Financial Glossary

A fund that reinvests dividends back into the fund’s assets in order to increase the value of each unit.

An investment approach in which the fund manager attempts to select specific shares or time the market in order to achieve a higher return than the index.

An employee for whom contributions are being made to a pension fund on an ongoing basis.

A broad global index comprising thousands of shares from developed and emerging markets.

Covers the cost of temporary accommodation if the home becomes uninhabitable due to damage.

A loan in which only monthly interest is paid and the principal is repaid in one lump sum at the end of the term.

A bank savings product in which a sum of money is "locked" for a defined period in exchange for a predetermined interest rate.

A savings product based on an individual contract between the saver and the insurance company, combining a savings component and insurance coverage.

A type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest.

A gain created by an increase in the value of a particular asset (such as a rise in a share price) and realized only when the asset is sold.

A management approach in which the level of risk is adjusted according to age – as age increases, exposure to equities decreases.

The process of assessing an insurance applicant’s medical condition in order to determine the policy terms.

A situation in which the returns accumulated on an investment are reinvested and generate additional returns themselves, creating accelerated growth of the money over time.

An index that measures the average change in the prices of a basket of goods and services consumed by an average household, and serves as the main tool for measuring inflation and indexing debts.

Maintaining continuous insurance coverage when switching between policies in order to avoid a new waiting period.

The maximum amounts that may be deposited into certain savings products in order to receive tax benefits.

The initial amount the insured pays out of pocket when making a claim.

A model in which the amount of the pension depends solely on the actual contributions made and the returns accumulated on them.

Government programs (such as Mechir LaMishtaken) that enable the purchase of a discounted apartment through a lottery.

A fund that transfers dividend or interest income directly to investors’ bank accounts.

A situation in which multiple policies cover the same risk, resulting in unnecessary premium payments.

A penalty charged for repaying the mortgage before the agreed time.

Protects against claims by workers on the property (such as a cleaner) who are injured while carrying out their work.

A method in which the principal is repaid in equal installments, so the total payment decreases over time.

A security traded on an exchange that tracks a particular index, allowing an investor to buy a "basket" of assets in a single transaction.

An older index-linked product that represented a contractual obligation by the issuer to pay the investor the return of the index.

Specific situations or types of damage that are not covered by the insurance.

A strategy of purchasing a property, improving it, and selling it for a profit within a short period.

A central information system that makes it possible to obtain a complete picture of all pension savings and insurance policies.

Pension funds opened before 1995 that are based on rights accumulated according to years of service and salary.

An older model in which the pension is paid directly from the employer’s budget according to salary percentages and years of service.

A registration in the Land Registry indicating that the property owner has committed to a transaction, in order to prevent a double sale.

Includes building insurance (for the structure of the home) and contents insurance (for the property inside the home).

A person who has stopped contributing to a pension fund, which may impair their insurance coverage.

Ongoing income received from holding an asset (such as dividends from shares or interest from bonds) without needing to sell it.

A mutual fund whose objective is to achieve a return as close as possible to the performance of a particular index.

A process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products).

The list of events and damages for which the insured is entitled to compensation.

The legal contract that sets out the insurance terms, coverage, and exclusions.

The "price of money" – the amount paid for the use of someone else’s money, as income to the depositor or as a cost to the borrower.

The set of rules and criteria established by the fund manager regarding how assets are selected and the level of risk.

The bank’s formal preliminary approval to grant a mortgage based on your credit data and income.

A medium-term savings product (six years) that benefits from a tax exemption on investment gains up to the applicable contribution limit.

A basic allowance paid by the state to every resident who has reached the qualifying age.

A monthly pension paid to the family members of a saver who has died.

A flexible savings vehicle that allows withdrawal at any time, or receipt of a tax-exempt pension after age 60.

A long-term savings vehicle without a built-in insurance component, allowing flexible investment management.

Provides for payment of a sum of money to beneficiaries in the event of the insured person’s death.

The speed and ease with which money can be withdrawn from an investment and converted into cash in a bank account without significant penalties.

An index measuring construction input costs, to which the remaining payment to the developer is linked.

"Short-Term Loan" – a one-year government bond that serves as a relatively low-risk investment instrument.

A tax imposed on the buyer, the amount of which depends on the value of the property and on whether it is the buyer’s only home.

