Investment and Savings
Most people would agree that saving and investing is one of the best ways to build capital for the future. If you want to save a regular amount each month or have an existing lump sum to invest to achieve capital growth or income, there are many options open to you.
Like most things in life, saving and investment is a question of drawing a balance. On the one hand there are safe, secure and relatively low yielding investments such as Building Society accounts, and on the other are schemes such as Unit Trusts, OEICs and ISAs, which offer the potential for far greater returns, but which also incorporate a greater degree of risk.
Helping you to strike a balance between the two is the job of your Independent Financial Advisor. Each individual will have their own needs and these must be taken into account when building a savings or investment scheme for the short, medium and long term. It is the adviser’s job to balance an individual’s financial needs with their overarching ethical, social and environmental values.
This section is intended to be a general guide to savings and lump sum investments which can be specifically linked to an ethical / green fund. Please explore the sections below then contact us for more information.
- Individual Savings Accounts (ISAs)
- Building Society Investment
- Unit Trusts
- Personal Equity Plans
- Investment Bonds
- Discretionary Fund Management
- Regular Savings
Individual Savings Accounts (ISAs)
A detailed explanation of the ISA, as well as the current Cash ISA rates, is included in our main Ethical ISAs section.
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Building Society Investment
The first home for one's capital is a Building Society savings account; it is generally better on ethical grounds to avoid banks (with some exceptions). Such accounts offer the guarantees of an annual rate of interest and, depending upon the type of account, instant access to your capital. Interest rates can be improved by leaving the money in accounts with notice periods ranging from 30 days to five years.
For individuals, if you are a non-taxpayer interest can be paid gross. If however, you a Higher Rate taxpayer, then after deduction of Basic Rate tax by the Building Society, there will be a further liability to tax. This will obviously reduce the returns available.
Whilst most high street Building Societies are much the same, there is an alternative to consider - the Ecology Building Society. Founded in 1981, this society provides a means of purchase of ecologically sound properties only. Indeed, it was the first society to strictly limit the type of property on which it is prepared to lend money. By investing in the Ecology Building Society you can support ecological projects and earn interest on your money.
For most, it is essential to consider additional forms of investment, designed to build your capital over the medium to long term and to combat the effects of inflation.
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Unit Trusts and OEICs
A Unit Trust/OEIC (Open Ended Investment Company) is a pool of money of a large number of individual investors. These funds are managed by an investment or insurance company, and invested across a broad selection of stocks and shares. The total 'pooled' investment is divided into units, and each investor buys a number of these units when they invest. The value of the units rise and fall as the value of stocks and shares change on a daily basis. By careful management, the investment company will aim to achieve long term capital growth from the ethically screened stocks and shares they select.
The reason for choosing a unit trust/OEIC is the security offered by the pooling of funds, and the greater buying power and risk spreading which can be achieved. As the minimum investment can be as low as £500, this pooling gives the smaller investor the broad investment spread usually only available to the much larger investor.
There are now over 60 ethical and environmental unit trusts available, and careful selection is required to find one(s) suitable to your personal ethical criteria. Our ongoing vetting and screening of these funds enables us to recommend the most appropriate fund(s) for your needs.
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There are now over 60 ethical and environmental unit trusts available, and careful selection is required to find one(s) suitable to your personal ethical criteria. Our ongoing vetting and screening of these funds enables us to recommend the most appropriate fund(s) for your needs.
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Investment Bonds
The investment principle is much the same as that for a unit trust; your money is pooled with that of many other people, to increase the buying power, thereby reducing the risk.
The tax treatment of an Investment Bond is quite different to that of a Unit trust/OEIC. As a general rule, Investment Bonds offer little benefit to non-taxpayers and Basic rate taxpayers (unless there is a special investment opportunity), and offer marginal benefits to some Higher Rate taxpayers.
Discretionary Fund Management
For those individuals with substantial sums to invest (usually in excess of £250,000), Ethical Investors offers a unique Discretionary Fund Management service. Under this arrangement, a personalised investment portfolio is established, in conjunction with a fund manager appointed by you, or by us. Ethical Investors works with clients to establish the ethical criteria to be applied to the investments, and will then liaise with Ethical Screening to obtain a list of ethically acceptable companies. Investment will then be made by the fund manager using this approved list, to meet the financial objectives which have been agreed between the client and Ethical Investors.
We believe that no other financial adviser in the UK can offer the bespoke combination of financial planning advice and ethical research - it is another example of what makes us unique in the ethical investment market.
Full details of this service are available on request.
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Regular Savings
If you have no immediate capital to invest, then it is an essential part of the financial planning process to investigate ways of building capital. Whatever your future needs - university fees for children, house purchase, holidays or retirement - saving on a regular basis is crucial to short, medium and long term financial security.
The range of schemes available included Building Society accounts, ISAs and Unit Trusts. As with lump sum investment, the key to any regular savings plan is balance. There must always be funds available to meet a sudden emergency, but there should also be a part of your savings which is working harder for the medium to long term.
Having built up funds in a building society account, other schemes should be considered. The advantage of using Unit Trust or ISA schemes for regular savings is that they offer flexibility. Payments can be increased, deceased or ceased at any time and without penalty. There is no fixed term, and so the money can be used for any number of purposes over the years.
Minimum contributions vary from company to company, but most are around £30 per month. It is also possible to add one-off lump sums at any time, perhaps from a Building Society account which you feel may have built up too high a sum, and the money could be working harder in a Unit Trust or ISA.