Which ethical saving / investment?

[andygates]

Most of you will know my ninja skilz with money. So I'm throwing myself on your Motley wisdom here: I have a bit of cash that needs to be squirreled away. I'm thinking an ethical 30-day ISA.

Ecology Building Society do one with instant access, 4.1% and a 1% bonus if you leave it alone; Triodos do a 33-day notice, 4.5% one.  What other savings / investment products are out there for this sort of sum and return?  I'm not averse to a little risk - is there such a thing as a green investment fund into which I could buy?  Is a grand worth the fees and faff? 

Help me, Obi Wodge, you're my only hope...

Comments

[skean.livejournal.com]

Much as I'd love to give you advice, I'd steer well clear of anything to do with finances and me.

I had an instant access/30 day ISA once. I managed to take all the money out of it within 30 days of opening it, which wasn't quite the 30 days they meant I think.

[andygates.livejournal.com]

Hey, snap!

[andygates.livejournal.com]

Probably gonna spend it right now on, er, fixing what looks like a cracked bog pan in the bathroom.

Feck and arse.

[simoneck.livejournal.com]

well you can have upto £3000 in a cash isa (per year and amount due to go up at somepoint). Not sure how you make that ethical, it's just an interest account. That sounds like what you are talking about above, but those aren't very good rates. look here
http://www.fool.co.uk/news/your-money/isas/2007/03/21/your-guide-to-best-buy-cash-isas.aspx
And there have been a couple of interest rate rises since then.
Skipton BS have an instant access ISA with 5.5%.
http://www.skipton.co.uk/investments/rates/index.asp
Notice accounts don't tend to give higher rates than instant access, so unless you want such a restriction because of a lack of self control (a comment not an observation), it's not worthwhile.

cash ISA's are very low risk.
If you're prepared for more risk, want ethical investments and are looking for long term savings (>5 years is the usual guide) then a share ISA is the thing for you. Shares tend towards 7% above inflation when dividends are reinvested, so are much better long term saving vehicles. Oneoff investments are inherently a bit more risky since you could invest at the top of the market. That's hard to judge, so it's better to have ongoing (monthly or yearly) investments so things average out.
Lots of options here...and I'll write more later when I have time.

[simoneck.livejournal.com]

Share wise I'd tend to say go for a cheap tracker product. Easy and as low risk as shares can be.
Via most companies, with self trade and the fidelity money builder index tracker (http://www.fidelity.co.uk/adviserclient/select/fidelity/uk/mbukindex.html) for higher effort and lower charges.
Ethical investing is a bit different. L&G for example do an ethical tracker ISA. http://www.legalandgeneral.com/investments/isas/ethical-isa/
The charges are 1%, which is a bit high for what is basically a filtered FTSE350 tracker (you could go more towards 0.5% on a straight tracker). Ethical lists are always a bit debatable anyway (pharma make medicines to cure people - Good, pharma test on animals - Bad) so you might want to look at a number of products and see whether their filter fits your personal idea of ethical.

I could give lots more detail here, but if it's just a one off investment (rather than say the same amount every year) and unless you are certain you want to tie money away for the medium to long term, then I'd probably advise against shares. Go for the best instant ISA you can find, from a building society if it makes you feel better (with the small potential of giving you a vote against any de-mutualization proposals, and carpet bagging a sack of cash if out voted)
Or Zopa (but read up more on them, I'm no expert, it just sounded more on the ethical side).



Also sharewise, it's been reported recently that ethical funds have done pretty well for the last 3-4 years. Now that could be because there's lots of interest in ethical companies and it may continue because of environment and global warming fears, or it could be that ethical funds are moving more towards a peak. That's a personal judgement call.

[simoneck.livejournal.com]

Quick thought, It's not an ISA (so not tax free), but I bet Zopa tickles your fancy.....
http://www.fool.co.uk/news/comment/2006/c060406d.htm

I don't use it and have no idea about the risk. But it gives above bank rates (but will be subject to tax, so less really), and certainly could be considered ethical.
For some reason I think it might be your kind of thing.

[simoneck.livejournal.com]

http://www.zopa.co.uk/ZopaWeb/

Zopa is social banking or banking without the bank, directly connecting depositors with debtors.
Or it's just a low cost bank. I think it's a view point thing.
Anyway rather than deposit money with a bank who then loan in out and charge a large commission for being the middleman. Zopa is a website that connects people directly for only a small commission. There is added risk, but any loan is spread across lots of depositors, meaning it should average out to a lowish risk.

