S&P 500: The Complete Guide for Israeli Investors

The comprehensive guide for Israeli investors in the S&P 500 index. What is the index, how to invest through index funds and ETFs, and what are the historical returns.

The S&P 500 index is arguably the most famous "growth engine" in modern financial history. It represents the 500 largest publicly traded companies in the United States and serves as the primary benchmark for global capital markets. At Financial Engineering, we believe that money management should be systematic, and investing in a broad index is the foundation of any stable investment portfolio.

What Is the S&P 500 Index?

The index includes corporate giants like Apple, Microsoft, Amazon, and Nvidia. Unlike other indices, the S&P 500 weights companies by their market capitalization, providing a true representation of the American economy's strength.

How to Invest in the S&P 500 from Israel

There are three main ways to invest in the index from your Israeli investment account:

Israeli index-tracking funds — funds denominated in NIS that track the index performance without the need for currency conversion.

Foreign ETFs — funds like VOO or SPY that trade on American stock exchanges.

Investment-linked provident fund (Kupat Gemel) — a convenient solution that combines tax benefits at retirement.

Historical Returns: Is It Really Worth It?

Over time, the index has delivered an average annual return of approximately 10% (before inflation). It is important to remember that index investing is a long-distance race, requiring patience and an understanding of market volatility.

Tax Implications for Israeli Investors

Israeli investors in the S&P 500 should be aware of withholding tax on U.S. dividends (typically 25%), capital gains tax in Israel (25%), and potential currency gains or losses from the NIS/USD exchange rate.

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The information on this page is for educational purposes. Please consult a professional before making financial decisions.

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Frequently asked

+−Should I invest in the S&P 500 now?

Timing the market is nearly impossible. The systematic approach suggests consistent investing (DCA) over time regardless of the current price.

+−What is the difference between the S&P 500 and the NASDAQ?

While the NASDAQ is heavily weighted toward technology, the S&P 500 is more diversified and includes finance, healthcare, and industrial companies.

+−How can I invest in the S&P 500 from Israel?

You can invest through Israeli index-tracking funds (denominated in NIS), foreign ETFs like VOO or SPY, or an investment-linked provident fund (Kupat Gemel).

+−What taxes do Israeli investors pay on S&P 500 gains?

Israeli investors pay 25% capital gains tax on profits and face a 25% US withholding tax on dividends. Currency gains from NIS/USD fluctuations may also be taxable.

+−Is the S&P 500 suitable for long-term pension savings?

Yes, many Israeli pension funds and Kupot Gemel offer S&P 500 tracking options. The long time horizon of pension savings aligns well with the index's historical growth pattern.

+−What is dollar-cost averaging into the S&P 500?

Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market price. This strategy reduces the risk of investing a lump sum at a market peak.

+−How does currency risk affect S&P 500 returns for Israelis?

Since the S&P 500 is priced in USD, a strengthening shekel can reduce your returns when converted back to NIS, while a weakening shekel can boost them. Some Israeli funds offer NIS-hedged versions.