Last week, I wrote about how the “so-called” middle-class tax cut is going to cause damage to both the Israeli economy as well as to those in the lower and middle classes. Now it seems like the Finance Ministry, led by Yuval Steinitz, is trying to outdo itself by dramatically increasing the taxes on luxury cars and apartments.

My gut tells me that this is only the beginning as more and more Trajtenberg committee recommendations are enacted. Measures to disincentivize job-creators, as well as those trying to climb the socioeconomic ladder, is sure to backfire by stifling capital investment and adding to the unemployment rolls.

The ultra-rich like Nochi Dankner and Shari Arison will be able to use their battery of accountants and lawyers to figure out ways to shelter their money. It’s the small and mid-sized business owners that just saw their corporate taxes increase. If they are fortunate enough to make a profit, the money that they take out of their businesses as a dividend will be taxed at a higher rate as well.
Redistributing wealth from the rich to the less fortunate doesn’t really help the less fortunate. What helps them the most is a job and incentives to invest, so that they can be enabled to do what it takes to grow their net worth and exit the poverty cycle they are relegated to. If Daphni Leef and her protesters have their way, those in lower income levels have little chance of ever escaping their current economic conditions. No society has ever been taxed into prosperity.

Required Reading

Before any more damage is done, I urge the local policymakers to read the defense of capitalism penned by former Florida governor Jeb Bush, the brother of former president George W. Bush, which was published in a recent Wall Street Journal editorial titled “Capitalism and the Right to Rise.”

In lamenting the current state of economic freedoms, he writes, “Freedom of speech, for example, means that we put up with a lot of verbal and visual garbage in order to make sure that individuals have the right to say what needs to be said, even when it is inconvenient or unpopular.

We forgive the sacrifices of free speech because we value its blessings.

“But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself. Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations.

“We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand, ‘Do something… anything.’”

Bush hit the nail on the head. A few days ago, I got a letter (sent in a Knesset envelope – at taxpayers’ expense) from a Knesset member who will remain nameless. He writes about how much of an impact he has made in 2011, and all the laws that he authored or co-authored, assuming that the sheer quantity, by definition, has greatly added to Israeli society. Could it be that he actually has harmed the very people he is claiming to have helped? Maybe the best thing our elected officials could do is do nothing and stop interfering in our quest for a better life, both individually and for society in general.

The right to rise

This is a term started by US Congressman Paul Ryan.

The point is that governments should create a landscape that breeds success. How does this apply to Israel? Prime Minister Binyamin Netanyahu and Finance Minister Yuval Steinitz should stop pandering to those who believe in equality of outcome; rather, they should create a system that allows people to be the best that they can be.

In the words of Bush, “We either can go down the road we are on, a road where the individual is allowed to succeed only so much before being punished with ruinous taxation, where commerce ignores government action at its own peril and where the state decides how a massive share of the economy’s resources should be spent. Or we can return to the road we once knew and which has served us well: a road where individuals acting freely and with little restraint are able to pursue fortune and prosperity as they see fit, a road where the government’s role is not to shape the marketplace, but to help prepare its citizens to prosper from it.”

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.

The very successful book Start-Up Nation: The Story of Israel’s Economic Miracle (New York, 2009) certainly made the case for why Israel has flourished, against all odds, economically. I can’t tell you how many emails and phone calls I have received from people who have read the book and are now all revved up to invest in Israel. They all want to know how they can invest in Israel. 

Before looking at various investment alternatives I think that it’s important to make a distinction vis-à-v-is investing in Israel. I would like to distinguish between the Israeli economy and Israeli ingenuity. The story of the Israeli economy is well documented. The country survived the recent financial crisis with flying colors. With the U.S. reporting an unemployment rate over 9% (the real jobless rate is closer to 15-16%), the situation in the holy land is much better. Unemployment around 5.7% and dropping, GDP is growing at a 4.7% clip (est.) for 2011, and a strong currency all are major factors in the strong economy. 