[despaer.livejournal.com]

Kinda depends on whether you want to be able to lay your hands on the money at short notice. And also depends on (a) how ethical you wish to be and (b) how you define ethical behaviour. There are plenty of companies who contribute nothing to global environmental horror but are unethical in a lot of eyes (online gaming springs to mind) and there are plenty who generally treat their employees and customers with great consideration but aren't great for the world long term, such as North Sea oil companies.

Have a think. And follow Mr.Eckfords links.

[andygates.livejournal.com]

Well, I don't want the loot locked away for too long. And I don't think I have enough to make sharemangling worth the commission charges. Anyway, I personally think share-land is Babylon and a fount of evil...

Triodos Bank's Ethical Mini-ISA blurb says they hunt down investment companies who have a greener-than-green pedigree: wind turbines and bike rickshaws and fairtrade and organic farms, that sort of thing. That's pretty darn green by my book and the bloke from Cycles Maximus in their bumf only makes me buy their pitch even more. The 33-day lock-in smells nice to my itchy Ebay finger without being a total hideaway.

Ecology Building Society's Mini-ISA is much the same, I've had one before; the rate is lower but they loan only to green builds in the UK. So if you want to feel like a little green Rowntree, that's the way to go.

Zopa look even more fun. Reading through their blurb, the best returns are on long, high-risk loans but that's always the way. Risk is mitigated by spreading loans among lenders so a £500 loan might be a bunch of £10 and £20 loanlets - the bad debt becomes a statistic at that point, not a spectre. In terms of social lending I know from personal experience that the worse your score, the more you usually need loot, so I'm quite tempted to offer up on that. There's a lending lock-in of 1-5 years.

So I think shares are outside my wedge for now; I'm tempted to split this grand 50:50 between a Triodos ISA and a one-year high-return lending account on Zopa.

You wait, the van'll have its engine fall out now.

[estaratshirai.livejournal.com]

I think that Sierra Club has some options, but I don't know if they play on your side of the pond.

[andygates.livejournal.com]

Don't think they do...

[jonnycowbells.livejournal.com]

Not sure about green/ethical funds perse, but most of the big investment companies will have one or two funds of this type you can invest in under an ISA banner. I personally favour a UK all company index-tracker as a fairly low-cost, low-risk investment. I don't know if anyone does a 'green companies index-tracker' but if they do it's probably your best bet. The makeup of these funds is pretty much computer controled so it matches the index (hence the name) so management fees are kept to a minimum.

I suspect that a lot of green funds will have higher management overheads because of the involvement of real people to check that companies really are ethically sound.

I ended up using fidelity.com for share ISAs. Seem fine to me. I also agree with most of the comments above. You should be able to get 6% on a cash ISA especially as interest rates are looking to go up yet again. Shares should be seen as locking your money away for 5 years or more. And I wouldn't trust Skean for financial advice... :)

[flitljm.livejournal.com]

I use Smile instant access ISA. Rates are 5% with a smile current account or 4.25% without one.
http://www.smile.co.uk/servlet/Satellite?pagename=Smile/Page/smView&c=Page&cid=971088187918

I am very happy with them because it is ludicrously easy to use.

[flitljm.livejournal.com]

... and their Ethical Policy is good enough, but not nearly as lovely as Triodos or Ecology BS.

[simoneck.livejournal.com]

At 5% I'd transfer if I was you.
Skipton have always been pretty good when ever I've compared rates if you're after a recommendation.

[jonnycowbells.livejournal.com]

Or Kent Reliance B.S. - I think we're transferring my wife's in there. Postal service only though...

[jonnycowbells.livejournal.com]

I'm curious as to other's thoughts on something:

Is it better to put £1000 into a 'green certified' financial instrument whose governing institution promises to lend it only to green things. Or is it better to put £1000 in to a non green financial instrument that pays 1.5% better and use the extra £15 a year to give personally to your green charity of choice? (GiftAid? I suppose that makes it more like £20)

I suppose what it comes down to is - would a green charity prefer the ability to borrow £1000 at X%, or get a donation of £20? I wonder if green charities only borrow from green banks, or do they go elsewhere because they can presumably get better rates?

[andygates.livejournal.com]

Don't forget that the green instruments don't only lend to charities. Triodos have the examples of Cycles Maximus and some little market-garden farms, all of which are businesses. Odds are you won't just give twenty quid to either of those.

[flitljm.livejournal.com]

With the non-green instrument, you are investing in non-green things. They could be innocuous, or they could be appalling. Investing £1000 in planetary damage would not be justifiable for a £15 donation to a charity.