Investments

The Israeli and international capital markets offer a wide range of investment opportunities for investors at every level. The Tel Aviv Stock Exchange (TASE) is the primary trading venue in Israel, but today it is easy to invest in global markets like the S&P 500 and NASDAQ through index funds and online brokers.

Smart investing in the capital markets requires basic knowledge, patience, and a disciplined approach. Our guides aim to give you the tools to start investing with confidence and build a portfolio that matches your goals and risk profile.

Fundamental Principles

The three pillars of sound investing are risk, return, and diversification. As a general rule, higher risk means higher potential returns but also a greater chance of losses. Spreading your investments across different asset classes, sectors, and geographic regions reduces overall portfolio risk without significantly hurting expected returns.

Investment Vehicles

The main vehicles include stocks (partial ownership in companies), bonds (loans to companies or the government), index-tracking funds (which replicate the performance of an index like the TA-125 or S&P 500), and exchange-traded funds (ETFs). For beginning investors, index funds are an excellent entry point thanks to broad diversification and low costs.

Additional options include money market funds (for short-term savings), bank deposits, and savings plans. Each vehicle suits different needs, and a balanced portfolio combines several in line with your age, goals, and risk tolerance.

Tax-Advantaged Accounts

Israel offers several savings vehicles with significant tax benefits: Kupot Gemel (provident funds for investment), Hishtalmut funds, and savings policies. A Kupat Gemel allows withdrawals at any time with only 25% tax on profits, while a Hishtalmut fund grants a full capital gains tax exemption after six years. Optimal use of these vehicles can save you thousands of shekels per year.

Common Mistakes

The most common mistakes among investors are trying to time the market, paying excessively high management fees, and insufficient diversification. Research shows that investors who try to time the market lose an average of 1-3% in annual returns compared to those who hold for the long term. Rather than trying to predict the market, it is better to invest a fixed amount consistently every month and avoid emotional decisions.