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How do I evaluate my assets? A 5-Point scale to help you know which assets are for you

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Which assets have the best returns?
Which assets are tax-free?
Which assets are the safest and which are the riskiest?
Which assets are the most liquid?
Which assets have the lowest expenses?

If you are looking at investing and building your assets, you may have asked yourself these kinds of questions before.

This is why Aspen Creek Financial has developed an innovative asset rating scale that we affectionately call LiSERT.

LiSERT is an acronym for the five most important elements of any asset:

  • Liquidity
  • Safety
  • Expenses
  • Rate of Return
  • Tax Efficiency

How To Rate Your Assets

To use the scale, you rate an asset in each of the five LiSERT categories with a number from 1 to 20.

The higher the number, the better.

The rating is based on your opinion of how well that asset performs relative to other assets.

Here’s how you would choose a rating for your assets:

  • If you feel an asset is average in a given category, rate it at a 10
  • If you feel an asset is better than average in a category, choose a rating from 11 to 20
  • If you feel an asset is below average in a category, choose a rating from 1 to 9

For example, many advisors would say that a CD is far below average when it comes to Rate of Return — so, you may only give it a score a 2 out of 20 in that category.

Whereas, many would say that a Roth IRA is far above average for tax efficiency — so, you may give it a score a 20 out of 20 in the Tax Efficiency category.

Once you have assigned scores in each of the five categories, you add them together to form the asset’s overall LiSERT score.

The closer the asset’s overall score is to 100, the better it will be at protecting and growing your wealth.

The Perfect Asset would score a perfect 100 on the LiSERT scale, which would mean it:

  • Is 100% liquid
  • Has no risk
  • Has no expenses
  • Has an unlimited rate of return potential
  • Has zero taxes

Unfortunately, the Perfect Asset doesn’t exist!

But, we can use the LiSERT scale to try to find assets to add to our portfolio that are as close to perfect as possible.

The Perfect Asset would score a 100, while real asset scores range from a low of 42 to a high of 86.

How Do My Assets Rate?

To help you understand how this asset rating scale works, here are some examples of assets that you may have in your portfolio and how they might rate on the LiSERT scale.

Your opinion (or another advisor’s opinion) of how these assets would rate in each category may be slightly different, but this is an example of how they could be rated.

Stocks

  • Liquidity: 20
  • Safety:  6
  • Expenses: 18
  • Rate of Return: 6
  • Tax Efficiency: 14

Total LiSERT score: 64 out of 100

Bonds

  • Liquidity: 18
  • Safety:  14
  • Expenses: 18
  • Rate of Return: 8
  • Tax Efficiency: 18

Total LiSERT score: 76 out of 100

529 Plans

  • Liquidity: 18
  • Safety:  6
  • Expenses: 8
  • Rate of Return: 6
  • Tax Efficiency: 20

Total LiSERT score: 58 out of 100

CDs

  • Liquidity: 18
  • Safety:  20
  • Expenses: 20
  • Rate of Return: 2
  • Tax Efficiency: 2

Total LiSERT score: 62 out of 100

Mutual Funds

  • Liquidity: 20
  • Safety:  6
  • Expenses: 8
  • Rate of Return: 6
  • Tax Efficiency: 6

Total LiSERT score: 42 out of 100

Whole Life Insurance

  • Liquidity: 20
  • Safety:  20
  • Expenses: 8
  • Rate of Return: 8
  • Tax Efficiency: 20

Total LiSERT score: 76 out of 100

Indexed Universal Life (IUL)

  • Liquidity: 20
  • Safety:  18
  • Expenses: 16
  • Rate of Return: 14
  • Tax Efficiency: 20

Total LiSERT score: 88 out of 100

The Ultimate Asset

Did you happen to notice the score of that last asset, Indexed Universal Life?

An 88 out of 100 is VERY good on the LiSERT scale.

That’s why we call it the Ultimate Asset.

Like other assets, an IUL must be structured, funded, and used properly to achieve this high LiSERT score.

To obtain maximum benefit, you need to work with the right agent who offers IUL from the right insurance carriers.

When you do, the IUL is the Ultimate Asset.

If you’d like to learn more about the Ultimate Asset, you can watch our free educational video about the Ultimate Asset by clicking here.

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