What Are My Investment Choices?

Evan Liberman Articles, Corporate, Government, Israeli Market, Israeli stocks 2 Comments

Israel offers a wide variety of choices when it comes to investing in its capital market. From stocks, government fixed-rate bonds and inflation-linked corporate bonds, to mutual funds and sector stock ETFs, Israel provides vehicles for all types of investors. Each financial investment instrument is suited to a different class of investors: some investors wish to make more profit (and assume higher risk), while others seek capital preservation as their main goal. Different options are suited to investors with a short-term investment horizon, versus choices that are made for the mid and long-term investor. Still others protect against certain downsides, such as inflation or currency fluctuation.

Investing choices can be boiled down to one axiom: "No Risk, No Gain". All investment options are placed somewhere on the risk-reward spectrum. The more one risks (larger ups and downs on one's invested funds), the more one stands to profit (or lose). Generally, the less one risks (less willing to see ups an downs on the value of one's investments), the less one can profit in the market (but you are mostly protected from potential losses).

Each investor must determine for himself what his comfort zone is for risk and reward before investing in any market, whether it be the stock, bond or the real estate market. Some of us want to have the security that all our money is safe (that its value won't decrease over time), and that we have some upside to make profits. Others want our money to make us a higher profit, and are willing to take more chances to achieve that bigger reward.

Below, you'll find a list that categorizes Israeli investment options based on their risk level. Investors that have many future years to accumulate capital (i.e., younger investors and those still earning income) likely can take more risk with their capital so as to benefit from higher returns. They are willing to invest in stocks, for example, as these usually have a greater potential for high annual returns compared to government bonds. The more speculative investments listed below may be suited to them.

Often, a combination of asset classes will provide proper diversification and the correct balance of risk vs. reward.

Here is a list of financial vehicles offered on the Tel Aviv Stock Exchange, starting with the most solid choices (least volatility, least risk), to the more risky vehicles that present the greatest chance of growth and profit.  The less risky investments ("solid") will more likely preserve your capital with some profit potential. All of these investment instruments can be purchased online from an [post=1416 text="Israeli investment account"].

Solid: low risk

[post=766 text="Government bonds"]
  • Fixed interest rate
  • Adjustable interest rate
  • Inflation-indexed
  • Short-term Treasury bills

Highly-rated [post=3447 text="corporate bonds"] (AAA, AA, A)
Bond mutual funds

  • Government
  • Corporate
  • Mixed

Bond Exchange Traded Funds (ETF)

Solid: moderate risk

Lower-rated investment-grade (BBB) bonds and not-rated corporate bonds
Convertible Bonds
Structures

Somewhat Speculative

Stock Exchange Traded Funds ([post=1811 text="ETF"])

  • Market index-tracking funds
  • Sector funds

Stock Mutual funds

Speculative

Individual stocks
High-Yield Bonds
Tel Aviv Index Options

Highly Speculative

Warrants
Futures/forwards
Currency and commodity ETFs
Currency trading

Contact us for assistance or direction in investing in any of these investment types in Israel.

Comments 2

  1. What is the minimum amount to open up a investment account with your organization. I’m looking forward to investing in Israel stocks and bonds in the very new future.

  2. Shalom Evan,
    I finally received back the documents with the apostille stamp from SC.
    I’m re-reading the info again as its quite foreign to me. Would you like to call me Friday at 1:30pm Feb 19th, and I can ask questions about what I’m about to commit to? Hopefully Ill be somewhat prepared then..
    Thank you
    Elaine

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