What Is Your Investment Criteria?

They are in your mail, your email, your drive to the office, your meetings, your lunch conversations and even at the weekend get together. They are everywhere! What are they? They are investment opportunities!

You probably get a steady flow of investment opportunities coming your way and if you are like most, you scratch your head wondering how people have the time to look at all these opportunities.

You may toss these opportunities aside because you don't have the time to deal with them. Or perhaps you are in the group that spends way too much time trying to figure out which one is the right one for you.

Why Establish Investment Criteria?

One of the reasons many people get stuck in their wealth strategy is that they do not set any boundaries or standards for selecting their investments. They immediately act on an investment opportunity that sounds good. While it may be a good investment, it may not fit with their overall wealth strategy which can lead to trouble down the road.

When properly established, it is a proven method to analyze opportunities quickly based on your specific goals.

Before You Establish Your Investment Criteria

One piece of an overall wealth strategy. Before determining your investment criteria, you must first know:

#1

Your Wealth Vision, Mission and Values

Vision, mission and values are not just for businesses. They are powerful tools in your wealth strategy too!

#2

The Type of Asset

You may wonder, if I already know the type of asset I want to invest in, isn't that my investment criteria? It's not.

The type of asset is very broad. Let's say you have decided to invest in commercial rental real estate. Even though this is a specific type of asset, there are still thousands of opportunities in that category.

Here's why you must know these 2 items before determining your investment criteria Investment criteria is simply a list of standards an investment must have. These standards are specific to you and must be consistent with your wealth vision, mission, values and asset type.

Knowing these 2 items first makes your investment criteria more compatible with your overall wealth strategy.

Examples of Investment Criteria Specific investment criteria may include:

Minimum appreciation Minimum rate of return Minimum cash flow or cash on cash return Price range Maximum amount of investment Location of investment

Once established, the process of using investment criteria is quite simple. If any part of an investment opportunity does not meet the minimum requirements listed on your investment criteria, throw that investment opportunity out.

This process enables you to sort through all the opportunities in just minutes and identify the ones that will best fit in your wealth strategy. Then you only spend time further researching those that meet your minimum investment criteria.

Using investment criteria helps you stay focused on the right opportunities for your wealth strategy.