Green light for ethical investments

More than £11.3 billion is currently invested in ethical or sustainable funds, according to EIRIS, the ethical investment research group - up from just £4 billion in 2001. The Investment Management Association adds that sales into UK ethical funds rose by 25% in the second quarter of 2011 compared with the same time a year earlier.

"We've seen a huge increase in the amount of money being invested ethically," says Mark Robertson of EIRIS. "Since the credit crunch, people are better informed about the impacts their spending and investments can have, and more are turning to ethical investment which takes a longer-term approach."

Traditionally, investors have worried about lower returns from green funds - but that's no longer necessarily the case. Over the past five years, the best-performing ethical fund, Kames' Ethical Equity A (formerly known as Aegon Ethical Equity) returned 6.65%, nearly double the average 3.78% return on UK All-Companies funds over that period, according to data from Morningstar.

Over the past year, the best-performing fund has been Ecclesiastical's Amity UK A, paying 2.11%, compared with the return on an average of UK company funds at minus 2.35%. But they haven't all performed well. Morningstar figures show the worst-performing socially conscious funds over five years, the Pru ethical trust, is down 28.17%, compared to the average 3.78% return.

How to pick a fund

First, decide what your ethical requirements are: each fund has a different approach to investment, as well as risk level. "Over the last five years, we've seen a shift from negative screening and avoidance criteria towards more positive investment styles," says John Ditchfield, director of Barchester Green, an independent financial adviser specialising in ethical investment.

"Within those, there are 'lighter green' and 'darker green' funds, with varying criteria. Kames has a brilliant track record as a lighter green fund. It avoids armament and tobacco companies, the banking sector, and firms which heavily pollute the environment."

Darker green stocks include Jupiter Ecology, WHEB Sustainability and Impax Environmental Markets. "There's a strong investment story here," adds Ditchfield. "The trend towards emerging markets in the past 10 years is very effectively managed through an environmental perspective."

The independent, not-for-profit website yourethicalmoney.org has a full database of ethical funds, pensions plans and more.

Lower-risk ethical banking

Savers can squirrel away money into socially conscious accounts without risking investing in shares. The rates are usually not quite as good as the best-buy accounts, but they're not far off. Dutch bank Triodos, for example, exclusively lends British savers' money to UK projects with social and environmental benefits and publishes the name and address of every firm and organisation it lends to (knowwhereyourmoneygoes.co.uk). Its instant-access Online Saver Plus account pays 2% interest, compared to the best buy deal, from Northern Rock, at 3.11%.

Ethical provider the Co-operative Bank's one-year bond pays interest of 2.75%, compared with the most generous whole-market account, 3.6% from krbs. For Isas, Charity Bank's Cash Isa Second Issue pays 2.5% while the leader on the wider market is Newcastle Building Society's 3.05%.

Where ethical funds put your money

There are about 100 green and ethical funds available to retail investors, and each has a different investment policy. Some screen
out firms involved in industries such as arms manufacturing, tobacco and gambling while others screen in companies such as renewable energy
providers or pharmaceuticals firms that make low-cost drugs available to developing countries. Other funds, meanwhile, invest in stocks that might seem unethical, such as oil companies, and use their influence as shareholders to campaign for positive change on their environmental or social performance.

Say 'I do' to wedding insurance

There were double the number of insurance claims from brides for failure of supplies between March and August as so many florists, caterers and photographers went bust. The figures, from John Lewis Insurance, showed this accounted for nearly eight in 10 claims. Most self-insure but anyone booking weddings for next summer and beyond should consider buying insurance before paying thousands in deposits. A £20 package will give £5000 cover for supplier failure and cancellation. Pricier policies for around £250 cover up to £50,000.

Steer towards cheaper car cover

The cost of car insurance is up more than 12% this year, so use a price comparison site to find the cheapest deal.

Visit both Gocompare.com and Confused.com - as well as Aviva and Direct Line, who don't list on the sites.

Consider adding low-risk second or third drivers: they can pull down the cost. And avoid paying monthly - it's cheaper to pay upfront or put it on a cheap credit card.

Before buying cover, use a website like Quidco or TopCashBack - these offer money back on a fully comprehensive policy.