The Ultimate Portfolio

Introducing our innovative LiSERT asset rating scale to show you how it can help make the ultimate portfolio a reality for you.

LiSERT is an acronym that stands for what most people would consider to be the 5 most important elements of any asset:

Liquidity | Safety | Expenses | Rate of Return | Tax Efficiency.

To use the scale, you simply rate an asset in each of the 5 categories of LiSERT – Li, S, E, R, and T — and assign a numerical score between 1 and 20 for each; the higher the number, the better. The rating should be based on how well that asset performs relative to other assets. So, an asset that is average in a given category would score a 10. Assets that are better than average in that category would score somewhere between 11 and 20… while assets that are below average in that category would score between 1 and 9. For instance, CDs are far below average when it comes to the rate of return, so they only score a 2 out of 20 in that category. Meanwhile, Roth IRAs are far above average for tax efficiency, so they would score a 20 out of 20 in that category. See how it works?

Then you add up the scores for each of the 5 components for an asset to get its total – or overall LiSERT score. The closer the composite score is to 100, the better; generally speaking, it’s going to be at protecting and growing your wealth. The PERFECT ASSET would score a perfect 100 on the LiSERT scale: 100% liquidity, no risk, no expenses, unlimited rate of return potential, and zero taxes. The PERFECT ASSET doesn’t exist… but it does give us a benchmark against which to compare everything else.

LiSERT is an objective rating scale that allows you to remove the emotion and preconceived notions, and judge assets for what they really are. Then, to the extent possible, you’ll want to re-position your assets from those with lower LiSERT scores to those with higher LiSERT scores. That’s how you create your own ultimate portfolio.

Though you can equally weight each of the 5 categories, in real life those 5 categories should be weighted differently by each person according to their mindset and their financial priorities. Savers tend to prioritize safety, expenses, and taxes as being the most important. Real estate investors, on the other hand, tend to prioritize the rate of return and tax efficiency more highly… and liquidity and expenses very low. That’s okay. How you weight the 5 categories is completely dependent on you – your mindset, current situation, and financial goals.

This is also something we can help you with. One of the very first things we’re going to do is find out what YOUR PRIORITIES are for the 5 components on the LiSERT scale, and then adjust the weight accordingly.

For instance, an extremely conservative, saver-oriented person might weight the LiSERT categories as follows:

  • Liquidity: a maximum score of 10
  • Safety: very high, at 40
  • Expenses: also important in a low-return environment, a really high 30
  • Rate of Return: NOT as important for the staunch saver, so just 5
  • Tax Efficiency: somewhere in the middle, at 15

Meanwhile, for an aggressive real estate investor, we might weight LiSERT like this:

  • Liquidity: 5
  • Safety: 10
  • Expenses: 5
  • Rate of Return: all the way up at 40
  • Tax Efficiency: also very high at 40

So what would be the ultimate asset for you? Let me be so bold as to say that we can take any portfolio (no matter what is currently inside it) and make it better and stronger FOR YOU, based on your specific priorities. This is achieved by moving assets from lower LiSERT score assets to higher LiSERT score assets. We can help turn any portfolio into the ULTIMATE portfolio.

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