Category Archives: banking

Ethical ISAs

With the tax year ending April 5th, many Britons are thinking about where to stash the few extra pounds we’ve managed to scrimp and save this year.

My choices are limited because I only have a meagre bit of money to put away.  If you’ve got under £3000 and you’re a scardy cat who hates risking their money (like me) then you can’t go wrong with a mini-cash ISA.  They are like a high interest savings account, but the interest is tax-free. 

Today there are a number of ethical ISAs on the market.  I wanted to switch to one of these, but unfortunately, I opened an ISA with Halifax (grrrrrrr!) two years ago and cleared it out this tax year – so they informed me I can not open another one with another bank in the same year. 

But for those of you who haven’t done anything on that front yet, you could check out the Co-operative Bank’s cash mini ISA.  It’s interest rate is 4.75 per cent, below the best rates of about 5.4 per cent but as with all Co-operative Bank accounts, it follows a strict policy to invest ethically.  The policy is extensive, avoiding companies trading in arms, tobacco, fur or animal testing and supporting companies who uphold human rights, practice fair trade and social welfare.  To read their policy, visit their website: http://www.co-operativebank.co.uk

The sole reason I haven’t switched to this bank yet is that trusted friends banked with them for years because of the Co-op’s great ethical policy, but finally switched because they were SO frustrated with the poor customer service.  Bad service makes me crazy, so I’ve so far avoided this bank.

If you’ve got a bit more cash to spare, think about the Marks and Spencer ethical fund.  Launched in February this fund invests in companies that make a positive contribution to the environment and avoids the bad guys (arms, tobacco etc.).   The fund has so far received solid reviews from financial analysts. 

It’s a unit trust, which is a number of stocks jointly owned by individual investors who purchase units but managed by a professional trader.  You can count it as part of your ISA for stocks and shares, so any returns will be interest free.  The low overhead (you can start with as little as £100 or monthly investments of £25) means even us little guys can try our hands on the stock market.  M&S is also waiving the initial 1% set up fee for anyone signing up before May.  

But beware, don’t play the stockmarket unless you’re prepared to keep your money in for at least five to ten years.  And there’s no guarantee that you’ll get your money back!  So the risk-averse should run.  

Intrigued? To read more about it go to: http://www6.marksandspencer.com/pages/default.asp?PageId=home&Product=UT

Happy saving!

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