If you’re a global investor, there is one country in the world today that is screaming value for money… and it’s the UK.  Why so I hear you cry?  Well, there are two main reasons why, the same two reasons in my view that has made the USA a value for money buy over the last 2 years.

The first reason is a weakening currency; typical of an economy in a downturn, one that is importing more than it is exporting or of one that is printing vasts amounts of money, or  potentially all three.  The weakening of a currency, relative to your own means better value purchases.  Many Brits indeed found that to be the case when buying American over the last few years at as much as 2 Dollars to the Pound.  Times they have a-changed though!..Xe.com tells me that 1 British Pound Sterling buys me but 1.38 US Dollars, a fall in the last 9 months of around 60 cents, or in percentage terms,  approx. 31%!!!  So if you’re making an investment purchase in the UK, there is certainly inherent value compared to even the most recent past.

The second major reason is falling house prices, which begins to give this type of investment market inherent value too.  Property prices have fallen approx. 20% from their peak 18 months ago, and therefore considered better value.  Discounts are also being offered in the region of an extra 20% on distressed and new build sales, which provides further value.  Therefore investors are  taking the view that these discounts provide built-in equity in case we have another year of falls.

Finally, rental yields are now in the region of 8-9%, which means on the typical mortgage, cashflow positive deals of around the £100 ($138) per month mark are starting to appear.  With interesting new 12 month insurance policies available from major brands to protect rental income, these deals are incredibly attractive.  Some valuers will even pay for your valuation for you so no expenses are necessary until you know you can get a mortgage and the valuation is accurate.

So it’s easy to see why property investors are taking the view that the current UK deals are great value, income producing straight away and extremely secure.  On top of this, a long term view means the profits are much more substantial than in a boom.  We are all taught to buy low, sell high.  Well here is the chance to put the first part of that equation into practice…whether it is property, or an alternative investment, companies like Discover and Invest can help you to see why the UK is worthy of your attention.

My morning started with Take That on the radio telling me this could be the greatest day of our lives, and then a report from the British Bankers Association informing me that the mortgage lending rose in December, indicating the start of a possible recovery for our shattered economy. Coincidence?

With nine out of ten news stories indicating the end of the financial world, it is refreshing and relieving to finally hear some positive news on this cloudy Monday morning.

Figures indicated that approvals for house purchases in December were around 22,000, up from around 17,300 in November. This figure is still 46% down on this time last year, but to see an extra 5,000 mortgages approved in what is traditionally one of the weakest months for selling houses, is excellent news and a sure sign that investors and home buyers are now starting to understand it is a great time to buy, with some amazing bargains on the market.

2008 was undoubtedly a lot harder for mortgage lenders and estate agents than the previous few years, with borrowing at a much lower rate, and the BBA backed this up.

BBA statistics director, David Dooks, said of the latest data:

“This first opportunity to compare 2008 with 2007 shows that gross mortgage lending by the main high street banks totalled £170bn, some 23% below 2007’s total of £221bn. However, lending by the rest of the mortgage market was half the previous year’s total, showing how mortgage lending became much more concentrated during the year. The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality.

“Consumer credit was very weak in December as people reined in their credit card spending, despite early Sales and heavy discounting by retailers. This consumer caution was also reflected in personal deposits, which rose strongly.”

There are obvious problems at the moment but we are starting to see a rise in house sales, more mortgage companies offering more products and a general raise in enquiries reported by many estate agents. The question that will be asked is will this continue for the next few months or even the year, or will this rise only last a couple of months before things take another turn for the worse.

We will not know until it happens and I am sure there are more ups and downs ahead, but we must take notice of the fact that more people are now buying homes than in November, which in turn will not only help the economy but also give some relief to the many companies related to property.

With Discover and Invest launching our first Property Investment deals next week, this news is more welcome than a cold beer on a summers evening.

