Ethical S&S ISA advice please

Blackavar

Hi.
I have a colleague, late 20's who is looking to grow 10K over time better than the current bank rates. He's had this cash in a guaranteed bond and the current rate to reinvest for a year is 1.17%. I have gone to great lengths to explain the risk aspect and the ongoing potential anxiety but he wants to invest this into an ethical fund.
I am not 'advising' as not qualified to do this so just offering information.
My suggestion would be to look at funds: Vanguard ESG Developed world and Fundsmith Sustanable equity T. These seem to tick his boxes although the latter has larger fees. I will also suggest that as a new investor, he feeds this in maybe 2K per month just to get used to it. I would also suggest a low cost platform Iweb that I use myself which although basic, is adequate for low investment activity.
I just need a sanity check that this may be the way to go for him?

grumiofoundation

iWeb is £5 per trade?

Therefore if he feeds in £2000 per month thats will be £25 fees per year - 2.5% - which is high. (£50 -5% in first year).

He would be better with a % based fee system for this amount of money. 

See comment below.

Blackavar said:

I have a colleague, late 20's who is looking to grow 10K over time better than the current bank rates. He's had this cash in a guaranteed bond and the current rate to reinvest for a year is 1.17%. I have gone to great lengths to explain the risk aspect and the ongoing potential anxiety but he wants to invest this into an ethical fund.

What length of time? - if 20 years seems sensible to go 100% equity. 
If 2 years investing at all is pretty risky.

bowlhead99

grumiofoundation said:

iWeb is £5 per trade?

Therefore if he feeds in £2000 per month thats will be £25 fees per year - 2.5% - which is high. (£50 -5% in first year).

He would be better with a % based fee system for this amount of money. 

You are out by a factor of ten on the maths - perhaps a decimal point in the wrong place.

Assuming he invests £2000 each month into one fund each month (if he wants two funds, perhaps alternating which fund he invests in from month to month until all his money is invested), the fee of £5 for investing each £2000 (or £25 for the whole £10,000) would be 0.25% in year one; and the fee on that £10,000 would be zero in year two, three, four etc because the money has already been invested. 

So, a system that charges a platform fee of an ongoing percentage of the total account balance each year is unlikely to be a lot cheaper, because most places doing that are 0.15-0.3% every year and some are a lot more.

grumiofoundation

bowlhead99 said:

grumiofoundation said:

iWeb is £5 per trade?

Therefore if he feeds in £2000 per month thats will be £25 fees per year - 2.5% - which is high. (£50 -5% in first year).

He would be better with a % based fee system for this amount of money. 

You are out by a factor of ten on the maths - perhaps a decimal point in the wrong place.

Assuming he invests £2000 each month into one fund each month (if he wants two funds, perhaps alternating which fund he invests in from month to month until all his money is invested), the fee of £5 for investing each £2000 (or £25 for the whole £10,000) would be 0.25% in year one; and the fee on that £10,000 would be zero in year two, three, four etc because the money has already been invested. 

So, a system that charges a platform fee of an ongoing percentage of the total account balance each year is unlikely to be a lot cheaper, because most places doing that are 0.15-0.3% every year and some are a lot more.

Yeesh - thats bad maths by me!

Shouldn't have stayed up to watch the American football!

Albermarle

https://www.triodos.co.uk/ethical-isas/ethical-stocks-and-shares-isa
Not cheap but ethically sound 

xylophone

If he wants to use Vanguard  and the amount invested  will be modest  he might consider their ISA?

https://moneytothemasses.com/saving-for-your-future/investing/vanguard-investor-uk-review-is-it-the-best-in-the-market

Blackavar

xylophone said:

If he wants to use Vanguard  and the amount invested  will be modest  he might consider their ISA?

https://moneytothemasses.com/saving-for-your-future/investing/vanguard-investor-uk-review-is-it-the-best-in-the-market

Thanks but I think it’s a bit cheaper holding the Vanguard fund on IWeb due to ongoing annual charges with Vanguard direct as opposed to the one off fixed costs with iWeb. Thanks for the link though - some interesting info there.

thegentleway

Passive funds aren't that ethical. If you really want to invest ethically you should consider active funds.

A_T

thegentleway said:

Passive funds aren't that ethical. If you really want to invest ethically you should consider active funds.

there are plenty of ethical indexes tracked by funds e.g.:
Vanguard ESG Developed World All Cap Equity Index Fund which tracks the FTSE Developed All Cap ex Controversies/Non-Renewable Energy/Vice Products/Weapons Index; or
iShares MSCI World ESG Enhanced UCITS ETF USD which tracks the MSCI World ESG Enhanced Focus NET Index

colsten

Albermarle said:

https://www.triodos.co.uk/ethical-isas/ethical-stocks-and-shares-isa
Not cheap but ethically sound 

Errrm. https://www.brusselstimes.com/opinion/120168/european-banks-implicated-in-cambodias-microcredit-scandal/

Albermarle

colsten said:

Albermarle said:

https://www.triodos.co.uk/ethical-isas/ethical-stocks-and-shares-isa
Not cheap but ethically sound 

Errrm. https://www.brusselstimes.com/opinion/120168/european-banks-implicated-in-cambodias-microcredit-scandal/

Did you notice who wrote this 'opinion' article ? The Cambodian opposition leader in exile in Paris, so I suspect it is not 100% factually correct.....