The “How”

What can I invest in?

Accredited investors and non-accredited non-investors alike can invest in a wide array of investments, ranging from Israeli stocks offering dividend payments, to secure Israeli government bonds, through inflation-protected corporate bonds paying fixed quarterly interest payments, to Exchange Traded Funds tracking to market Israeli indices. The choice of how secure the portfolio is to be (or how risky) is entirely up to the account holder in consultation with our licensed Portfolio Management personnel.

Israel's national exchange offers all the major business sectors offered in other markets around the world, including: technology, real estate, industry and manufacturing, communication, biomedical, agrotech, insurance, finance and banking, commerce and services, chemical/rubber/plastics, food, transportation, etc. Of particular interest is the defense industry and oil/gas exploration sector, given Israel’s recent large-scale discoveries of these commodities. Companies in these and other sectors are listed on the Tel Aviv Stock Exchange. Additionally, many Israeli technology companies are listed on Nasdaq.

Types and size of accounts

Do I need to know Hebrew to invest?

How much does it cost to hold an Israeli investment account?

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There is one central Exchange in Israel where all securities (bonds, stocks, ETFs, mutual funds, etc.) are traded. There are 24 member institutions holding seats on the Tel Aviv Stock Exchange (TASE) that are allowed to facilitate transactions for individual and institutional investors. The TASE members are either investment brokerages, banks or insurance companies. Some of these firms offer services for independent and managed accounts for individuals, and others only service institutional investors. Only a select few brokerages offer investors from abroad investment accounts with full-service in English.

Having served many hundreds of clients over the past ten years, Wise Money Israel has determined that the English speakers are best served by opening their investment account at one of three recommended brokerage firms. Wise Money Israel assists investors in Israel and around the world to open and manage their Israeli investments, whether they be Israeli citizens/residents or non-citizens/non-residents. For help, contact us here or sign up for an investment account here.

Bank or brokerage?

Holding an investment account at a bank is expensive, compared with a brokerage firm. Banks tack on more fees than brokerages, and typically charge more in comparable fees and commissions than brokerages. Banks charge a variety of fees such as minimum transaction fees, account management fees, custodian fees, transaction cancellation fees, limit order change/cancellation fees, wire transfer reception fees, currency conversion fees, interest fees, dividend fees, cash withdrawal fees, etc. Brokerages typically charge only a small fraction of these fees, and when they do, you'll find the fee itself is much less. For example, the commission on a single buy or sell order will cost 0.6%-0.65% of the total transaction at the largest banks in Israel (Bank Hapoalim, Bank Leumi) with a minimum commission charge of 26-27 shekels ($8 USD). In comparison, investment brokers charge less than a quarter of that commission percentage, and in most cases the transaction minimum is between 2-5 shekels. At the same banks, the yearly account management fee is 0.6%-0.8% per year of the customer's account balance! This fee is also 75% lower at brokerages. Lastly, we have found that banks are usually less equipped to answer your investment questions, don't speak English, are often harder to contact, don't handle email, and will not be able to manage your money.

Which brokerage should you choose?

The majority of brokerages work only with institutional investors, but several are set up to also handle retail (individual) investors. These firms maintain online trading systems and reports in English and provide telephone/email customer support. These brokerages provide a good and convenient way to participate in the Israeli capital market through investing on the TASE, both for the small and larger investors. Client securities are held in the client's name centrally at the Tel Aviv Stock Exchange through one of these brokerages.

From our extensive experience facilitating client investment in Israel, we've found the best brokerages are: Interactive Brokers, Meitav Dash Trade and  IBI. These brokerages offer low commissions per trade and good customer service. Many Wise Money Israel clients hold their investments at these brokerages and have been satisfied with their service.  Each brokerage is set up to handle the needs of Israeli and non-Israeli investor and English speakers, and have English online interfaces for investment. Contact us for details on the rates Wise Money Israel has with each brokerage for the clients we manage.

What's the process?

Opening an individual, joint or organizational/nonprofit Israeli investment account requires filling out an application and for some countries providing identification. Wise Money Israel has helped hundreds of clients for over a decade open their brokerage account remotely via the Internet and also in person if/when the client is in Israel. Israeli and non-Israelis alike can open accounts.

Some of the above mentioned brokerage firms have a minimum opening account balance and other do not. You may wire your funds or transfer funds online with these brokerages, and one brokerage also accepts checks. Several brokerages pay interest on cash deposits when Israel's interest rate is sufficiently high. Funds can be withdrawn at any time from your investment account to your bank with a simple phone call or email as necessary.