It’s not that difficult to notice that we are in the midst of an economic crisis is it? This thought struck me during the weekend whilst I was on a sports forum and I noticed topics not relating to the beautiful game but to the worsening value of the pound. In amongst topics debating the visual ability of the referee there are posts relating to the cost of having to put up with such nonsense.

This is just one such example. Running a search for keywords such as ‘economy’, ‘credit crunch’ and ‘interest rate’ pulls up an astonishing amount of topic threads not related to the subject of the economy, yet find themselves containing posts referring to it.

I read with interest this morning an article on this afternoons forthcoming pre budget report in which Chancellor Alistair Darling is set to announce a £20billion fiscal stimulus. In the red corner we have Darling stating that we must act now to avoid making the same mistakes we did in the recessions of the last few decades, whereas in the blue corner it is argued that increased public borrowing will lead to higher taxes further down the line.

For me there are elements of truth in both. Whilst I would certainly support the notion of acting sooner rather than later, I would agree that making sure the credit markets are working again is every bit if not more important than any fiscal boost.

Either way, we will all have to watch how things progress in the oncoming months, most notably in January which is traditionally a ‘quiet’ month for many of us. Personally I’m not convinced that raising the tax bracket for higher earners will be as effective as hoped nor do I think that the 2.5% cut in VAT will be either, although I welcome both. The cut in VAT is supposedly to encourage spending again but in reality it will fail.

Retailers are feeling the crunch as much if not more than most, not a day goes by without hearing of another shop, pub or restaurant going to the wall. The cut in VAT gives them every opportunity to raise their prices, and just watch them do so! We live in a capitalist society and there is nothing to stop them.

At the time of writing, the past fortnight has seen nothing short of turmoil grip many of the worlds banking systems, not least our own. As confidence falls even further it seems many depositors are seeking more secure alternatives than to remain reliant on their trusted high street institutions. It seems so long ago now that the whole Northern Rock fiasco was gripping the news and sending waves of panic through its customer base. The rest of us, myself included, simply watched on and took a ‘not in my back yard’ attitude towards the banks demise as ‘our money is elsewhere’! If only someone could have shown us a vision of the future at that time and I wonder what the reaction would be. Actually, can someone show us a vision of the future now, please?

Fast forward to the present and we have witnessed the fall of a number of leading financial institutions. We all know them, so I’ve no need to list them, and an alarming number in addition are beleaguered and set to dominate the headlines over the oncoming weeks. It’s quite frightening, but now it seems people are beginning to take heed and start to ask questions of their own potential security.

So it’s just as well then, that the government has now raised the bar. Following the Northern Rock affair the government stepped in and introduced a state guarantee of £35,000 – which is great if you fall within that threshold – and has now increased it to £50,000 in the wake of recent events. But what of the millions of people in this country with savings in excess of £50k? It would seem some of our fellow EC members have the solution with both Germany & Greece this week following Ireland’s example of offering an unlimited guarantee for two years. Of course, many have moved fast and taken the Irish banks up on their offers!

So indeed these funds are now secured for two years, but what happens thereafter? How certain are we that the financial markets will have recovered by then? Perhaps the classic British eternal optimism is on display once again as we view this as a temporary glitch, despite leading figures seemingly concerned about the long term effects this time round. The great depression & recessions of last century have been bandied about in the press with many speculating that this current situation will eclipse it. So the question remains, where can people securely deposit their savings, and can they do it here in good old blighty? The answer is yes.

If you are reading this blog you are most likely aware of the Discover And Invest stamp investment product that is available currently. Have another read by clicking here. Not only is this a secure vehicle for investing your savings over the next five years, but once the five years have passed you will be entitled to not just the return of your capital, but 25% in addition as a bare minimum, worked out as 5% per annum compounded. As a plus, there is every opportunity for the investment to emulate private collections currently realising at up to 13-33% per annum. And over five years? – do the maths!

In short, in the current economic climate, what better way to keep your money here in the UK, securely & with the guarantee of capital growth?