A Junior ISA (JISA) is a great way to get your children interested in saving and investing from an early age. By choosing ethical investments for their JISA, it can also inspire them to make a positive difference to the world they will be growing up in.
Yes, money is tight at the moment. But what if you could get in on the JISA act without spending a single penny of your own? According to Hargreaves Lansdown, by depositing £20 a week – less than the child benefit payment most people get for their first child – in a Stocks and Shares JISA from the week they’re born, you can amass an impressive £26,452 by the time they reach age 18 (assuming an average growth rate of five per cent on your investments).
That’s a pretty useful amount towards his or her further education or first home. Currently, the cost of tuition for the average university student in the UK is around £9,250 a year, while the average deposit on a first home is a shocking £53,935. With these costs rising fast, it pays to think earlier rather than later about the best way to meet them.
You can invest a maximum of £9,000 a year into a JISA, tax-free. Once you’ve opened the account, friends and family (and anyone who wants to) can deposit money into it too. Your child can access the pot once they reach the age of 18, and can start managing the portfolios themselves from age 16.
There are a number of online platforms where you can invest sustainably on behalf of children, while teaching them about overcoming environmental and social challenges in an age-appropriate way.
Here, we round up eight Good options for platforms offering ready-made portfolios for an ethical JISA (ie the investments are all picked for you, meaning minimum effort required):
Dedicated sustainable investment platforms/apps:
Annual fee: 0.25 per cent
Fund management fees: Typically ranges between 0.8 per cent and 1.8 per cent, per year
Minimum investment: £25 per month or £100 lump sum
The Big Exchange, co-founded by The Big Issue, is an online investment platform which only lists funds that are proven to be making a positive difference to the planet and its people. All of its funds are actively managed, which means there is a human decision in every investment.
Every fund on the platform has passed an impact assessment so you can clearly see the type and level of positive impact they’re making to people and planet. Each one is awarded a gold, silver or bronze medal, with gold having the highest ability to bring about positive change. You can choose funds that tackle the issues you (and your child, depending on their age) care about most.
The Big Exchange is a Good With Money ‘Good Egg’ company, meaning it can prove it makes a positive impact on people and planet as well as to its customers and staff.
For more on The Big Exchange, see our full review.
Annual fee: 0.45 per cent + £1 monthly subscription
Fund management fees: 0.44 per cent on average
Minimum investment: £5
With the CIRCA5000 JISA, parents can choose to invest in companies from three themes – people, planet or people AND planet – at a risk level they feel comfortable with and from just £5.
CIRCA5000 is a certified B Corp, which means it is committed to positive social and environmental performance, public transparency, and legal accountability.
The platform selects global stocks and shares, bonds and cash across the financial markets to ensure that investors’ money is going into the top companies making an impact in the world. For every referral CIRCA5000 receives from an existing investor, it plants a tree through One Tree Planted.
CIRCA5000 uses passive Exchange Traded Funds (ETFs) – otherwise known as index trackers – to invest across markets. As these funds are not ‘actively’ managed, it makes them comparatively cheap to run. However, the flipside of this plus point is that it’s harder to achieve a high degree of positive impact, compared with funds that have managers that actively stock pick the right companies.
For more on CIRCA5000, see our full review
Annual fee: 0.99 per cent for investments up to £100,000, then reducing
Fund management fees: Typically ranges between 0.25 and 0.6 per cent per year
Minimum investment: £250 per month or a £1,000 lump sum
Simply EQ is an online and phone-based investment service from Good With Money ‘Good Egg’ company EQ Investors.
You can choose from Simply EQ’s ‘Positive Impact‘ or ‘Future Leaders’ portfolios for your child’s JISA. The Positive Impact portfolio actively screens for social and environmental impact and is designed to maximise profit while also making a positive difference to the planet and its people. Future Leaders “invests in the sustainable leaders of tomorrow.”
The fact that Simply EQ’s online portfolios are actively managed means they come with a slightly higher charge than their competitors, such as Wealthify and CIRCA5000 which invest passively through low-cost ETFs. It also means that you can feel a little more confident about the positive difference your money is making.
For more information on Simply EQ, see our full review
Robo-advisers offering ethical JISAs:
Annual fee: 0.75 per cent up to £100,000, 0.35 per cent beyond
Fund management fees: Average of 0.31 per cent
Minimum investment: £500
Nutmeg is one of the UK’s biggest ‘robo-advisers’ – this is where investments are made with minimal human intervention. It offers a range of proactively-managed ‘socially responsible’ investment portfolios for your JISA that invest according to ethical principles.
These invest in ETFs that avoid companies engaged in controversial activities, while focusing on those that lead their peers on ESG (environmental, social and governance factors).
Using an ESG screen devised by global market aggregator MSCI, each portfolio carries a score indicating how ethical or ‘socially responsible’ it is, ranging from one for the least to 10 for the most responsible.
Unlike sustainable or impact investment funds that target specific outcomes – for example a reduction in Co2 emissions via a clean energy investment – Nutmeg’s portfolios invest in main markets using the MSCI screen to filter OUT companies that do not meet its criteria (for example tobacco and controversial weapons).
Annual fee: 0.6 per cent
Fund management fees: Average of 0.7 per cent (much higher than its standard plans at 0.16 per cent)
Minimum investment: £1
Wealthify, a subsidiary of Aviva, is a UK-based robo-advisor which invests in ETFs to keep investors’ costs low. Like Nutmeg, it uses an automated process to create portfolios to suit a client’s appetite for risk.
When you sign up, you can choose one of five ‘ethical plans’. These aim to avoid companies involved in four main activities that are harmful to society and the environment. They are tobacco, arms, pornography and gambling. Wealthify also aims to limit profits received from oil and gas.
Instead, it proactively invests in companies that are committed to making a positive impact through their ESG practices. Find out more about Wealthify’s ethical plans here.
Traditional providers offering ethical portfolios for a JISA:
Fund management fees: (covered in the above fee)
Minimum investment: £10 a month or £100 lump sum
Annual fee: £4.99, £9.99 or £19.99 per month depending on your plan
Fund management fees: Varies from 0.2 to one per cent
Minimum investment: £25 per month or any lump sum
Interactive Investor (ii) stands out for its flat fees, but whether this is good value for you personally will depend on how much you are investing in your JISA.
ii’s ready-made ethical portfolio – ‘Sustainable Growth’ – invests in 12 ethically-focused funds. To open a JISA with ii, you must already have an active ISA or Trading account.
Annual fee: 0.2 per cent
Fund management fees: 0.75 per cent
Minimum investment: £50 lump sum
Bestinvest offers two ethical portfolios for a JISA (called the Evelyn Portfolios), according to the risk level you are comfortable with.
- Evelyn Sustainable Adventurous Portfolio Clean
- Evelyn Sustainable Cautious Portfolio Clean
Both invest in companies that aim to have a positive effect on the world while avoiding those that have a detrimental impact on society or the environment.