Brokerage services offered

All investment brokerages Wise Money Israel works with offer the following features:

• Account application in English
• Online trading platform in English
• Telephone customer service (some also email and chat)
• Monthly/quarterly printed statements in English
• Trading in stocks, bonds, Exchange Traded Funds, mutual funds, options, and currencies
• Inexpensive wire transfer to/from your bank
• Inexpensive currency conversion, much less than banks
• Stock and bond information and online charting

In summary, investment accounts can be opened with a bank, insurance company or brokerage. Because of the fees and convenience, brokerages are preferable. You'll be able to invest easily yourself or utilize Wise Money Israel's investment management services at any of these brokerages. Start investing here!

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In our previous articles, we discussed why you should invest in Israel. There are many reason for investing in Israel, among them currency diversification, geographical diversification, and the desire to support the Land and people of Israel. Other reasons include participating in the prosperity Israel is experiencing since its rebirth, and enjoying the fruit of a strong and robust economy that weathers the sometimes-stormy global financial climate.

So how can this be accomplished practically? There are three main ways to invest in Israel financially:

1. Investing in Israel’s capital market via Israeli stocks, bonds and mutual funds. This is done by opening an investment account with one of the established Israeli brokerage firms that are members of the Tel Aviv Stock Exchange (TASE). Accounts may be opened remotely through the mail and can be overseen through a secure English online portal, just like a bank account. Citizens of all countries may invest in an Israeli brokerage account as individuals (single or joint), as an organization (for-profit and non-profit) and through U.S. retirement funds with a minimum entry limit of 20,000 Israeli Shekels (approximately $5,000 USD). Some additional information to know about investing in the Israeli capital market:
   1. The TASE provides a wide array of asset types (securities), ranging from Israeli stocks offering dividend payments, to secure Israeli government bonds, through inflation-protected corporate bonds paying fixed quarterly interest payments, to ETFs tracking market indices. These assets are spread over all the major business sectors offered in other markets around the world, including: technology, real estate, industry and manufacturing, communication, biomedical, agrotechnology, insurance, finance and banking, commerce and services etc. Of particular interest is the new oil/gas exploration sector, given Israel’s recent large-scale discoveries of these commodities, and of course the world-renown Israeli high tech sector that has supplied the world with many groundbreaking technologies.
   2. Individual stock and bonds capital gains, as well as bond interest payments, are not taxed in Israel for non-Israeli investors. The Israeli capital market has shown impressive returns over recent years:
      During the economic recovery year of 2009, the Tel Aviv 35 stock index returned 75% to investors, vs. the S&P 500 yield of 24%. Israel’s stock market has outperformed other developed markets by far since the year 2000 showing 184% total return for the Tel Aviv 35 compared to 63% total return for the S&P 500 (as of May 16, 2017). On the bond side, Israeli corporate bonds have yields over 6% average annual return with relatively low volatility since 2009.

2. Investing in Israeli Start-Up companies. This is done by purchasing equity in early stage start-ups as an angel investor or through a venture capital firm that is connected with various private companies and raise capital for them through a VC fund. Some additional information to know about investing in Israeli start-up companies:
   1. Investing as an angel investor or through a VC requires a relatively large investment principle, typically ranging between $150,000 to $2,000,000 USD but typically represents no more than 10% of the investors total investment portfolio. VC investing is usually done by “Accredited Investors”: individuals with a net worth of at least $1,000,000, excluding the value of the investor’s primary residence, or demonstrate an annual income of $200,000 or $300,000 for joint income for the last two years with the expectation for the same or higher income in the future.
   2. Since seed investments in start-ups and VC funds are of a much higher risk nature, investors should be prepared and able to potentially lose all of the principle investment. Start-ups have a success rate of 1 in 10, meaning that there is 90% chance that the start-up will fail and the principle will be lost. For this reason investors usually invest in dozens of start-ups simultaneously with the hopes that one of them will success and provide a good ROI (return on investment) to cover the losses gained from the other failed investments.
3. Investing in Israeli Real Estate. This can be done in two ways: first, by directly purchasing physical real estate such as an apartment, house, building, office etc. Second, by purchasing stocks and/or bonds of real estate companies or Real Estate Investment Trusts (REITs) on the Tel Aviv Stock Exchange. This second method is less direct, i.e. you do not actually own the property but do enjoy the dividends and cashflow from the companies that build, sell and rent out the real estate. These dividends are legally tied to over 90% of the profits of the REIT. Some additional information to know about investing in Israeli real estate:
   1. The Israeli real estate market has seen good growth in since 2007 with prices of many assets rising close to and even over 100% since then, giving an approximate annual return of 7% (varying, significantly even, from asset to asset). Since the end of 2016 the rise in house prices has slowed significantly, with recent data indicating a very possible change in trend to housing prices as they begin to drop, though it is still too early to tell. There is a certain level of uncertainty currently in the real estate market, however some analysts are already determining that investors are beginning to sell their real estate assets.
   2. Investing in REITs and real estate companies put somewhat of a hedge between the investor and the assets, for the better. On the one hand it employs the REIT management and real estate company’s expertise in the market, eliminating the need to for the client to make those decisions and spend all that effort themselves. On the other hand, it is easy for the client to control their level on investment in the real estate market by purchasing or selling more stocks or bonds with the click of a button, without the need for finding a buyer for their physical property and not having to deal with the bureaucracy, taxation, legal work, fees etc. that go with selling (and purchasing) actual property. These advantages allows the investor to change weighting in their portfolio to other market sectors and asset classes swiftly and with minimal hassle, time and money consumption. This flexibility can be key in turbulent market times.