Compared to the global economic scene things in Israel are great, but there are some clouds on the horizon. The Bank of Israel recently ratcheted down Israel growth numbers for 2012, to 3.2% because of the continued global slowdown. The local real estate market appears to be cooling and while it has taken a back seat, no one knows exactly how the large ‘tent protests’ will impact the economy. 

How to Capitalize?

For many investors, investing in local Israeli stocks is one alternative way of gaining exposure to the Israeli economy. If you want exposure to the strong domestic growth you could buy for example a local food company like Strauss or phone company like Bezeq. In order to do so you need to open up a local Israeli brokerage account, invest in Shekels and speak in Hebrew to a local advisor. While this may be fine for some investors, for many native English speakers in Israel and abroad this is a big step. 

It’s also important to note that Israel’s economy while strong is not the only investment destination in the world with similar strong economic fundamentals. A tour through emerging markets( Brazil, Chile, South Korea..etc) will find many countries with 4+% growth. Local food companies and telecommunication companies are a dime a dozen. 

To me that’s not the reason people get excited about investing in Israel. Those excited after reading Start-up Nation weren’t running to invest in a small company that invests in canned Israeli food. Rather they want to be part of all the ingenuity and creativity that Israel exports. Investors want to invest in companies that power the world. It’s no secret that the largest multi-national companies in the world are every active in Israel. Whether it be Microsoft (MSFT) or Johnson and Johnson(JNJ) or IBM (IBM) or any of a multitude of other well know companies, they all come to Israel to acquire or invest in today’s cutting edge technologies. From companies that can put a camera in a pill to help alleviate the need for invasive gastro procedures (Given Imaging-GIVN)), to companies that lead the world in computer security (Checkpoint-CHKP) to companies that are leading the move into cloud computing (Radware-RDWR) what Israel does very well is power the world based on technology and that’s what becomes exciting as an investment. 

The easiest way to access these companies is via the Israeli stocks that trade in the U.S. As has been widely reported, Israel has more companies trading on major U.S. exchanges than any other country in the world. Not all Israeli companies are created equal andinvestors should do in depth research before investing. 

Risk

It’s very important to note that these types of investments carry an element of risk. As some of these companies are not very large, the smallest piece of news can send their stocks either soaring or tumbling. It’s therefore important to speak with your investment adviser to see how, if at all, investing in up-and-coming Israeli companies fits into your overall investment portfolio.   

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.

Take a look at my fetaure article in the latest edition of Jewish Action. It’s about the surging Israeli economy, the Israeli hi-tech industry, as well as financial aliyah and the Israeli housing crisis. http://www.ou.org/jewish_action/article/the_surging_israeli_economy

This article appeared in The Jewish Week’s Aliyah supplement

We all remember the old joke, “How do you become a millionaire in Israel? You come with two million!” While that used to be true, today Israel’s economy is flourishing and both economic and employment opportunities abound. Israel has gone from being just a tourist destination to one of the leading investment destinations anywhere in the world. Global giants like General Electric, Microsoft, IBM and Johnson and Johnson are only a few of the companies that have made large investments in Israel by buying local companies. In fact, Warren Buffet, perhaps the world’s most famous and successful investor, made his largest non-U.S. investment when he purchased Iscar, an Israeli company, for $4.4 billion. Buffett has since referred to the purchase as a “dream investment.”

It’s The Economy

Israel has successfully made it through the global economic crisis without so much as a scratch. The U.S. economy is still plagued by large levels of unemployment, a slumping real estate market and a general feeling that its’ days as the number one economic power are numbered. The situation is even worse in Europe, with certain European countries on the verge of bankruptcy. Compare this with an Israeli economy that is clicking on all cylinders and it makes sense why the foreign investment keeps pouring in. Israel posted 4.5% GDP growth in 2010 and the forecast for 2011 is to be strong as well. Unemployment is hovering down at just over 6%, a lot better than in U.S.

