Self-Managed Investment Portfolio: Control in Your Hands
A self-managed investment portfolio is the "manual route" in the investment world. Rather than buying a ready-made product from an Insurance company or investment house, you open a trading account and decide what to buy, when to sell, and how much risk to take.
- Reading time
- 4 minutes
- Last updated
How does it work in practice?
The investment is made through an account with a bank or investment house that is a stock exchange member. You choose the portfolio allocation: stocks, bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest., ETFs, or mutual fundsAn investment vehicle that allows many investors to pool their money into a shared portfolio of assets managed by a professional.—entirely at your discretion.
- Opening an account: Deposit money into a dedicated trading account.
- Making trades: You decide what to buy, when to sell, and at what price.
- Full flexibility: There is no deposit cap, and in most cases, you can start investing with very small amounts.
Control and transparency
Self-management gives you full control and maximum transparency. At any given moment, you know what your money is invested in and how it is performing.
Taxation: no Tax deferral
Unlike structured investment products, taxes on a self-managed portfolio are paid along the way:
- Selling at a profit: Whenever a SecurityA 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. is sold at a profit, capital gains tax on 25% of the real gainThe actual gain remaining from an investment after deducting the rate of inflation. is paid.
- Automatic withholding: In most cases, the tax is withheld at source by the bank or investment house.
- Withdrawing funds: Transferring money from the account to your current account does not create a new Taxable event because the tax was already paid when the securities were sold.
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Full control: You are the sole decision-maker for every shekel in the portfolio. | Requires knowledge and time: Managing the portfolio requires market knowledge and ongoing monitoring, without a professional investment manager. |
| Low costs: There are no portfolio management fees; you pay transaction commissions and custody fees. | Behavioral mistakes: Without professional guidance, it is easier to act out of stress or emotion. |
| Transparency and flexibility: You can respond immediately to market events and tailor the portfolio to your needs. | No Tax deferralThe ability to pay capital gains tax only when money is withdrawn from the plan, rather than when the gain is generated.: Every realization of profit triggers an immediate tax payment. |
The bottom line
- What is it?
- Independent, low-cost, and transparent management of your money.
- What is it not?
- An automated product or one managed for you.
- Who is it suitable for?
- Those willing to invest time in learning, who have self-discipline, and want to control costs.
- The main advantage
- Full control and relatively low costs.
- The main disadvantage
- It requires knowledge, high involvement, and dealing with ongoing taxation.
Frequently asked questions
Can money be withdrawn at any time?
Yes. You can withdraw money from the portfolio at any time, subject to selling the relevant securities and converting them to cash.
Is this a conservative investment?
Not necessarily. The level of risk depends on the portfolio composition and the investor's investment decisions.
Can you switch to professional management later?
Yes. A self-managed portfolio can be converted into a managed portfolio, but this may involve selling assets and create a Taxable event.
What is the minimum amount needed to open a self-managed investment portfolio?
There is no fixed legal minimum. In practice, you can start building a portfolio with very small amounts, sometimes from just a few hundred shekels.
How do you open a self-managed investment portfolio?
You can open a self-managed investment portfolio through a bank or an investment house. In many cases, commissions, management fees, and custody fees are lower at investment houses than at banks. It is therefore advisable to compare terms, as small differences in fees can accumulate into significant amounts over time.
Where is it better to open the portfolio—at a bank or an investment house?
It is advisable to compare terms. At investment houses, commissions and custody fees are generally significantly lower than at banks, which may save you substantial amounts over time.
Comparing offers
Before opening an investment portfolio, it is worth comparing offers from different banks and investment houses. In the table we created for you, we compiled trading commissions, management fees, minimum deposit amounts, available markets, trading platforms, and additional services offered by each provider to help you choose the trading account that best suits your needs.
In summary
A self-managed investment portfolio is the most direct and low-cost solution for investing in the capital market.
It gives you full control and high transparency, allowing you to tailor investments to your preferences and goals.
However, it requires a high degree of personal responsibility, knowledge, discipline, and ongoing management of market volatility and taxation.