Investing in Israel is a great way to diversify your portfolio, support the Israeli economy and participate in the success of the nation. Before you decide how to do that, you should consider the information above and how that applies to your specific personal and financial situation.

Stefan Silver serves as the Director of Business Development & Operations at Wise Money Israel (WMI), the first licensed Investment Portfolio Management firm in Israel that works completely in English to serve local and international clients. WMI works with hundreds of individuals and organizations from around the globe to invest in Israel’s leading companies and technologies through Israel’s capital market – the Tel Aviv Stock Exchange (TASE).

Stefan holds a B.A.in Economics and Management, and an MBA from Haifa University. Born in Auckland, New Zealand, Stefan immigrated to Israel in 1992 and served for four years in the IDF’s Combat Engineering Corp, including combat experience on the front lines of the Second Lebanon war. He is currently a Captain in the IDF Reserves.

LinkedIn: Stefan Silver

Sources:
Forbes, Investopedia

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Steps to investing your IRA funds in Israel

1. Contact us to learn more about our partner self-directed IRA custodian firm that works with Israeli brokerages to invest in Israel. Their forms can be filled in online.
2. Wise Money Israel will pre-populate the Israeli brokerage forms for your signature based on our online form.
3. Wise Money Israel will direct you how to have your passport/driver's license certified, allowing you to open the Israeli brokerage firm from anywhere in the world via mail.
4. Direct the IRA custodian firm to wire transfer your funds to the Israeli brokerage's bank.

Do I need an LLC?

No. A simple, self-directed IRA can invest in foreign securities directly, without the need for an LLC. Having an LLC in the middle allows to you allocate your self-directed IRA to more than just an Israeli brokerage ("check writing privileges"). This method is more costly and complicated, as the LLC opening the Israeli account must itself be certified via mailed documentation, maintain a separate bank account, and pay yearly state registration fees to keep the LLC open.

Therefore, if you want to have your self-directed IRA directly invest in your individual Israeli investment account, that can be accomplished directly and simply with only a self-directed IRA.

Will I be taxed?

No. A self-directed IRA can invest in foreign securities while retaining the U.S. tax-deferred status of an IRA.

As a non-Israel entity, your IRA funds will not be taxed in Israel on stock gains, corporate bond interest or corporate bond capital gains.

Also, just as your IRA is today exempt from paying taxes on gains immediately upon their sale, so too your Israeli gains in your self-directed IRA will not be taxed upon the sale of your Israeli securities. So your tax consequences are the same in the IRA whether you hold U.S. securities or Israeli securities. This allow the tax-deferred compounding effect on your gains enjoyed by retirement accounts, which typically greatly enhances your final return.

How do I invest the funds?

The self-directed IRA designates you as both the beneficiary and the power of attorney for the Israeli brokerage account. You may then direct which investments to make yourself, with hourly consulting, or with the help of a licensed account manager such as Wise Money Israel or others.

WMI assists clients in opening IRA, individual, joint, partnership, or corporate/organizational investments accounts, and to invest wisely in Israeli stocks, bonds, mutual funds, ETFs, etc. For more information, please contact us.

The post Using Your IRA to Invest in Israel appeared first on Wise Money Israel.

NewsWire writes: "If you were planning on getting your money out of the country, now is the time. If you haven’t withdrawn your cash from the bank, you should have done it yesterday."

