monte Carlo simulation has since come into wide use in various fields of science, engineering, and economics, for assessing result probabilities of processes with probabilistic inputs and no method at hand for direct calculation of the result probabilities. Monte Carlo simulation does not require that the result probability distribution be lognormal or any other particular shape, and enables development of a probability distribution of the final wealth for virtually any financial plan and portfolio plan.

[0019] However, for selecting best portfolio plans for long-term financial goals, Monte Carlo simulation alone is not a sufficient or acceptable method. For even a small number of asset classes, even if only portfolios defined in integer allocation percentages are considered, the number of portfolios is vast. But for just one portfolio, to develop a probability distribution of the final wealth for a long-term financial plan, Monte Carlo simulation requires thousands of simulations each proceeding year by year to the time horizon of the plan. Even with the powers and speeds of computers in current use by investors and financial planners, assessing all the potential portfolios with Monte Carlo simulation for just one financial plan would commonly require hours or days. Exploring what-ifs for variations of the financial plan would take much longer. Monte Carlo simulation alone does not provide any system or capability for zeroing in on best portfolio plans for long-term financial plans and goals with acceptable efficiency and speed.

[0020] While neither Modern Portfolio Theory nor Monte Carlo simulation is by itself adequate for selecting best portfolios for long-term financial plans and goals, the two techniques offer complementary powers. While Modern Portfolio Theory produces a portfolio comparison in only rates of return for the individual year, it efficiently guides the analysis toward effective diversification and greatly narrows the search for best portfolios to a range of the best-diversified along a curve. And while Monte Carlo simulation offers no way to efficiently find best portfolio plans, it offers a means to advance the probabilistic assessment of any one portfolio or portfolio plan from single-year return rate to long-term dollar results for a long-term plan and goal. Together, these two analytical techniques offer capabilities for fulfilling the present invention's purpose.

[0021] Recently systems and methods for portfolio selection have been introduced that use both Modern Portfolio Theory and Monte Carlo simulation, or claim to do so. However, these systems suffer deficiencies in all three essential requirements previously stated. Even where such systems apply Modern Portfolio Theory for portfolio selection also offer or claim to offer Monte Carlo simulation, they fail to incorporate the Monte Carlo simulation in the portfolio comparison for the selection. Instead, these systems present the comparison for portfolio selection using the results of only the Modern Portfolio Theory, the efficient frontier graph comparing individual best-diversified portfolios in terms of rate of return for the only the individual year. Only after the portfolio selection id made do these systems offer anything said to be produced by Monte Carlo simulation, applied to just the one previously selected portfolio. Thus the basis provided for the portfolio selection offers choice of only one or another single portfolio for the entire length of the time horizon of the financial plan, failing requirement (1.); displays comparison of these choices only in terms of return rate for the individual year, failing requirement (2.); and in probabilistic measures of results for the financial plan over its full time horizon, does not provide any comparison of portfolio choices, failing requirement (3.).

[0022] Accordingly, it would be beneficial for investing individuals and families to provide a system for selection of portfolio plans for long-term plans and goals that includes these three essentials, and thus provides investors heretofore-unavailable information and understanding for comparing and selecting best portfolio plans for their long-term plans, goals, and priorities.

