When I first started my journey in the investment world, I was searching for something that would give me peace of mind. Something that wouldn’t make me check the market every five minutes but would still yield solid and stable returns. That’s how I discovered Israeli bonds – and for me, they were a game-changer.
Government Security That Brings Peace of Mind
There’s something comforting about knowing your investment is backed by the full faith and credit of the government of Israel. It’s not just about patriotism or Zionism; it’s about real financial security. Unlike stocks that can plunge on a bad day in the market, government bonds offer a sense of stability. At the end of the day, I know that the State of Israel does everything to meet its commitments and has never missed a payment in the history of issuing bonds over 70 years ago.
I remember a particular moment – during a global economic crisis a few years ago, that our portfolio was fluctuating wildly. But one part of it remained steady – the government bonds. That feeling of having a financial anchor was worth everything.
Inflation Protection
Many of Israel’s government and corporate bonds are linked to the inflation index, meaning you’re covered even if inflation gets out of control. Your buying power stays intact, as your interest and principal payments are linked to the Israeli CPI (inflation) index. That means if inflation is 3% this year, and your interest payments are 4%/year, you will receive 7 NIS for your 100 NIS invested this year. If next year inflation is 6%, you will receive 10 NIS for your 100 NIS invested. Also, the principal will be indexed as well. That means if there is inflation during the years you invested, not only are your interest payments higher, but when the bond matures, the government will pay you back the bond’s principal amount indexed to inflation over all those years!
Predictable Returns Without Unwanted Surprises
I love surprises – just not when it comes to my money. One of the things I found most appealing about bonds is the steady interest flow. It’s like receiving a small, predictable “salary” that keeps trickling into your account. And when the whole market is in turmoil, knowing you have a stable income is no small thing.
And honestly? It’s comforting to know that if inflation starts to rise, you’ve got inflation-linked bonds protecting you. This way, even if prices go up, you’re not left behind.
Diversity and Liquidity – So You Can Stay Flexible
One of the most important lessons I’ve learned is to always stay flexible. Life is unpredictable, so investing in a liquid asset is critical. I found the perfect balance with Israeli bonds – on one hand, they provide stability, and on the other hand, they offer high liquidity. You can always sell the bonds immediately if you need cash. And since bonds are traded in Israel like stocks, you can get in and out of State of Israel bonds quickly, with low spreads, online and with very minor transaction fees.
For me, that made all the difference. When I needed liquid funds for an investment opportunity I couldn’t pass up, selling bonds was the perfect solution. I didn’t have to compromise on price or stress about market fluctuations.
Current Yields
With the interest rates in Israel currently high, State of Israel Treasury bills (1-12 month maturities) are yielding annually about 4.3%, State of Israel bonds (1-27 years) yield up to 4.9%, and A- and above rated Israel corporate bonds are currently yielding up to 6.3% annually.
So, Who Is This Suitable For?
If you’re also looking for a stable anchor in the stormy economic sea, Israeli government or corporate bonds could be the perfect solution. It’s not about getting rich overnight, but it’s a smart way to sleep well at night.
They’re especially suitable for individuals seeking to preserve the value of their money, receive predictable returns, and enjoy relative security even during uncertain times. As an added benefit, investing also supports Israel, its economy, and its people, while offering diversification through exposure to the strong Israeli shekel.
If you want to hear more about my journey in the investment world and get tips from my personal experience, keep following the blog. In the end, it all starts with one small decision – to keep your money stable and secure by investing in Israeli bonds.