Sources: Fox News, InfoWars, NewsWire

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The dollar has continued to strengthened against the shekel in the past year, creating a good opportunity to fund a shekel Israeli investment account, as more investable shekels can be obtained for the same dollar.

Since April, the dollar was unusually strong against the shekel, increasing by 10% in just four months, but recently we've seen a weakening of the dollar again (-3.5% in the past two weeks), in-line with its multiple-year, strengthening shekel trend. The window of opportunity to obtain more shekels for your same dollar may be closing.

The dollar has been weakening since the US Federal Reserve's decision last week to buy $40 billion of mortgage backed bonds each month.

FXCM Israel's research department said, "The dollar-shekel exchange rate trend is now clearly downwards and in the present conditions no change of direction is expected. The two currencies are expected to make their way further down to the region of NIS 3.85-3.86/$. Of course due to the sharpness of the measure brakes in the fall and corrections are expected but the direction is southwards."

Sources: Globes, Bank of Israel

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Frequency of trades

If you don't intend to trade often, then your best bet is to call your Israeli brokerage or bank and take the following steps. Their customer service will usually speak English well enough to execute buy and sell orders. If you plan to trade on a reoccurring basis, it may be worth your while to learn the basics on the online trading system. Contact us for help with this.

Call and identify yourself

1. Call during their Israel-time zone work hours. Remember, Israel Standard Time is GMT+2 hours (7 hours ahead of New York), and Israel conducts business on Sunday through Thursday.
2. Call your bank or brokerage internationally using +972 as the Israel country code, and remove the leading 0 from the Israeli area code. For example, from the U.S., you might dial 011-972-3-5555555.
3. Identify yourself using your account number, name, and any phone identification code given to you upon opening your account

Placing a buy order

1. Israeli securities are purchased in Israeli Shekels. There are no "settlement days" on the TASE: all transactions are executed and paid for immediately (for stocks, bonds and ETFs) or at the end of the same business day (for mutual funds). So, you'll need enough shekels in your account to make your purchase.
2. If you opened your account with another currency (such as U.S. dollars), you'll need to convert these to shekels through your Israeli brokerage or bank. They should be able to do this via phone or email. Make sure you indicate that you would like to sell your currency and buy shekels. The actual purchase of shekels (currency exchange) may not occur immediately. Banks typically transact at the current intraday rate, and brokerages will transact sometime during the currency trading day (which are only Monday-Thursday).
3. Remember to always leave some cash in the account to cover periodic fees and transaction commissions.
4. Once you have funded your account and have the necessary shekels to purchase the desired security, indicate the name and number of the security, as well as the number of shares you wish to purchase. In Israel, the security's number is in place of a company's "ticker symbol". This can be found on the bank/brokerage's online website, the Tel Aviv Stock Exchange website, or by asking over the phone by giving the exact name of the company (for stock), series and maturity date (for government bonds), or company and series (for corporate bonds).
5. Verify the current price with customer service before you confirm the transaction.
6. If you place a market order, you can usually get purchase confirmation as you wait on the phone.
7. If you give a limit order, you can call back later to see if your securities were purchased at the given price or not. By default, limit orders are day-only orders, so if you'd like the order to be "good 'till cancel" (called a "continuous buy limit order", usually good for up to 30 days), indicate that on the phone call.

Placing a sell order

1. Indicate the name and number of the security, as well as the number of shares you wish to sell (or all). The security's number is in place of a company's "ticker symbol". This can be found on Tel Aviv Stock Exchange website or ascertained over the phone.
2. Verify the current price with customer service.
3. If you place a market order, you can usually get sale confirmation as you wait on the phone.
4. If you give a limit order, you can call back later to see if your securities were sold at the specified price or not. By default, limit orders are day-only orders, so if you'd like the order to be "good 'till cancel", indicate that on the phone call.
5. There are no "settlement days" on the TASE: all transactions are executed and paid for immediately (for stocks, bonds and ETFs) or at the end of the same business day (for mutual funds).

The first transaction or two may be daunting as you learn the ropes, but by the third time, you'll be a pro. Happy investing!

If you do not feel comfortable doing this by yourself, we are hear to help. You can contact us to find out how you can get started investing in Israel.

The post Buy, Buy, Buy! appeared first on Wise Money Israel.

First, decide how you'd like to manage your account. There are different ways to manage your Israeli investment account: self-managed, where you manage your own account independently, using consulting as needed, and a managed account. To help you choose your preferred method, first read about investment account management options before proceeding.