SUMMARY OF THE INVENTION

[0023] In accordance with the present invention, method and apparatus are provided for determining and graphically displaying a range of best-diversified portfolio plans comprising pluralities of best-diversified portfolios, assessed and compared in several measures of probabilistic prospects and risks for long-term final wealth results for long-term financial plans and goals, derived from user entry and selection of information on sets of investment categories to be considered as components of portfolios with data regarding their return-rate probabilities; information on financial plans including time horizons, schedules of cash flow investments into and withdrawals from a portfolio plan, and other relevant considerations including fees, taxes, and inflation rates; and information for defining a series of best-diversified portfolio plans in which a portfolio plan may comprise a plurality of best-diversified portfolios in parallel or in series or both with respect to time. The present invention combines in an integrated analysis the powers of both Modern Portfolio Theory (MPT) and methods of simulation for assessing probabilities for multi-period financial or investment results such as Monte Carlo simulation (MCS), to determine, for a set of investment categories selected by the user, a range of best-diversified portfolios of the investment categories; to determine from the foregoing and information for defining portfolio plans a series of best-diversified portfolio plans comprising pluralities of best-diversified portfolios; to determine for the long-term financial plan a probability distribution for long-term final wealth results with each of the series of best-diversified portfolio plans comprising best-diversified portfolios; and to display graphically assessments and comparisons of the series of best-diversified portfolio plans in several probabilistic measures of prospects and risks for long-term final wealth results for the user-entered plans and goals. With respect to these graphic analyses the user is enabled to obtain displays including additional user-entered portfolio plans assessed in comparison with the series of best-diversified portfolio plans, and to interactively obtain additional information relative to probabilistic prospects and risks of portfolio plans represented on the graphs and graphic and numeric displays of allocation proportions of the investment categories for each of a number of portfolio plans offering equivalent prospects and risks for the financial plan. For a user-designated portfolio plan, and for pluralities of portfolio plans for comparison, the user is enabled to obtain additional graphic analyses and displays including probabilistic simulations of year-by-year progressions of portfolio value through the time horizon of the plan, and probability distributions of long-term final wealth results on which the user can move interactively to obtain displays of probabilities for meeting various targets for the final wealth. From this information the user can compare best-diversified portfolio plans in several measures on which they will commonly compare differently to judge a portfolio plan that offers best prospects for the investor's long-term plans, goals, and priorities. For a portfolio plan thus selected, the user is enabled to obtain additional graphic analyses and displays of probabilities for meeting the investor's goals through various numbers of years and how these probabilities would be changed if values of key items in the financial plan are changed by various amounts.

[0024] The graphic analyses and numerical displays of user inputs and selections and analyses, results, and graphs are presented on an electronic display screen offering interactive access to further information relative to what the graphs display, and together with text narration and explanation are produced in the form of a user-customizable printed report for the investor.

[0025] The apparatus of the present invention preferably includes a computer system that executes software for receiving user entries and selections, performing mathematical analyses, and displaying results and supporting data in the form of graphs as well as numerical presentations on a computer display screen and on printed pages. In one embodiment, this software includes a word processing software package that enables user customizing, storage, and production of printed reports and a spreadsheet software package that enables electronic exchange of data between the invention's novel software and other computerized data processing and storage systems.

[0026] The invention further includes a novel long-term optimizing (LTO) software package that enables users to enter values and otherwise provide information to define a long-term financial plan, including a multi-period time horizon, schedules of cash flow contributions and goals that define inputs to and withdrawals from a portfolio plan, and data regarding fees, taxes, and inflation values; information specifying asset classes or investment categories to be considered for portfolios, for which return-rate data are provided; and information for defining a series of best-diversified portfolio plans comprising pluralities of best-diversified portfolios in the same or different investment periods. The novel LTO software performs analyses and presents graphic and numeric displays to identify, assess, and compare best-diversified portfolio plans in several probabilistic measures of prospects and risks for long-term final wealth results for the long-term financial plan.

[0027] More particularly, from user selection or entry of asset classes or other investment categories each with historical or predicted data for expected return rates, return-rate standard deviations, and correlation coefficients relative to corresponding data for the other investment categories, the LTO software determines and produces a graphic display of a range of portfolio points representing best-diversified portfolios or allocation proportions of the investment categories, offering a range of expected return rates each at minimal return-rate standard deviation or uncertainty. This range of portfolio points is presented graphically as a curve on an efficient frontier graph, showing and comparing the range of best-diversified portfolios in terms of expected return rate and return-rate standard deviation for the individual year. The LTO software determines this curve using established mathematical methods of MPT such as modified Simplex linear programming, which produces a theoretical curve reflecting portfolios in which the allocation proportions of the investment categories are fractional percentages of unlimited precision, which as a practical matter no investor could attain or maintain. In a preferred embodiment of the invention, the curve is also produced as a range of practical portfolio points representing a range of the best-diversified portfolios in a population including only portfolios in which the allocation proportions are integer percentages, representing portfolios that offer essentially the same best-diversification benefits as portfolios along the theoretical curve but are more practical targets for investors to obtain and maintain. In any case the efficient frontier curve resulting from this part of the invention's analysis measures and compares the range of best-diversified portfolios in terms of individual-year rate of return, specifically expected individual-year return rate and individual-year return-rate standard deviation. This analysis does not incorporate any consideration of the investor's long-term plan or goals or their time-horizon dimension with respect to either desirability of different portfolios in different time phases of the plan or need for assessment and comparison of portfolio alternatives for the financial plan over its full time horizon, and therefore does not provide an adequate comparison of the portfolios for selection of a particular portfolio plan for the investor's long-term plan. But this analysis and its results do provide essential raw material for further analysis performed by the present invention, specifically identification of the range of best-diversified portfolios upon which the further analysis should be focused and the description of this range as a curve.