A tax imposed on the seller on the gain created by the increase in the property’s value between purchase and sale.

The outstanding principal is not affected by the index.

The outstanding balance and repayments change in line with changes in the Consumer Price Index.

A mutual fund that invests in low-risk, short-term assets and serves as a liquid alternative to a bank deposit.

A long-term loan for purchasing a property, with the property serving as collateral for the bank.

People whom the bank has refused to grant a loan because of a low credit rating or insufficient income.

A combination of life insurance and building insurance required by the bank to secure repayment of the mortgage.

The combination of several different interest-rate tracks within the same mortgage in order to diversify risk.

Replacing an existing mortgage with a new one in order to improve the terms or adapt it to a new financial situation.

An investment vehicle that allows many investors to pool their money into a shared portfolio of assets managed by a professional.

A principle under which all savers insure one another; costs and gains are shared among all members of the fund.

An index comprising the 100 largest non-financial companies listed on Nasdaq, with a strong emphasis on technology.

New apartments purchased directly from a developer, often "off plan."

The "raw" monetary gain without taking into account the decline in the value of money due to inflation.

Tax calculated on the total gain without offsetting the effect of inflation (for example, 15% on a money market fund).

Ownership of a small share of an apartment (up to one third), which generally is not considered ownership of a full apartment for tax purposes.

An investment strategy based on tracking broad market indices over time, based on the assumption that it is difficult to consistently outperform the market.

A monthly payment made to a person after retirement from work in order to help maintain their standard of living.

The monthly amount paid to the saver in retirement, calculated by dividing the amount accumulated by a "conversion factor."

A savings vehicle based on mutual risk sharing that includes insurance coverage in cases of disability or death.

A general term for long-term savings products (pension fund, managers’ insurance, or provident fund) intended for retirement.

Statements detailing the status of the savings, investment gains, management fees, and insurance coverage.

The portion of contributions paid solely by the employer, intended for severance pay or to increase the pension benefit.

An investment product managed by insurance companies, offering full liquidity and the ability to switch between investment tracks without creating a taxable event.

An early sales stage in a real-estate project at a price below the market price.

The periodic payment made to the insurance company.

A base interest rate consisting of the Bank of Israel interest rate plus 1.5%.

The original amount of money borrowed from the bank.

The actual gain remaining from an investment after deducting the rate of inflation.

Government bodies (such as the Israel Securities Authority or the Capital Market Authority) whose role is to supervise financial institutions and protect investors’ rights.

The maximum monthly amount you can allocate to mortgage repayments without harming your standard of living.

A pension paid by the pension provider based on the individual amount accumulated.

The profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested.

A fixed interest rate; however, if the loan is index-linked, the debt will change according to inflation.

A track in which the interest rate and repayment remain fixed, regardless of the index or the market.

An interest rate that is updated at predetermined points in time according to an external benchmark.

An index composed of 500 of the largest and leading companies traded on U.S. stock exchanges.

A law that protects buyers of apartments from developers and requires safeguards (such as a bank guarantee) for the buyer’s payments.

A 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.

A repayment method in which the monthly payment is fixed, while its composition (interest versus principal) changes over time.

A virtual "basket" of shares grouped according to a certain criterion (such as market capitalization or industry), used to measure the performance of a specific market segment.

The flagship index of the Tel Aviv Stock Exchange, consisting of the 35 companies with the highest market capitalization traded in Israel.

The portion of pension savings contributions intended for the pension, consisting of both employee and employer contributions.

The ability to pay capital gains tax only when money is withdrawn from the plan, rather than when the gain is generated.

Tax on rental income, with an exemption available up to a certain income threshold.

The economic benefit created when money that would otherwise have been paid as tax remains invested and continues to earn returns over the years.

An action in an investment portfolio (such as selling at a profit) that triggers an immediate tax payment to the state.

Protects the property owner against claims for bodily injury or property damage caused to others on the premises.

A period from the start of the insurance during which the insured is already paying premiums but is not yet entitled to compensation.

A provision guaranteeing a minimum number of pension payments to heirs if the saver dies shortly after retirement.

Projects such as TAMA 38 or demolition-and-reconstruction projects designed to strengthen or rebuild older buildings.

A legally binding document signed between a buyer and seller before the final contract.