How can you maximize Savings for Every Child?
Small decisions in Savings for Every Child can significantly affect the amount accumulated by age 18 or 21. This page explains how choosing a provident fund and investment track, doubling the deposit and redirecting future deposits from a bank can help maximize the savings and give the child a better financial starting point.
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Savings for Every Child (חיסכון לכל ילד) is an excellent opportunity to give your children a better financial starting point in adult life. A common mistake, however, is to assume that every child in Israel will finish the program with the same amount of money.
In practice, small decisions you make today about where the savings are managed, the investment track and the monthly deposit can create gaps of tens of thousands of shekels over the years. The good news is that several simple actions can significantly improve the amount accumulated for the child.
Three drivers that can substantially increase the child's savings
You can actively control three main tools to maximize the plan:
1. Moving future deposits from a bank to a provident fund under the 2025 reform
If you discover that the child's savings are managed in a bank track, there is no reason to panic, but it is worth acting soon. The money already accumulated in the bank will legally remain there, but since 2025 you can direct all new and future deposits to a provident fund.
Historically, provident-fund savings invested in the capital market have produced much higher returns than bank savings over long periods. Even if the child is already several years old and you missed the beginning, improving the deposits during the years remaining until age 18 can still make a major difference.
2. Doubling the monthly deposit
By default, the state deposits NIS 57 each month for every child. Parents have the legal option to double this amount by adding another NIS 57, automatically deducted from the ongoing child allowance paid by Bituach Leumi (ביטוח לאומי).
Over almost two decades of long-term saving, even this small addition creates a large cumulative effect through compound interestA situation in which the returns accumulated on an investment are reinvested and generate additional returns themselves, creating accelerated growth of the money over time.. The step should still be taken responsibly: if the family budget is tight, it is not right to create current cash-flow difficulty for future savings. If your financial position allows it, however, this can be one of the most worthwhile long-term decisions.
3. Choosing a higher-risk investment track
When savings are managed in a provident fund, you can choose between four main types of investment track:
- Low-risk track
- Medium-risk track
- Higher-risk track, with greater exposure to the capital market and shares
- Designated tracks, such as Halacha or Sharia tracks
For young children, many parents choose the higher-risk track. Because the program has a very long predefined horizon of 18 to 21 years, the capital market offers the highest returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested. potential. The long period until withdrawal can help absorb and balance the volatility and declines that occur along the way.
The result: how much difference can this really make?
The combination of moving to a provident fund, choosing a track with high exposure to shares and doubling the deposit from the child allowance can completely change the child's financial picture:
Conservative path versus an active, maximized path
| Chosen parameters | Conservative or passive path | Active, maximized path |
|---|---|---|
| Where is the money managed? | Bank savings, with no change | Higher-risk provident fund |
| Total monthly deposit | NIS 57, without doubling | NIS 114, including the additional deposit |
| Potential final savings at age 18 | Basic and relatively low savings | Tens of thousands of shekels more than the conservative path |
This is not an extra few shekels for coffee. It is a strategic decision that directly affects the capital available when your child wants to finance a degree, buy a car or provide initial equity for a home.
Bottom line
Frequently asked questions
Can the investment track in the provident fund be changed later?
Yes. Unlike bank savings, where the track is locked, flexibility is part of the provident-fund system. You can move between low-, medium- and higher-risk tracks, and even transfer the entire savings balance between investment houses at any time, at no cost and without harming the money.
If my child is already 12 and the savings are in a bank, is it still worthwhile to redirect future deposits to a provident fund?
Yes, it may still be worthwhile. Only six years remain until age 18, so the capital market has less time to affect the outcome than it does for a newborn. Even so, certain provident-fund tracks may still produce a better return over that period than conservative bank interest.
Is a higher-risk track also suitable for a child approaching age 18?
As the withdrawal date approaches and the child nears age 17 or 18, the investment horizon shortens and the risk increases. If you intend to withdraw the money immediately at age 18, many parents prefer moving to a more conservative, low-risk track to protect accumulated profits from a sudden market decline just before withdrawal.
Summary
With children's savings, a small decision today can be worth tens of thousands of shekels in the future. Even if the monthly deposit appears small now, differences in returns and compound interest have a major effect over almost two decades.
Do not remain passive. Review the children's accounts and give them the best possible starting point.