[0028] The LTO software then defines a series of best-diversified portfolio plans comprising pluralities of best-diversified portfolios, based on information provided by the user for this purpose together with the information defining the range of best-diversified portfolios.

[0029] The novel long-term optimizing software then performs analyses to determine a probability distribution for the long-term final wealth results of the user-entered financial plan with each of the series of best-diversified portfolio plans. In one embodiment, the software develops the final wealth probability distributions using Monte Carlo simulation. More specifically, for each of the series of best-diversified portfolio plans the software produces a large number of Monte Carlo simulations for the entered long-term financial plan to determine a distribution of probabilities for the long-term final wealth.

[0030] From such distributions for each of the series of best-diversified portfolio plans, in a preferred embodiment the LTO software produces and displays graphic assessments and comparisons of the series of portfolio plans in several probabilistic measures of prospects and risks for the final wealth for the long-term financial plan. In one embodiment, one assessment and comparison is presented in a “Goal Frontier” graph with one axis representing expected value of the final wealth, as a best single measure of long-term prospects; the second axis representing minimum final wealth that at a specific high probability will be met or exceeded, as a measure of long-term safety versus risk; and a series of portfolio plan points are positioned to represent the series of best-diversified portfolio plans assessed and compared relative to the measures of the two axes. Another assessment and comparison is presented in another Goal Frontier graph identical to that just described except that the second axis represents probability of meeting-or-beating a final wealth goal as the measure of safety versus risk, and the portfolio plan points are positioned relative to the scale of this second axis to represent assessment and comparison with respect to this measure.

[0031] In this embodiment, once the graphic long-term probabilistic assessments and comparisons are produced and displayed on Goal Frontier graphs, the long-term optimizing software enables the user to interactively obtain additional graphic and numeric displays of information pertaining to portfolio plans represented on the graphs and the prospects they offer for the financial plan, for portfolio plan assessment, comparison, and selection by the investor for his/her long-term financial plan, goals, and priorities.

[0032] Further, in a preferred embodiment of the present invention, for a portfolio plan the user selects on a Goal Frontier graph or enters, or for each of two such portfolio plans for comparison, the novel long-term optimizing software produces and graphically displays individual probabilistic simulations of the development of portfolio value, net of cash inflows to and outflows from the portfolio plan in the financial plan, year by year through the time horizon of the plan. Additionally, for a portfolio plan selected on a Goal Frontier graph or entered by the user, or for each of two portfolio plans for comparison, a graphic presentation is produced and displayed showing a probability distribution of the long-term final wealth for the investor's entered long-term financial plan. On such a probability distribution display the user is enabled to interactively move to various target heights for the final wealth, and at each target height moved to, obtain a graphic and numeric display of the probabilities of meeting-or-beating versus falling short of that final wealth target.

[0033] For a user-entered long-term financial plan and user selected or entered portfolio plan, in a preferred embodiment the novel long-term optimizing software produces an additional set of probabilistic sensitivity graphs showing and comparing probabilities of meeting the investor's goals through various numbers of years with values of key items in the financial plan changed by various amounts. On each graph in this set a first curve shows probabilities of meeting the investor's goals through various numbers of years with all financial plan items at planned values. For each of a number of user selectable items in the financial plan, additional curves are produced and displayed showing what the goal-meeting probabilities would be for various numbers of years with the value of the user-selected financial plan item changed by various amounts. Through interactive explorations on these graphs, investors and their financial and investment advisors can obtain information on alternatives for key financial plan items and resulting probabilities for meeting goals useful for optimizing the financial plan relative to the investor's priorities.