If you choose to self-manage your account (with or without consulting), here is a short list of your next steps:

1. Fund your account. You likely did this by depositing an initial amount into your account when you opened it. But if not, you can wire transfer funds from your bank to your Israeli brokerage or bank. Contact us if you need details about the wire transfer process with your chosen broker.
2. Convert your currency. If you funded your account in a foreign currency, such as dollars, you're next step will be to convert them to local currency, as transactions on the Tel Aviv Stock Exchange are executed in Israeli Shekels. Brokerages usually give good conversion rates (very close to the Bank of Israel representative rates, sometimes within 0.5%), so you won't lose much in the transfer. Also, brokerage fees can be waived if you work with the right brokerage. Currency exchange can be executed by calling your brokerage/bank's customer support and in some cases (depending on your choice of broker) via an email request. If you're calling, refer to our our article article for details on how to call and what to request. Typical turnaround time for currency conversion is one business day in which currency trading occurs (Monday-Thursday).
3. Research what securities you'd like to purchase. This is the key step, of course. Which securities (stocks, bonds,  Exchange-Traded Funds, etc.) to buy and when to buy them is at the heart of every successful investment story. Buying under-performing securities, not purchasing solid companies stock or bonds, or buying too early or late can make all the difference between a winning year of gains or disappointing loss at year end. Assess how much risk you're willing to take, how much loss of capital (if any) you're willing to suffer for potential gains. Bonds (government and corporate) are interest-bearing investments that for the most part return you 100% of your initial investment years down the road, with a certain interest percentage paid every year for "renting out" your money. The chances of losing money on solid bonds and solid companies is typically less than investing in stocks. On the other hand, stocks provide the possibility of gaining tens and sometimes even 100% or more when choosing the right stocks to invest in at the right time. Investing in stocks bears the risk of losing a portion of your initial investment if the company under-performs or worst case, the company even goes bankrupt. Research well the various options that you have, and weight the pros and cons against your risk tolerance, investment time frame, current financial situation and cash needs. The Wise Money Israel website is full of information about investment options and our consultants can help you with this as well. If you plan to purchase Israel government bonds, read our Government Bond series for practical information on what types of bonds are available and how to determine their current prices, yields and security numbers (needed for your purchase order).
4. Determine portfolio allocation. Once you've chosen which investment vehicles you feel comfortable with (stocks, government or corporate bonds, ETFs, mutual funds, index funds, etc.), you should diversify among different asset classes, market sectors, industries and securities to lessen risk if one security or sector under-performs. For example, you can allocate 60% to bonds and 40% to stocks. Within your 60% bond allocation, you could buy three different bond types, each totally 20% of your portfolio. You could purchase an adjustable interest rate government bond, a fixed-rate inflation-adjusted corporate bond, and a 12-month Bank of Israel "Treasury" note (Makam). Then, you could spread your 40% stock allocation among two stock mutual funds, two broad-based market index ETFs, a sector ETF or three individual strong company stocks. There are as many combination as there are people, so consult with your financial advisor for what combination is most suited for you.
5. Execute your order(s): If you wish to execute your trades via phone, our article called our article will give you the details on how to call and what to request.  If you'd like to execute your purchases/sales using the bank or brokerage's online trading platform, contact them for details on installation and usage.That's it! Sounds like a lot? Wise Money Israel personnel can help walk you through this process: just contact us. Once you've executed your transaction(s), follow your securities' performance and market conditions online because at some point you may want to sell and/or move into potentially better investments when the timing and market conditions are right. If you haven't already done so, you'll want to sign up for WMI email updates, full of helpful tips, investment ideas and important information about investing in Israel.

The post I’ve Opened My Account; What’s Next? appeared first on Wise Money Israel.

Government sites

• Bank of Israel: Here you will find press releases, exchange rates, monetary policy, interest rates, financial legislation and economic reports on this site
• Finance Ministry:  Here you will find economic research, statistics, tax and capital market information, credit rating, financial projects, budget on this site

Stock Exchange

The Tel Aviv Stock Exchange site provides market data, graphs, prices, rules and regulations, brokerages and trading banks, trading schedule, news, statistics, listings, prospectuses and company announcements in English and in Hebrew.

Israeli financial sites

There are many good capital market websites, some of which have English versions. For sites that are in Hebrew, we suggest you use a browser-based translator tool such as Google Translate. Here is a listing of several good sites:

English

• Globes
• Ynet
• Jerusalem Post
• HaAretz
• Bank HaPoalim

Hebrew

• Bizportal
• Calcalist
• The Marker
• Bank Leumi
• Walla! Finance

Are you looking for a particular type of information? Let us know or leave a comment below on your experience with these sites.

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