Instability of Banks Means Investing in Property Over Saving is More Valid Than Ever

John Brady

John Brady

RWinvest Property Writer

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UK Property

If you’ve been paying attention to the news recently, then you may have noticed several banks collapsing in the US in the past couple of weeks, which is beginning to cause alarm.

For those not in the know, on March 10th, the biggest failure of a US bank since the global financial crisis of 2008 happened in real-time. Silicon Valley Bank collapsed after a bank run and failure to raise capital, which was the second-largest failure of a financial institution in US history.

Following this, a second bank, Signature Bank, has also shut down, and a third has been propped up. As well as this, Credit Suisse was taken over by UBS, otherwise, it would have faced the first threat to a major international bank since 2008.

More than $400 billion has been spent so far to try and dam the river and stop this crisis from spreading further, and by guaranteeing the deposits of Silicon Valley Bank and Signature Bank, the US Federal Reserve has spent over $140 billion.

This crisis naturally has investors worried about where to put their money. Savings accounts have traditionally been known to be the safest way to invest large sums of money thanks to the stability of banks, and industry experts believe that more will follow.

If this stability is taken away, what is a safe investment for large amounts of money?

The answer: property investment.

In this blog, we’ll break down some of the key ways in which property is a reliable and secure investment, and why you might want to consider your options when it comes to saving vs investing your money right now.

Property Is a Physical Asset

One of the main reasons why property is considered such a reliable investment strategy is because it is a physical asset.

This means it is unlikely to see it rise or fall in value dramatically over a short period of time, so investors have more warning if things begin to go bad.

In recent years, property in the UK has grown in value. In the past year alone, the average house price has risen by 9.9% from December 2022, according to the UK House Price Index.

The stability of physical assets means they are more reliable than banks at the minute. For example, Silicon Valley Bank collapsed in a matter of days and were it not for the Federal Reserve then the customers of the bank would have lost everything.

By putting your money into a physical asset like property, it is likely to rise slowly in value and give you enough warning to pull out before it becomes a risk to you.

The Housing Market Is Stable

Ever heard the phrase ‘safe as houses’?

That is more than just a saying, as the UK housing market has proven time and time again its reliability and endurance during tough times.

Every major event of the past two decades has seen the housing market rally faster and more reliably than other investment options, including the 2008 financial crisis and the COVID-19 pandemic.

In fact, a year after the pandemic and the housing market was finding record-high prices in 2021, which continued into 2022 to a record high of £296,000 by the end of the year!

This is important for investors as it means even if the worst happens and we see another major financial crash, the property market can be relied upon to recover faster than other forms of investment like savings accounts.

Property Investment Has Higher Income Than Saving

One of the other main benefits of property investment over savings accounts is the fact that investors get much higher levels of income by putting their money into an investment property.

Buy-to-let investments give investors returns through both rental income and capital gains.

Rental income means you earn a consistent cash flow of money each month from your tenants, while capital gains are the increased value of your property over time.

Compared to savings accounts, where you only achieve returns through interest rates, and you see far higher levels of income through property investment.

Interest rates will likely fall in the immediate future as confidence in banks is lowered due to this crisis, so you will likely earn less money from saving than ever.

Invest With RWInvest

While banks and savings accounts will likely be fine in the long run, it is worth learning about alternative places to put your money.

Here at RWInvest, we have over 18 years of experience in property investment, with expertise in some of the best places to invest in the UK like Manchester and Liverpool.

We have guided thousands of clients towards achieving financial freedom through property investment, and have hundreds of five-star reviews on Trustpilot.

Why not contact us today to see what we can do for you, or try finding out more about how to invest £75k to see a variety of investment strategies suitable for any investor.

RWinvest - Disclaimer
RWinvest - Disclaimer
John Brady

John Brady

John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.


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