The foreign exchange (FX) markets have provided a highly liquid revenue stream for many investors over the years. The volatile nature of trading has prompted the creation of many complex financial instruments including equity derivates namely forwards, futures, spots and options. The use of these products is reserved for “sophisticated investors,” a category defined by law which removes the protections available under the Financial Services Act.

The question remains as to how investors without an in-depth knowledge of the financial markets, or indeed those who want to invest in a less speculative product can exploit FX. September 2009 witnessed headlines of the pound reaching near parity with the euro. The pound also saw falls against the dollar, prompted by renewed speculation the Bank of England will cut the rate it pays financial institutions on deposits.

The collapse of the global banking system has caused many investors to lose trust in financial institutions. Is it therefore time to return to the old fashioned investment in “bricks and mortar?” Purchasing property is an investment in a tangible asset, the value is determined by supply and demand. Britain, being an island has limited supply and growing demand through immigration. Property is not a derivative gambling game where the value is determined by analysts modeling complex calculations of underlying assets or sub prime lending. In property investment, the insolvency of the property’s management company will not lead to potential loss of the asset. Unlike in a Bank where the guaranteed protection of your assets under a scheme is capped.

Of course, sub prime lending was the catalyst for the recession in the United Kingdom (UK) and this resulted in Britain seeing some of the steepest house price falls in the world over in the past two years. However Banks have now tightened their credit procedures and tighter government regulation such as the Turner review has the aim of rebuilding the economy and subsequently the housing market. Now seems to be the opportune time for cash rich Europeans and Americans to take advantage of the property price falls and the favorable FX rates to purchase property in the UK.