 Starting in May 2010, Israel was re-classified as a developed country by the MSCI. For investors, this means that you get the stability of a developed country with the strong growth prospects of an emerging economy. Sounds like the best of both worlds. I mentioned the U.S. real estate slump; well Israel is enjoying a real estate boom. While prices have been moving up, there is still good value to be had for people looking to either by as an investment or to come and live. And to top it off, while Israel is lacking in natural resources, huge natural gas reserves have been found off the Haifa coast. This will turn Israel into a net exporter of natural gas! Israel’s economic prospects just keep getting better and better.

Aliyah by Choice

 It’s this economic strength that has driven so many North Americans to make Aliyah. There is a plentitude of employment opportunities to be had in Israel, and I know many olim that have left the U.S. to come to Israel because they lost their job and they understood that there were more opportunities in Israel in their particular field. Israel is no longer a place that people go to because they have no other choice, rather it has turned into a sought after destination because of all the economic opportunity as well as quality of life.

 Financial Aliyah Tips

For those seriously considering making Aliyah, here are some financial tips that will help you in your preparation:

1. Budget: While it may seem easier to wait until you are settled before practicing fiscal discipline, it is extremely important to make a budget as soon as possible. Chances are that you will blow through the limits of this budget with the various miscellaneous expenses that will arise at the beginning of your new life in Israel. Nevertheless, getting used to living within a framework is important. As time goes by and you get more accustomed to your new life in Israel, your budget should be flexible enough to be able to accommodate your new lifestyle. Keep in mind that while certain things in Israel are much cheaper, such as your children’s education, other things may cost more (like appliances and cars).

 2. Your IRA: New olim need to keep their IRAs (Individual Retirement Account) up to date. One of the most common issues I see when I meet with prospective clients is that they haven’t looked at their IRAs in years. I fully understand that tending to retirement accounts for a new immigrant is not at the top of the list of things that need to be done upon arrival. Finding a place to live, getting your children adjusted to their new surroundings and school are more urgent issues which need to be attended to. It’s just that I find that when it comes to both retirement accounts and investments abroad in general, inertia tends to sit in. Olim tend to forget about these accounts altogether, only to wake up in a decade or so to realize that the value of their account is the same as it was pre-Aliyah.

3. New Job: When job hunting, make sure that you get a fair compensation offer. When discussing compensation, it is important to know that there are many social benefits that salaried workers are entitled to and you should make it clear that you want them as well. In fact, in most cases, it is now the law that you receive certain pension plans. Savings plans, both short term (Keren Hishtalmut) and long term (Kupat Gemmel), can help you realize the goals that you have set forth for yourself. Such expenses are often covered by the money that the worker has put away over the years, which is matched by their employer according to the terms of the policy.

Now is the time to take advantage of the strong economic situation and consider moving to Israel. Take the time to speak with a professional in order to make sure, that financially, you are all set to have a successful Aliyah.

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.

The Arab world has been shaken. Large protests in Tunisia, million-man marches in Egypt, and a new government in Jordon created to try and stave off protests. Are these protests the precursor to democracy taking over from dictatorships? Are they the beginning of a massive takeover of power by radical Islam? While only time will answer these questions, investors need to ask how these events will impact their portfolios. 

The answer varies depending on where you are investing. Those investing locally, on the Tel Aviv Stock Exchange (TASE), need to realize that the current, unsettled situation could continue for months or even years until the dust settles. As Andre Aciman writes in Bloomberg news, “Where Egypt is headed is still unclear. More worrisome yet is who will step into the breach if President Hosni Mubarak goes. Will it be the powerful Islamist oligarchy, which, so far, has stood on the sidelines and watched the unaffiliated younger generation of Egypt vent its rage against a police state that has historically been so brutal to the Muslim Brotherhood? Or will it be someone like Mohamed ElBaradei, who clearly appreciates the ways of the West and who could steer Egypt toward real democracy and desperately needed change, thus helping Egypt become the modern state it so wants to be? Or will it be someone like Nasser, who, rising from the military ranks and armed with his own charisma and propaganda machine, will, as so many leaders have done in the past century, feed the masses on national pride?”

