A woman doing some DIY

What to invest your money in during the recession

Times are tough are we agreed?

The cost of everything over the past few years, such as food, taxes, petrol, have all shot up, but houses unfortunately are not the golden eggs they used to be so what should you do you do with your money?

Every day when we read the papers, talk to people, watch the news on TV, it all seems doom and gloom, in fact with prices across the UK now dropping, being an owner of a house doesn’t seem to be the sure fire bet it used to be!

Instead of drawing all your money out of the bank and putting under the mattress (!), how else can you “protect” your money?

I’m going to suggest something that no-one else has yet………………

Instead of hoarding the cash, or leaving it in the bank for greedy bankers to give it away to some other greedy bankers, why not SPEND IT INSTEAD!!!!!!!!

Yes, you read correctly……………

Money doesn’t make us happy, it only makes us happy when we give it away! i.e., when we receive goods or services, in exchange for money.

All those people (and local councils) who invested in shares in banks like Northern rock, Bradford and Bingley etc, have lost their money! People, who invested in anything to do with Iceland, have lost the lot, and it would seem that includes our council tax too!

What to invest your money in

So are “bricks and mortar” still the best option?

Well, despite falling house prices, yes I would say this is still the case, just don’t expect a quick return.  The value of houses goes up and down over time so view them as a LONG TERM investment

Remember when houses used to be homes and not investments?

With what has happened over the past few weeks, this looks like this should be the new way of thinking. Carry on investing in your home. Spending money on it, will reap rewards in the future as your home will be more marketable than others who have not spent money, plus when and if the market recovers, yours will be amongst the first to sell!

So, this is the idea……….

At present, anecdotal evidence suggests a very negative outcome for the economy in the next few years. That’s means our money possibly won’t go as far, will buy less, and with everything happening with the banking system, it’s not as safe as it once was; so what IS safe? Where can you put your money with a view to investing it?

Why not invest it in some improvements for your house?

No, I’m not crazy, read on…………

House prices in the UK have experienced phenomenal growth over the past few years, a situation that could not possibly carry one.

The warning signs have been in place for some time, with top surveyors reporting that houses were “overvalued by at least 40%”, and recent drops in house prices, and the stalling of mortgage markets, seem to suggest that this has largely been true.

Many people will probably think at this point “so why should I throw money at my house?”. Well, although prices are dropping, they won’t drop for ever, and will eventually bottom out, stay static for a while, and then one the economy recovers, will start to go up again, it could be suggested.

One only needs to look at historical house price data, and historical economic data to see that economies are “cyclical”, that means that a clear pattern emerges of prices going up and down, and values of thing such as houses, going up and down.

lose money man

What about the long term?

A long term view is needed to survive this particular crisis, and I believe that a long term view needs to be considered as far as your house in concerned. Houses still require maintenance, and homeowners still like to make their house look nice, and be warn and comfortable, in fact some people wont be affected by the downturn as much as others, senior citizens with no kids or mortgage being a prime example.

Instead of putting your money into the bank, or under the mattress, why not spend it on your house? As the saying goes, “Don’t move: Improve!”.

In fact anecdotal evidence suggested by the building trade, seems to point to a recent trend of homeowners getting a variety of home improvement jobs done on their house, including obvious jobs that have to be done, such as exterior rendering, damp proofing, replacing damages or broken items or features on the house, but also a new trend is emerging.

Many people are now taking “the bull by the horns” and spending their money on their homes, despite the falling markets, and they are doing this for a variety of reasons.

Despite the credit crunch, some people still are moving and selling, although that figure is a drastic reduction from this time last year, but of the people who DO end up selling, (and some do),  many of them have taken steps to ensure that their house WILL sell.

These are the smart people.

My advice would be to concentrate on the EXTERIOR, not the interior.

When most people move into a new house, they normally decorate the interior themselves, to their own taste, so if you want to sell, forget the inside! Also make sure that things are FIXED. Get someone to sort any leaks, any cracked pebbledash, loose or hollow render, get rid of green mould, fix any loose slates or tiles, mow the front lawn if applicable. MAKE AN EFFORT!

People who are making an effort are making sure the outside walls are freshly painted, and any estate agent will tell you, if you want to sell your home, painting the outside and clearing the front up is perhaps the best and most effective thing you could do to your house.

Basically you can do this yourself (and it’s a LOT harder than it sounds), or you could get a contractor in to do it for you. Doing it yourself, especially if you don’t know what you’re doing or have little experience in painting a house, can end up as a disaster! As far as choosing a reputable contractor, that’s another article altogether, but in brief, getting someone to sort the exterior of your house out, in preparation to sell is not as painful as it seems if you follow this general advice.

How to avoid being ripped off.

•1)      DO NOT even entertain offers from ANYONE who knocks at the door unannounced with some “special deal” or such like. If they have to resort to sending spotty teenagers around in feral packs, onto housing estates, to knock strangers doors, they can’t be any good can they?

•2)      Be very wary of junk mail also. Many companies, especially exterior wall coatings companies, double glazing companies, damp proofing companies and driveway installers, frequently trade for a year or so, make the money they want to, and then close down, not paying any tax, and not honouring any guarantees. Watch out for envelopes (usually a dark colour) that come through the door with a leaflet or letter, and a pre paid reply card. DO NOT REPLY TO THEM! Your details would also be sold on to marketing companies in many cases.

•3)      Ask friends, neighbours and family for recommendations or approach trade organisations or reputable surveyors, for someone to paint the outside of your home, do your driveway or some other related exterior home improvement. MAKE THE EFFORT, do the research! Basically if you want the best outcome, you’re going to have to get up out your chair and do something about it!

•4)      If and when a contractor or a rep from a wall coating company does come round, make sure you DON’T get pressured into signing on the day. Believe me, trades people are desperately looking for work at present and the ball is in YOUR court. Thank them for coming out to see you and in preparing the quote, but explain that you want to think about over the next few days. (In my own experience running an exterior wall coatings company, quotes given by competitors can differ wildly, so get some comparisons before you decide).

•5)      (and as a footnote, and to fit in with these frugal times),  don’t take out a payment plan or finance agreement as you will most certainly pay a fantastic amount MORE for the work. That is also depending on whether any credit or finance is actually available in the market! Basically if you can’t afford it, don’t have it! Talk to someone you know who is a senior citizen, we could all learn from these people. Back a few years ago, before cheap credit, if you could not afford something; you quite simply would not have it. If you wanted it badly you would SAVE UP YOUR MONEY and then buy it! Simple really.

So there we are, and a rather controversial view given the current economic climate, but hey, what can you do?

So my advice would be to spend any money you have on your house, you will eventually reap the rewards, but don’t expect a quick return on your investment, and hey, why not? If you don’t spend it, either your local authority, your building society or your bank may possibly lose it, so make hay while the sun shines eh?

SEEN THIS ARTICLE SOMEWHERE BEFORE? Yes it was submitted to an articles site in 2007 and was scraped around the world by people so we decided to take it back and publish it, edited, for the first time on our site.

© Guy Alexander Bell. 2007 and 2012

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