Kupat Gemel LeHashkaa (קופת גמל להשקעה): flexibility in saving and investing
Kupat Gemel LeHashkaa is one of Israel’s most popular investment products. It combines features associated with pension savings—professional management and possible tax benefits—with liquid savings that remain available to you.
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How does it work in practice?
The fund is managed by an institutional body—an investment house or insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. company—under close supervision by the Ministry of Finance. You deposit money, and the managing body invests it in the capital market through the track you selected.
- How do you deposit? You can make a one-time deposit, set up a monthly standing order or combine the two.
- Contribution ceiling: You can deposit up to 83,641 NIS per year for each ID number. The ceiling is updated each year.
- Saving for children: You can open a separate fund in each child's name and use that child's contribution ceiling, making the product an effective tool for long-term family saving.
Choosing investment tracks in a Kupat Gemel LeHashkaa
You do not need to choose specific shares, only the level of risk that suits you:
- Equity track: High exposure to shares, high volatility and the potential for a higher returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested..
- General or balanced track: A combination of shares and bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest. with a moderate risk level.
- Conservative track: Investment in government bonds, Makam"Short-Term Loan" – a one-year government bond that serves as a relatively low-risk investment instrument. (מק״מ), or short-term Bank of Israel securitiesA general term for a tradable financial asset (such as a share, bond, or unit in a fund) that represents a right to an asset or to profits., and deposits, with lower volatility and risk.
Taxation: the fund's major advantage
As long as the money remains inside the fund, it continues earning returns without intervention from the tax authority. This is the effect of tax deferralThe economic benefit created when money that would otherwise have been paid as tax remains invested and continues to earn returns over the years..
- An ordinary withdrawal: You pay capital-gains tax of 25% only on the real gainThe actual gain remaining from an investment after deducting the rate of inflation., after inflationA process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products). is deducted.
- Retirement benefitThe monthly amount paid to the saver in retirement, calculated by dividing the amount accumulated by a "conversion factor.": If you leave the money until retirement age and withdraw it as a monthly pension rather than as a lump sum, you can receive a full exemption from tax on the accumulated profits.
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Full liquidityThe speed and ease with which money can be withdrawn from an investment and converted into cash in a bank account without significant penalties.: The money is available for withdrawal within a few business days, with no exit penalty. | Contribution ceiling: Deposits are limited by an annual ceiling. |
| Tax deferralThe ability to pay capital gains tax only when money is withdrawn from the plan, rather than when the gain is generated.: All the money remains invested until withdrawal. | Volatility: This is a capital-market investment, so the value of the savings may fall. |
| Management flexibility: You can move between tracks or managing bodies without selling the assets or paying tax. | Management fees: The managing body charges fees on the accumulated amount, so comparing and negotiating is important. |
| Regulatory supervision: The fund is supervised by the Ministry of Finance. | Not a short-term solution: The product is less suitable for money you will need soon. |
| Possibility of a loan: In some cases, you can receive a loan on favorable terms against the savings. |
The bottom line
- What is it?
- A flexible, liquid and supervised investment product intended mainly for the medium and long term.
- What is it not?
- A substitute for a current account or a solution for money you may need next week.
- Who may find it suitable?
- Someone seeking a medium- or long-term investment with flexibility in deposits and in choosing the risk level.
- Main advantage
- A combination of flexibility, liquidity and tax deferral.
- Main disadvantage
- Exposure to capital-market fluctuations and management fees.
Frequently asked questions
Can I withdraw the money at any time?
Yes. A Kupat Gemel LeHashkaa is fully liquid. The money can be withdrawn at any stage with no penalty, but the withdrawal may involve capital-gains tax on the accumulated profits.
Do I pay tax when moving between tracks?
No. Moving between investment tracks, for example from an equity track to a conservative track, is not a tax event. Moving between managing bodies also generally does not create a tax event, and tax is deferred until withdrawal.
Is a Kupat Gemel LeHashkaa suitable for children?
Absolutely. You can open a fund in each child's name and use that child's annual contribution ceiling separately. This is an effective tool for building long-term family savings.
Is this a conservative investment?
Not necessarily. The risk level is determined not only by the type of product but also by the investment track you select. You can choose a conservative track based on bonds and Makam, a general track or a high-risk equity track.
Compare and choose carefully
Before selecting a Kupat Gemel LeHashkaaA flexible savings vehicle that allows withdrawal at any time, or receipt of a tax-exempt pension after age 60., examine the available funds, costs, investment tracks and past performance.
Comparing providers
Before choosing a fund, compare management fees, investment tracks, joining terms and the additional services offered by different providers.
In summary
A Kupat Gemel LeHashkaa is one of the most efficient and accessible tools for managing capital-market investments.
It combines flexible deposits, high liquidity and regulatory supervision and lets you select the risk level that suits you.
It is particularly suitable for someone seeking a simple, user-friendly investment solution that can grow as part of long-term financial planning.