The world is full of investing initiatives and programs waiting for your money. Examples include real estate, finance, business, crowd-funding, and etc.

I’m sure you have seen your fair share of such schemes either in your network, investment seminars, emails or your social media feed.

Here’s a simple 3-step formula to guide you on when you should be saying YES to the right investment vehicle for you.

I call it my Y.E.S. Formula:

1. Y = Yield

In investing terms, a yield is simply a return or profit earned over a specific period of time. If you see a program that generates USD1,000 over a period of one year with an investment amount of USD10,000, the yield for that program is 10% per year.

Naturally, most investors want the highest yield possible, but it is important to understand the risks associated.

We will discuss more in the next segment but as a general rule, investors are looking for a yield that either beats the annual rate of inflation or keeps pace with the country’s stock index.

2. E = Easy

By this, I mean easy to understand. Consider this statement which I read from a recent financial article:

“We are cautiously optimistic regarding the upcoming financial report which could show a consolidation of returns from the region’s ETFs, especially after the Fed’s hike of 25 basis points.”

Hardly anyone would be able to understand a statement like that. Before you enter into any investment or business venture, it is critically important for you to understand and answer the following two questions:

How exactly is money made? Is the yield from steady returns or return on equity?

3. S = Safe & Sustainable

Richard Branson, billionaire owner of the Virgin Group, recently wrote about the importance of protecting your downside.

In his article, he shared about how he negotiated with Boeing to return the plane at the end of the first year if Virgin Atlantic wasn’t successful. Boeing actually agreed because they desperately needed a competitor to British Airways at the time. The rest of course, is history.

The moral of the story is clear – protect your downside. Your investment, regardless if it is in business or finance, must take into the account the elements of safety and sustainability so that you can generate consistent returns for the long term.

I hope you enjoy my Y.E.S. formula to assist you in deciding on future business or finance endeavours.

To Your Success,

Mario