Smaller investors can create and manage on a cost-effective basis a
complex portfolio of securities using a mechanism that enables the
investor to provide to the system the investor's preferences regarding
his portfolio, to generate a portfolio, including fractional shares, that
reflects the investor's preferences. The system then permits aggregation
of the orders, and netting of orders, generated by multiple investors at
various times during the day for execution. In addition, the structure of
the computer-based system of the present invention allows its cost to be
based on access to or usage of the system (such as a monthly fee) as
opposed to by securities orders entered into the system as per common
brokerage. The result is that the investor can create a portfolio of
directly owned securities with attributes, such as diversification,
similar to a mutual fund. As compared with the problems with existing
systems, the computer-based system of the present invention provides
complete control for the investor over what securities can be selected,
and in what weights and amounts, as well as control over the tax effects
of purchases or sales of the securities comprising the portfolio,
preventing the investor from being presented with unwanted taxable
effects due to discretionary sales transactions of fund managers. In
addition, the computer-based system of the present invention provides all
the information necessary to monitor and manage tax effects and
capability to sell or buy the individual securities in his portfolio to
obtain desired tax benefits, all shareholder rights with respect to each
security in the portfolio to the investor and full ownership and control
over all investment, voting and other decisions regarding such
securities. The computer-based system of the present invention also
allows for parameters to be set with respect to a portfolio to ensure
that it stays within certain diversification or risk limits. Furthermore,
the computer-based system of the present invention provides direct
control over the charges and expenses that will be incurred, and the
possibility of making multiple intra-day investment decisions by the
investor, if he wishes. Moreover, the computer-based system of the
present invention provides control over all factors in the portfolio and
modification of them as the investor sees fit.