Q&A with The Big Exchange on ISAs with impact

Ahead of the ISA deadline at the end of the financial year on April 5th 2021, Jill Jackson, CEO of The Big Exchange talks to Simon Birch about how your ISA can help save the planet.

Can you tell us what The Big Exchange is?

Co-founded by The Big Issue, (the idea was discussed with The Big Issue and our financial partners as far back as 2012), The Big Exchange is the UK’s first online investment platform providing actively-managed funds that aim for a financial return as well as doing good for people and the planet.

There are hundreds of ethical and sustainable funds and investment trusts available in the UK via DIY investing platforms and apps.

As the number of opportunities to invest increases in line with demand, the investment industry is becoming more focused on this growing interest.

However unlike other investments, the Big Exchange caters to those who want to invest with a conscience and who have struggled to find low-cost, impact-only funds from a range of respected providers in one platform. To make it even easier it has its own impact methodology underpinning a simple medal system (gold, silver or bronze) which means investors can see the level of positive impact they are making when investing.

Why was it launched?

The latest HMRC figures show that a massive £67.5 billion was paid into Adult ISAs in 2018-19, an increase of £2.3 billion from 2017-18, and £974 million was put into Junior ISAs (JISAs).

What if these huge sums were invested in companies that are working to solve the world’s most urgent problems, such as the climate crisis, poverty, air pollution, gender inequality, and a lack of social housing?

Not only would it accelerate a transition to a more sustainable world for us and future generations to live in, it would send a powerful financial message to politicians and big business that we want our money to be invested in line with our values.

Can you tell us how it works?

Every adult aged over 18 in the UK can currently pay up to £20,000 into an ISA (which stands for ‘individual savings account’) each year without paying any tax. For children aged under 18, the current annual limit for paying into a JISA is £9,000.

You have until the end of the tax year on April 5th 2021, to use your allowance and crucially, it doesn’t roll over to the following year, so if you don’t use it, you’ll lose it.

In 2018/19, the average amount paid into an ISA was £6,049. But whether you can afford to fill your ISA pot, or just want to get started with small monthly contributions, you can make your money make a difference.

Through the Big Exchange Stocks and Shares ISA, you can choose to invest in funds that help towards the issues you care about most, whether that’s combating the climate crisis, protecting biodiversity or providing housing for vulnerable people.

So what is a Stocks and Shares ISA?

There are different types of ISAs, for example Help to Buy ISAs, Cash ISAs and a Stocks and Shares ISA. A Stocks and Shares ISA is very different to a Cash ISA, which is simply a savings account that you don’t pay tax on. With a Stocks and Shares ISA, you are investing your money.

In a world of historically low interest rates and rising inflation, Stocks and Shares ISAs offer the prospect of a higher profit over the long term than if the same amount had been saved as cash.

However potential investors should be aware that investing places your capital at risk and the value of investments can go down as well as up.

You can think of a Stocks and Shares ISA as a shopping basket. The investments you put into the basket are up to you.

The Big Exchange has 46 investment funds to choose from, which are all rated against the United Nations Sustainable Development Goals or ‘Global Goals’. Adopted in 2015 as a rallying call to end poverty, fight inequality and injustice, and tackle climate change, the goals act as a useful measuring stick for positive impact.

If you are new to investing, a ready-made bundle is an easy way to invest in multiple positive impact areas. The Big Exchange offers three bundles - ‘cautious’, ‘balanced’ or ‘adventurous’ - put together by independent experts based on how much risk the investments are likely to take over time.

If you have some knowledge of investing and fancy putting together an investment package yourself, you can also pick your own funds.

Do these investments have the potential to be as profitable as other regular investments?

Doing ‘good with your money’ is no longer seen as being synonymous with taking a financial hit. In fact, in recent years investing sustainably has leapt from the sidelines onto centre stage - not only because it’s about doing the right thing, but also because it can be profitable.

Evidence such as the Good Investment Review shows that companies and organisations that are working to create a more sustainable world, treat their staff well, and have strong governance in place performed better financially over the long-term than their peers over the eight months to October 2020.

And as the global pandemic continues to grip the world, investing in companies and sectors that have the long-term health of people and the planet at heart seems to be not only the right thing to do morally, but financially too.

And how much will it all cost?

The Big Exchange aims to make finance a level playing field for everyone, so no matter how much or how little you invest (you can start from £25 per month or a lump sum of £100), it charges an annual fee of 0.25 per cent.

As with every other investing platform or bank, on top of this you will also need to pay a fee to the fund manager. This ranges from 0.62 per cent to 1.5 per cent per year. A calculator on the website shows you, in pounds and pence, your expected costs according to how much you invest.

The Big Exchange uses a unique medal system - with gold, silver and bronze medals - to show you how much positive impact each investment has.

What should I do if I already have an ISA?

If you already have an ISA or JISA elsewhere, it’s easy to transfer it to The Big Exchange so you can start making maximum impact with your money. And although it is better to invest for the long term, you can withdraw your money whenever you need to.

Why should I act now?

Ahead of the yearly ISA cut off on April 5th, The Big Exchange is launching a #MakeMoneyCount campaign to encourage people to use the money in their ISA as a ‘vote’ for positive change.

“The figures from the HMRC show the enormity of what could be achieved if we all made a conscious decision to put our money to work for the good of the planet and society, as well as for a potential profit.”

Finally, can you tell us something about the relationship between The Big Exchange and the Big issue Foundation and do they get a share of profits?

The Big Issue Group are co-founders and the largest shareholder in The Big Exchange. We are separate companies and have a different board, management and governance. The Big Issue are the holders of our mission share. What this means is that the social and environmental mission of The Big Exchange is protected by The Big Issue. They hold us to account, keep us focused on our social mission and provide us with great support to achieve it.

As The Big Issue Group is our largest shareholder, the more successful The Big Exchange is, the better the financial benefit for The Big Issue Group, giving them more to invest in the vital work they do for society and homelessness.

For more information visit The Big Exchange.

What can you do?

Jill Jackson, Managing Director of The Big Exchange, says: "If you have the resources to open an ISA, or have an existing one you’d like to transfer, we’re asking you to use this time before April 5 to put it to a positive purpose and join our movement for change."

Note:

Investing is not guaranteed to make you money. Your capital is at risk. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Past performance is not a reliable indicator of future results.

The Big Exchange (TBF) Limited is a wholly owned subsidiary of The Big Exchange Limited and is an Appointed Representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 574048).