3 options for solid savings
A bank deposit, a money market fund, and Makam are three common channels for solid short- and medium-term savings, but each offers a different combination of liquidity, certainty, taxation, and costs. This page compares the options and helps you understand which better suits when you will need the money and the flexibility important to you.
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When looking to set money aside without taking risks or getting tangled in financial terms, the choice is usually between three common options: a bank depositA bank savings product in which a sum of money is "locked" for a defined period in exchange for a predetermined interest rate., a money market fundA mutual fund that invests in low-risk, short-term assets and serves as a liquid alternative to a bank deposit., and Makam"Short-Term Loan" – a one-year government bond that serves as a relatively low-risk investment instrument. (מק״מ).
The three options in brief
1. Bank deposit
Locking money in the bank for a defined period in exchange for an interest rateThe "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. known in advance. This channel is suitable for someone looking for complete 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. but willing to “lock” the money without a flexible withdrawal option.
2. Money market fund
A regulated mutual fundAn investment vehicle that allows many investors to pool their money into a shared portfolio of assets managed by a professional. (by the Israel Securities Authority), professionally managed and invested in solid, short-term assets. The fund is a liquid alternative to a bank deposit, aiming to produce a returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested. similar to the Bank of Israel interest rate in accordance with changing market conditions.
3. Makam (short-term loan)
A short-term bondA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest. issued by the Bank of Israel for a period of up to one year. A bond is essentially a loan that we give the state: we transfer money, and on a predetermined date the state returns it. The Bank of Israel issues a new Makam series once a month, and each such series is redeemed after one calendar year (12 months). Makam is considered one of the most solid investment channels in Israel because the Bank of Israel itself stands behind it.
Summary table—deposit vs. money market fund vs. Makam
Comparison of 3 options for solid savings
| Features | Bank Deposit | Money Market Fund | Makam |
|---|---|---|---|
| Risk level | Very low | Low | Very low |
| Return | Fixed/defined in advance | Higher than a deposit (usually) | Known in advance if held to redemption |
| Liquidity | Low (depends on exit points) | Very high (daily) | High (through the stock exchange) |
| Tax | 15% on the nominal profitThe "raw" monetary gain without taking into account the decline in the value of money due to inflation. | Real tax (only above inflationA process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products).) | 15% on the nominal profit |
| Costs | Depends on the bank and product | Low management fees (reflected in the return) | Depends on trading commissions and custody fees |
| Managing entity | Your bank | Investment house | State of Israel |
| Who it suits | Someone willing to “lock” money for a period | Someone who wants liquid (available) and solid money | Someone planning to hold until a date known in advance (redemption), and who understands that an early sale may cause a profit or loss according to market conditions |