While I disagree with Aciman regarding the “democrat’ ElBaradei, the man who refused to admit that Iran was building nuclear weapons, his overall premise that it’s unclear as to what will happen is spot on. When it comes to investing there is a well-known principle that says that ‘markets hate uncertainty’.  For local Israeli investors uncertainty rules the roost. With Hezbollah taking over in Lebanon, Egypt facing the kind of unrest that could spread to Jordan and Saudi Arabia, Israel has once again been thrust into the middle of a very complicated political situation which could, I shudder to think, threaten the very existence of the Jewish state. As it could take months or even years to gain clarity and end the uncertainty, the local TASE could be in for an extended period of both heightened volatility and sub-par returns.

Israelis Traded in the U.S.

While I may be skittish about investing in the TASE, there is another way to gain exposure to Israeli companies and that is by investing in the more than 100 Israeli companies that trade in the U.S. These companies, while having been founded in Israel and still doing their research and development here, are truly global companies doing almost all their business globally. Some of these companies, namely the ones that deal with defense and security, very well may be the recipients of new government defense spending that will be proposed in order to deal with the new regional reality. Most of the ‘cool’ Israeli technologies which power many facets of our daily lives were created for the military and only later rolled out for consumer application. With ramped up defense spending we may see a new wave of groundbreaking technology created. These companies are less about having exposure to local, Israeli economic growth, but rather these are the companies that are the poster children for Israeli creativity, ingenuity and innovation.

Global Markets

Many clients have called me over the last week scratching their heads as to why global stock markets continue to head higher? It’s important to note that Egypt, Tunisia and Jordan are very small oil producers and as such, their impact on global oil supply is negligible. Egypt is more important as they control the Suez Canal, but all indications are that the Canal will remain open to traffic and as such there is little threat to the global oil transport. Most market participants believe that this crisis in the middle-east will do nothing to derail the global economic recovery. Global investors are continuing to focus on both improving economic fundamentals and healthy corporate profits, thus driving the markets higher.

Investors who own both investments on the TASE and in other global markets should take a hard look at the current situation and use this crisis in order to rebalance their portfolios to get them more in line with their risk tolerance level.   

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.

Global real estate markets have been crushed. With prices in some markets 50% lower than they were a few years ago, real estate seems to be cheap. Owning property is part of most asset allocation models, meaning that it serves as a good diversification tool. Even the Talmud is ‘pro’ real estate. The Talmud (Bava Metzia 42a) advises that one should keep a third of one’s assets in property, another third in business and the other third in cash. For those of you who do not have exposure to real estate, the question is whether now is a good time to start to invest in real estate. 

Israel vs. The World

Although the local real estate market has been on a tear, it’s important to note that nothing goes up forever.  Moreover, investors should note that the old refrain, “real estate never goes down in Israel,” isn’t necessarily true. In fact, earlier this decade, the real-estate market in the country was dormant. Keep in mind that while supply is limited and that is good for price appreciation, both the Bank of Israel and the government are doing all they can to try and cool off the local market. 

Buy Low/Sell High

Ahh, that old investing refrain. A good way to potentially make money is to buy quality assets when they are out of favor and trading at low levels. That brings us to international real estate. After such a serious fall, can prices keep dropping? The answer to the question is a resounding, maybe! But for an investor, that question may be less relevant. It is virtually impossible to pick the exact low price of any asset. What is possible is to buy a quality asset at a huge discount. i.e. buying low.

Options 

I’d like to highlight 4 ways to go about investing in real estate.

Investment Property Go out and buy an apartment.  As an individual property owner you are in control. You decide when to buy or sell, how much rent to charge..etc….  There are a few negatives to an individual buying an investment property. When buying an investment property, a common problem faced by many individuals is raising the large amount of money needed to get started. Even then, the high initial investment minimum means that most beginners are only able to purchase one property, and this lack of diversification enhances the risk involved with the investment.   There is also the headache of being a landlord and having to deal with leaky faucets and burst pipes.

