Liz Berwick is a fairly typical saver. The 35-year-old mother of two hopes to put away around £3,000 this year by saving regularly into a tax-free Isa. The question is, where?
"I have become quite disillusioned with the high-street banks," she says. "They're quite impersonal and it seems to be all about profit, not about supporting people and communities."
Liz and her husband Richard have two young children: William, aged 5, and Jacob who's 11 months old. Liz works from home running Simply Scrumptious Cupcakes, baking cakes for weddings and parties and other events.
"Since I've had children, I've become very conscious that I want them to grow up in a world that is fair," she says. "So we try and live as green as possible, for instance by buying fair trade and organic goods where we can."
Her disillusion with the mainstream banks and eagerness to ensure her money is used to help the world, rather than fund nasty things such as the arms trade or oil companies, led her to the internet to search for ethical finance.
There she found a link to Triodos, and after further research she decided she liked what the bank stood for. It uses people's savings to lend money to organisations involved in activities such as organic food and farming, renewable energy, recycling and nature conservation projects.
"I know my savings don't make a difference in the wider scheme of things, but for us it's a significant amount," says Liz. "If everyone thought more about how their money is used, it could make a big difference."
In fact, many people across Britain do plan to stop investing in so-called "nasty" sectors, according to new research. It's part of the global "divestment" trend, where millions are choosing to unload shares, bonds or investment funds that are unethical or morally ambiguous. (Divestment is simply the opposite of investment.)
More than one in 10 investors say they plan to remove any investments involving fossil fuels over the next 12 months, according to the research, conducted for Triodos. But among younger people the trend is even more marked, with the number almost quadrupling to 40 per cent for 18 to 34-year-olds.
The research also suggests that men are more likely to divest than women.
However, while the majority of investors say they would be concerned or even take action if their money was being used to support unethical activities, more than a third of savers admit they don't actually know what their financial providers are doing with their money.
And even though 86 per cent say they would switch providers if their stocks and shares Isas were investing in anything unethical, actual switching rates are much lower – only 39 per cent of investors have ever switched.
Huw Davies, head of personal banking at Triodos Bank, says: "There's strong demand from investors to support more sustainable sectors, and also to divest from sectors like non-renewable energy – especially from the younger generations.
"However, a lack of awareness of how money may be used by banks may mean that many investors are actually supporting industries they are ethically opposed to – through their Isas and other investments."
According to the Ethex Positive Investing Report, a record 1.7 million UK people are saving or investing £3.25bn directly in businesses that have a positive social or environmental impact. That includes £2.1bn in credit unions and £800m in ethical banks and building societies.
You have just over three weeks to make the most of the current tax year's 2014-15 tax-free Isa allowance. You must use the £15,000 allowance by 5 April, or lose it. However, you will benefit from the new 2014-15 Isa allowance of £15,240, which you can take advantage of from 6 April.
However, ethical investment fans say going green with your finances will ensure a better world for us all in the future –far beyond the short-term tax advantages of the different savings schemes that you may be considering now.
When it comes to choosing whether to put your money into a cash Isa or stocks and shares one, there's much less of a need to feel you have to choose this year. That's because the rules have changed about switching between cash and equity Isas to allow greater flexibility. But before signing up to an Isa provider, it's worth checking how flexible they will be, as some do not have the facilities to switch easily between cash savings and shares or funds.
Meanwhile research from Moneyfacts reveals that in 2014-15 the average stocks and shares Isa has grown by 7.4 per cent. By contrast, the average interest rate on cash Isas is just 1.53 per cent.
Richard Eagling of Moneyfacts, says: "The amount held in Isas is set to rise sharply over the coming weeks, but cash Isas remain a default choice for many investors despite record low interest rates."Reuse content