Kupat Gemel LeHashkaa (קופת גמל להשקעה): Flexible Savings
A Kupat Gemel LeHashkaa (קופת גמל להשקעה) is one of Israel's most popular investment products, and for good reason. It combines Pension benefits—professional management and tax benefits—with liquid savings, so your money is always available.
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How does it work in practice?
The fund is managed by an institutional entity—an investment house or an 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 the close supervision of the Ministry of Finance. You deposit money, and the managing entity invests it in the capital market through the track you choose.
- How do you deposit? You can make a one-time deposit, set up a monthly standing order, or combine both.
- Deposit limitThe maximum amounts that may be deposited into certain savings products in order to receive tax benefits.: You can deposit up to 83,641 NIS per year for each ID number. The limit is updated annually.
- Savings for children: A separate fund can be opened in each child's name, using their deposit limit, making this product an effective tool for long-term family savings.
Choosing investment tracks in a Kupat Gemel LeHashkaa (קופת גמל להשקעה)
You do not need to choose specific stocks, only the risk level that suits you:
- Equity track: High exposure to stocks, high volatility, and the potential for higher returns.
- General or balanced track: A combination of stocks and bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest. at a medium risk level.
- Conservative track: Investment in government bonds, Makam (short-term government bill)"Short-Term Loan" – a one-year government bond that serves as a relatively low-risk investment instrument. instruments, and deposits, with lower volatility and risk.
The tax bottom line: the fund's major advantage
As long as the money remains in the fund, it continues to accumulate profits without intervention from the Tax Authority. This is the Tax-deferral effectThe economic benefit created when money that would otherwise have been paid as tax remains invested and continues to earn returns over the years..
- For a regular withdrawal: You will pay capital gains tax at a rate of 25% on real profits only, after offsetting InflationA process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products)..
- Retirement benefitThe monthly amount paid to the saver in retirement, calculated by dividing the amount accumulated by a "conversion factor.": If you keep the money until retirement age and withdraw it as a monthly Pension rather than as a lump sum, you may enjoy a full tax exemption 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 penalties. | Deposit limit: Deposits are limited by an annual cap. |
| 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 the withdrawal date. | Volatility: This is an investment in the capital market, so the value of the savings may decline. |
| Management flexibility: You can switch between tracks or managing entities without selling assets or paying tax. | Management fees: The managing entity charges management fees on the accumulated balance, so it is important to compare and negotiate. |
| Regulatory supervision: The fund is supervised by the Ministry of Finance. | Not a short-term solution: The product is less suitable for money you may need in the near future. |
| Loan option: In certain cases, you can obtain a loan on favorable terms against your savings. |
The bottom line
- What is it?
- A flexible, liquid, and regulated investment product, mainly suitable for the medium and long term.
- What is it not?
- A replacement for a current account or a solution for money you may need next week.
- Who is it suitable for?
- Those seeking a medium- or long-term investment, with flexibility in deposits and in choosing the risk level.
- The main advantage
- A combination of flexibility, Liquidity, and Tax deferral.
- The main disadvantage
- Exposure to capital-market fluctuations and management fees.
Frequently asked questions
Can the money be withdrawn at any time?
Yes. A Kupat Gemel LeHashkaa (קופת גמל להשקעה) is a fully liquid product. The money can be withdrawn at any stage without penalty, but the withdrawal may involve capital gains tax on the accumulated profits.
Do you pay tax when switching between tracks?
No. Switching between investment tracks, for example from an equity track to a conservative track, is not considered a Taxable event. Switching between managing entities also generally does not create a Taxable event, and tax is deferred until withdrawal.
Is a Kupat Gemel LeHashkaa (קופת גמל להשקעה) suitable for children?
Absolutely. A fund can be opened in each child's name, using their annual deposit limit separately. It 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 choose. You can choose conservative tracks based on bonds and Makam (short-term government bill), general tracks, or high-risk equity tracks.
Compare and choose wisely
Before choosing a Kupat Gemel LeHashkaa (קופת גמל להשקעה)A flexible savings vehicle that allows withdrawal at any time, or receipt of a tax-exempt pension after age 60., review the table we created for you, based on Capital Market Authority data, and compare which funds delivered the highest ReturnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested. alongside the lowest management fees.
Comparing the offers
Before choosing a Kupat Gemel LeHashkaa (קופת גמל להשקעה), it is worth comparing offers from different entities. In the table we created for you, we compiled the management fees, investment tracks, joining terms, and additional services offered by each entity to help you choose the offer that best suits your needs.
In summary
A Kupat Gemel LeHashkaa (קופת גמל להשקעה) is one of the most effective and accessible tools for managing investments in the capital market.
It combines flexibility in deposits, high Liquidity, and regulatory supervision, and lets you choose the risk level that suits you.
The fund is especially suitable for those seeking a simple, user-friendly investment solution that can support long-term financial planning.