If youre considering adding foreign investments to your portfolio, youll find that a clear understanding of Quality of Life and Standard of Living can help you in your research.

Are these terms simply two ways of saying the same thing? Not exactly. Knowing the difference between them can be a useful perception, especially if youre looking to invest in a developing country.

Standard of Living

Standard of Living typically attempts to measure the level of comfort, wealth, and access to necessities that a people enjoy in a specific area.

These are some of the items that are usually associated with Standard of Living:

* Income

* Poverty rate

* Rate of unemployment

* Rate of inflation

* Climate

* Political stability

* Life expectancy

* Access to health care

As a general rule, these are things that are relatively easy to measure and quantify. With these values, you can compare countries, cities or even different periods of time. Its easy to compare things like life expectancy and the poverty rate between any two locations.

Keep in mind that it can be misleading to compare an entire country to another, as different areas within any given country can have very different numbers. Consider the differences between a wealthy suburb of a large city and a poor town in the Appalachia region of Kentucky.

Quality of Life

Quality of Life is more subjective and open to argument. The characteristics that go into deciding a level of quality are usually more along the lines of basic human rights and freedoms.

Some items that determine Quality of Life include:

* Freedom of religion

* Right to vote

* Freedom to move around within the country or in and out of the country

* Right to privacy

* Choice of employment

While these attributes seem common to those in the United States, many of these types of rights and freedoms are not available to others living in foreign countries.

Also, keep in mind that people value different things. What might constitute a great quality of life to one person might not offer much to someone else. For example, technically, Manhattan has a great quality of life, but many people would prefer to live someplace with more land and peace and quiet.

How Standard of Living and Quality of Life Relate to Your Investments

As indicators for possible investments, Standard of Living and Quality of Life are both of interest to you when youre looking to make foreign investments.

While both indicators have their flaws, both are useful tools in understanding the world.

Keep these factors in mind when researching overseas investments:

* Standard of Living is very objective and allows for easy comparison from location to location or from time period to time period. These are things that are easy to measure and quantify, like inflation and lifespan.

* Quality of Life is much more subjective and can vary from person to person. Just as different people have different needs to meet their desires, so too do different companies. A desirable quality of life for a company would be characteristics of the area that might help it be profitable.

So the big question you endeavor to answer is: Is the business that interests you likely to thrive in the living conditions of the area its located in? If, after looking at both indicators, your answer is Yes, then youve found your investment!