Is green enough?

This week, the UK Government unveiled a new financial product through NS&I.

This was a product designed to help consumers contribute to the green revolution, so money gained through the investments will be spent on renewable energy projects.

That’s a nice way to do a bit of ethical investing, and being a fixed year bond is a safer bet than putting it on the stock market and investing directly into a green company.

But if safety matters to you, you probably also value some element of return. This new product is a three-year fixed bond. In essence, your money is locked away for three years. So, you’d want a good bit of cash back. But this isn’t going to give you that. It has an interest rate of 0.65%. In fact, some one-year fixed bonds give you more.

This is well below other three year fixed bond deals on the market. Add to this, and there is speculation the base interest rate will be nudged up to try and help with the inflation and the number looks even worse.

So why would you invest? The Government is banking on being green being enough, but I just don’t see it. Happy to be proved wrong, but unless the rate jumps to be at least competitive with the current market this runs the risk of being more gimmick than game changer.

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