[0034] In a preferred embodiment of the invention, additional graphs based on the user's entries and selections are produced and displayed to educate users and investors on the overwhelming power and effect of the time-horizon dimension in determining comparisons and relative favorabilities of portfolios and portfolio plans, to help users and investors understand and benefit from the novel features of the present invention to incorporate the time-horizon dimension in assessments and comparisons of portfolio plans, specifically (1.) considering multi-portfolio plans in which different portfolios can be held during different phases of the plan as the remaining time horizon shrinks, and (2.) assessing and comparing portfolio plans for the financial plan over its full time horizon. To provide the desired education, graphs are produced and displayed to illustrate separately and jointly two long-term investment effects that cause portfolios and portfolio plans to compare differently for longer time horizons: long-term compounding, and reduction of standard deviation of the return-rate average for longer investment time horizons due to the tendency of high and low deviations to partially offset each other. These graphs show visually that for longer time horizons, the advantage of higher expected return rate increasingly outweighs the disadvantage of larger return-rate standard deviation, making best-diversified portfolios with higher return rates and larger return-rate standard deviations compare much more favorably for longer time horizons. It is especially important to help users see and understand these time-horizon effects on portfolio comparisons and best selections for two reasons: in the absence of such understanding, investors are inclined to react to immediate short-term ups and downs in ways that are adverse for prospects for their long-term plans and goals; and the prior art with its single-year method of comparing single portfolios, including labeling of the measure of short-term ups and downs as “risk,” encourages this misconceived viewpoint and approach.

[0035] In a preferred embodiment of the invention, the user is enabled to electronically produce printed reports containing all of the graphic and numeric information and displays produced on the computer display, or a user-selected subset of such information and displays, together with text narration and explanations of the graphic and numeric information, in a format the user can display, manipulate, customize, store, and print using the LTO software or popular word processing software products. Electronic or magnetic files of investor plans, including information to restore or recreate user entries and selections and graphic and numeric analyses and results, are storable in electronic file formats that can be opened and manipulated in the LTO software or popular spreadsheet software products, enabling the user to electronically exchange and use in other computer and software systems and products information from the invention, and electronically exchange and use in the novel long-term optimizing software information from other computer and software systems and products.

[0036] Based on the foregoing, it can be readily seen that the present invention provides major advantages and benefits in enabling investors and their financial advisors to identify, compare, judge, understand the advantages of, and select and maintain portfolio plans that are optimal in probabilistic prospects and risks for investors' long-term plans, goals, and priorities.

[0037] For an investor's long-term financial plans and goals, selected list of investment categories with return-rate data, and desires regarding pluralities of portfolios in portfolio plans, information is developed to identify the range of portfolios that through effective diversification offer various expected return rates each at minimal return-rate variation or uncertainty, and define a series of best-diversified portfolio plans comprising best-diversified portfolios, and then assess the best-diversified portfolio plans and display graphic comparisons of them in measures of probabilistic prospects and risks for the investor's long-term financial plans and goals, enabling investors and users to judge, select, and commit to portfolio plans that are optimal in probabilistic prospects and risks for the investor's long-term financial plans, goals, and priorities. Additional information is developed and displayed graphically and numerically to help users and investors understand and explain the superiority and extent of superiority of optimal portfolio plans, obtain fuller understanding of the prospects and risks for investors' long-term financial plans and goals with various portfolio plans, and with a selected portfolio plan obtain information useful for optimizing other key elements of the financial plan relative to the investor's priorities. This information is of great importance to most individuals'and families' financial plans for a number of reasons. For most long-term financial plans, optimal portfolio plans offer high probabilities of producing value from investment returns that greatly exceeds net value of original investment amounts and provides most of the means to meet long-term needs and goals, while other portfolio plans or investments offer probabilities of only a small fraction of the prospects for value gain over the time horizon of the financial plan that the most advantageous portfolio plans offer. And compared to other key factors in long-term financial plans, portfolio plan selection is far less suitable to common intuition, in fact counterintuitive in the sense that selections best and safest for long-term plans appear more risky in short-term views and news and when compared using the prevalent prior art method of single-year portfolio comparison. With much of the American public now participating in investment, and various trends increasing individuals' and families' responsibilities for their long-term financial wellbeing, the present invention can be described as offering important value to most of the public as well as to the community of professionals and organizations offering investment and financial planning education, advisory, and management services to the public.

[0038] Additional advantages of the present invention will become readily apparent from the following discussion, particularly when taken together with accompanying drawings.