“I’m Going Green To Grow My ISA”


  • Josh, 26, says green energy funds promise the best future returns as Western governments looks to avoid future energy shocks

  • Poll finds that armchair investors remain confident despite market uncertainty

  • Almost a third of stocks & shares ISA holders are dialling up their investing appetite in 2022

Josh Paradise is among a new demographic of young investors using their money to fight climate change.

The 26-year-old underwriter, from Swindon, Wiltshire, is transitioning his ISA to green energy investments, believing recent geopolitical events and energy shocks will ultimately reduce the West’s reliance on harmful fossil fuels.

He spoke about his investing strategy as new research published by Freetrade and InvestingReviews.co.uk revealed sentiment among armchair investors remains upbeat despite recent market volatility.

Josh said:

“Looking ahead, I really see governments moving towards green energy quicker than originally intended so they don't have to rely on imports from abroad, and I've adjusted my portfolio accordingly.

“I feel like they are the right investments for the future and will eventually benefit me in the long-run.

“Currently, I have investments in alternative energy sources such as ITM Power and Plug Power as well as investments in electric vehicle companies NIO and Tesla”.

The green investing movement is now estimated to be worth £30trillion globally — and is expected to grow rapidly in the coming years as climate change, energy security concerns and spiralling oil prices spur investment in renewables. Electric vehicle maker Tesla has been the most bought stock on Freetrade’s platform in 2022 so far, while a green energy ETF was the most popular fund on its platform last year.

Despite current market volatility and the soaring cost of living, Josh is keeping the faith in his ISA, hoping it will help him retire early one day.

He is committed to maintaining his current investment levels of £250-per-month despite recent volatility.

“As my investment experience has grown, I've learned to handle the fact that markets go up and down, so volatility doesn't phase me as much as it did when I first started. I also learned over time to make sure I have a diversified enough portfolio to help handle market volatility.

"My ISA goal is to achieve financial freedom for when I retire. I'm currently paying into a workplace pension and intend to a buy-to-let property or two in the future so I've got as many sources of income as possible.

“For me, it's all about staying true to your investing goals, no matter what the market is doing. The main thing is time in the market, not timing the market.”

While global events have created uncertainty in the markets, a poll of 1,000 ISA holders conducted by Freetrade and InvestingReviews.co.uk showed almost a third (31%) plan on increasing subscriptions in 2022.

Of those, nearly half (46%) said they would use pay rises to support their increased contributions. Only a small number (2%) said they expected to scale back their contributions.

Overall, the most popular investments among Freetrade ISA holders in 2022 so far are US tech stocks, in particular Tesla, Meta and Apple, as well as S&P 500 tracker ETFs. Among investment trusts, the Scottish Mortgage Investment Trust led the way for ISA contributions, followed by the Realty Income REIT and the City of London Investment Trust.

ISA investors have more recently been drawn to miners, financial services firms and commodities ETFs, given rising inflation and geopolitical shocks.

Cash ISAs vs Stocks and Shares ISAs

The research also explored the attitudes of cash ISA holders whose pots have been losing value in real terms at the fastest rate in almost 30 years. Typically, a cash ISA will return savers less than 1% per annum, meaning around 4.5% is currently being lost in real terms.

This year alone cash ISA savers stand to lose around £7.8billion2 as inflation eats away at their pots. Despite this, they continue to outnumber stocks and shares ISAs by around 3 to 1.

Researchers found that 42% of cash ISA holders wanted to know exactly what return they were getting. Nearly a third (32%) admitted they didn’t know how stocks and shares ISAs worked, with a slightly larger number (37%) saying that investing in the stock market worried them.

Women were more likely than men to be worried by stock market investing (39% v 34%), with more women also saying they don’t understand how a stocks & shares ISA works (37% v 24%).

Dan Lane of Freetrade commented:

“As market volatility heightens in light of global events, it’s important to have a sufficiently diversified portfolio and continue to focus on the long term. Pound-cost averaging through buying investments regularly in small amounts can also help to smooth out volatility and create some stability in the performance of your investments.

“When it comes to ISAs, some people who can’t stomach investment risk are just right to opt for a cash version. But with equity risk comes the opportunity to outperform cash and inflation over the long term. History tells us stock markets do go up over time and it doesn’t mean going full throttle on the risk pedal to take advantage of them”.

Simon Jones, CEO of InvestingReviews.co.uk, said:

“While events across Europe threaten to dampen growth in 2022, investors with long-term horizons shouldn’t allow themselves to be rattled.

“The lesson of the pandemic is that those who retreat from the market at the first sign of volatility risk losing out when conditions improve later.”

For more information about the research, people can visit https://freetrade.io/stocks-and-shares-isa/isa-research