A beginner’s guide to responsible saving and investing

Today we give you a few ideas on how you can get a bit more responsible with your money.

It all starts with Ethics

Described by the internet as the moral principles that govern a person’s behaviour or the conducting of an activity. They make up our moral code, determining how we think and what we do. So when it comes to expressing ourselves and what we believe in - our money and how we choose to spend it, are powerful statements.

The saying goes ‘Money talks’, and it couldn’t be more true…

When we buy fair trade (think your chocolate, coffee, fruit)

Gloat as we’ve just supported fairer pay for the people usually picking and processing the raw goods.

When we buy free range eggs and milk

High fives all round – as we’ve just supported better treatment of farm animals (clucking great).

When we buy ethical and sustainable clothing

Nice work – we’ve just supported the use of more environmentally friendly materials (hoorah).

It feels good right? We’re basically on the way to angel status (halo optional), as we’ve done good for those involved, and also this big old planet we call home. But what happens when we don’t support these types of businesses, instead using companies that benefit from things such as exploitative labour practices, animal cruelty, and damage to the planet (buzzkill right)…?!

Make a stand

Choosing who you spend your money with, or taking it elsewhere - can send a huge message to the big wigs of companies only driven by profits.

Low pay, poor working conditions and unethical resources are an easy way for a business to keep costs low and profits high… so taking your custom elsewhere speaks volumes, and is usually when we see changes begin to happen.

Where we save and invest our money is no different. Until recently, it’s not been easy to save or invest responsibly. But as people have started taking more of an interest in the impact of their money, the demand has grown, resulting in far more options to choose from!

So what’s responsible saving?

How do you make sure your money is getting more (responsible) bang for its buck… let’s start at the beginning.

When you put money into a savings account, the bank can use it to loan to other customers, and invest in businesses. With a typical high street bank account, you don’t get any say in where your money goes, and they won’t tell you either. So your savings might end up invested in a company like a weapons manufacturer. You didn’t really have a choice what it was used for… until now!

Cue responsible (sometimes known as ethical) savings accounts - designed to use your money by:

Avoiding

Investment in sectors like fossil fuels, tobacco, and weapons.

Actively choosing

Ethical investment like sustainable energy or development loans.

And responsible investments?

Most investments are done through funds, where lots of people’s money are pooled together and invested in lots of different companies. Funds like these may buy shares or bonds in companies that are considered immoral, but profitable. To counter this, more praiseworthy investment funds have appeared that look to favour ‘ethical’ sectors, whilst swerving those sectors that aren’t.

Of course, you can always invest directly into companies that you agree with, like a solar panel manufacturer for example (c’mon, you love solar panels), however picking individual stocks this way can be much riskier.

Why choose responsible saving / investing?

As both customers and investors, businesses depend largely on our financial support- without it they’d probably go bust. So carefully choosing who we do and don’t invest in, can make a real difference to the industries that prosper for the greater good (like the solar panel companies pushing for green, sustainable energy), and the ones that dwindle (like outdated oil companies profiting from fossil fuels damaging the planet).

Did you know

Ethical savings accounts and investment funds used to offer less growth than typical high street products, forcing people to choose between their morals and their savings goals. However, as responsible investment has become more popular, companies are encouraged to make improvements and clean up their acts – meaning they’re often better run and so now easier to stick to your principles and meet your savings goals.

Making your money do good

Saving responsibly means different things to different people. Take tobacco as an investment area for example…

Some people like tobacco...

They enjoy the occasional smoke and believe people are free to choose what happens to their body – so wouldn’t have strong opposition to investing in this type of business (after all, arms dealers are way more dangerous, right?).

Others may have very different views on tobacco...

Maybe they’ve seen someone close to them become addicted to smoking, so therefore think it’s a totally unacceptable business proposition (so up there with selling weapons).

Choosing responsible savings and investment products, starts with questioning your own priorities and figuring out what’s most important to you. Once you know that, then you can then start researching products that match your ethics… meaning you can save, safe in the knowledge that your money is out there doing good, in a way you agree with – happy days!

Here at OneFamily, we offer products whose funds support responsible investments (focussing on contributing towards a low-carbon future). For further information, please visit Our Products page

Please note OneFamily do not provide investment advice. While stocks and shares can have good potential for returns in the long run, their value can fall as well as rise - so there’s always a chance you could get back less than is paid in.