Ethical Children's Savings Accounts
There are now many ways in which you can save and invest ethically for your child, which will last far longer than the latest must-have toy. These options include:
- Child Trust Funds
- Children’s savings accounts
- Unit Trusts and ISAs
The good news is that there are some green and ethical options available for each.
1. Equity based Child Trust Fund
Under the Government’s Child Trust Fund scheme, every child born after August 31 2002, gets at least £250 in the form of a voucher which can then be put into a Child Trust Fund. Parents and Grandparents can also invest up to £1200 a year between them to boost the fund’s value. All income and capital gains are tax-free.
There are two main ethical equity based child trust funds to choose from:
This is a stakeholder account, meaning that your money is predominantly invested in shares, but gradually moved into lower risk investments after the child’s 13th birthday, thereby protecting any capital gains made. The money is invested by leading investment management company New Star.
Family Investments advises that the monies won’t be invested in companies that generate a significant turnover from unethical areas such as: alcohol, tobacco, arms, ozone depleting chemicals, testing of cosmetics on animals, intensive farming, pollution or human rights abuses.
Family Investments are a leading Child Trust Fund provider with over 400,000 accounts and provide child trust fund accounts for Barclays, the Post Office and Sainsbury’s Bank.
The Co-operative Insurance Society (part of the Co-operative Bank) in association with the Children’s Mutual offers a stakeholder child trust fund account. The money is invested into a fund that tracks the FTSE4Good UK Index, which was launched in 2001 and was designed to make it easier for people to invest in socially responsible companies.
The FTSE4Good index adopts a more inclusive approach meaning that whilst tobacco companies, arms manufacturers, nuclear power companies etc are excluded, other companies such as BP are included.
2. What if your child was born before September 2002?
Children born before the Government introduced Child Trust Funds need not miss out. There are a number of Unit Trusts and Investment Trusts aimed at children, but it’s also worth remembering that you don’t have to restrict yourself to these. You can take out an ISA, which can be held on behalf of the child but “designated” with the child’s name.
There is a wide choice of ethical ISAs and Unit Trusts to choose from – so check out our Ethical ISA best buys and Ethical Unit Trust best buys to find out more. Remember, all income and capital gains are tax-free with an ISA.
3. Cildren’s savings accounts
Triodos Bank and the Co-operative Bank both offer ethical children’s savings accounts.
The Triodos Young Saver account helps you save for a secure future for your children, but not at the detriment of other people. You can choose to operate the account on the child’s behalf from birth to 16, or hand over the reins when they’re 7 years of age. The Triodos Young Saver also allows you to:
- Start an account with as little as £25
- Save regularly with a standing order and add lump sums
- Earn a bonus of 1% at the end of 5, 8 and 10 years
The Co-operative Bank offers two children’s savings accounts:
- Bonus account - which teaches children the basics of looking after their own money; and
- Future fund – for saving for the future
Both pay good rates of interest and the bonus account pays a cash bonus every year.
Go to the top of the page