 Real Estate Investment Trusts  Another option is to invest in a Real Estate Investment Trust (REIT). A REIT is a trust company that raises a sum of money,   to buy, develop, manage and sell assets in real estate. By purchasing one unit of a REIT, you are purchasing a part of a managed real-estate trust, providing much greater diversification.  REITs are similar to investing in regular stocks, so there is no prohibitive minimum investment and they are publicly traded on major stock exchanges, providing relatively quick liquidity. In addition, REITs are normally required to distribute 90% of the income that was generated from their real-estate holdings. This way, you receive your rental income without having to fix the plumbing!

Deals There are many people out there peddling real estate deals. For a reasonable investment you become a limited partner in a group that is going to buy a building, a strip mall or some other property whose price is well beyond the average person’s means. Keep in mind that you need to do a lot of due diligence on the people behind these deals to make sure they are honest. The media is full of stories of fraudulent real estate deals.

Related Stocks Ask your financial professional for stocks that are related to the real estate market. They may include publicly traded roofing, landscaping and lumber companies to name a few. These companies have the potential for price appreciation if the construction market would stabilize or start to grow in the U.S.  

Whether looking to enhance your income, or for a capital gain, at these depressed levels, real estate is worth taking a look at. 

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.

One of the most common questions that I receive from clients is how to preserve the value of their portfolios in the face of a sinking U.S. dollar. While I answer that it’s important for people living in Israel to hedge against a potential fall in the dollar, I think that investors need to take a slightly more macro-approach in what is really happening with the greenback against the shekel. While all currencies move up and down on a daily basis, the fact is that the USD/shekel has been remarkably stable over the last three years. This graph demonstrates that since the end of November ’07 we have been nearly spot on 3.8 USD/NIS. 

While a strong shekel gets the headlines it’s important for investors to drill down a little bit and see what is actually happening, and in our case what is actually happening is that the dollar is stable. 

Stronger Dollar?

While the dollar has been falling globally since the Korean War, it has had periods of strength. Those periods of strength have also corresponded to big stock market moves higher. While conventional wisdom says that a weak dollar is good for exports which will help the U.S. extricate itself from the nasty recession, the fact is that a weak dollar is horrible for the economy. Aside from the fact that it is inflationary, rarely good for any economy, a weak dollar often means a weak economy. It means that foreigners don’t want to invest there, and local companies move operations overseas. Just think about Israel over the last 7-8 years. You have a stronger/stable currency and global investors have poured in billions and billions of dollars to invest here. This was not happening back in the day of high inflation and weak shekel/lira.

Elections

One of the least talked about ramifications of the recent massive Republican gains in the mid-term elections is the impact on the currency. The fact is that the dollar has rallied since the election. My gut feeling is that if the Republicans can show the world that they are serious about implementing fiscal constraint and put the reins on government spending, the USD will continue to strengthen. The Americans need to show that they are serious about tackling both budget and debt issues, and if they buckle down and do it, and it appears that progress is being made on both fronts, the dollar will again become attractive.

After all, the alternatives to the dollar are nothing to write home about. As I write this article, pressure is on Ireland to accept a European bailout. We could see Italy and Portugal facing these same issues shortly. While until this week the currency market still seemed deaf as to sovereign credit crisis within the euro zone, it appears that once again this issue is coming front and center. So the Euro has problems and the Japanese economy is really screwed up as they try and work through their own debt issues. This potentially leaves the USD as the big winner in the global currency wars if, and I admit it’s a big if, the US can get it fiscal house in order.

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.

With the landing of multiple Nefesh B’Nefesh flights over the summer I would like to continue my series of financial tips for new Olim. Last week I discussed the need for new Olim to get their ‘Financial Aliyah’ in order. I explained how important it is to get your hands around a budget and keep your retirement plans from the old country current. This week I would like to focus on issues of employment benefits and banking.

New Job

When job hunting, make sure that you get a fair compensation offer. Much to my chagrin, there are employers out there that will try to take advantage of your “new immigrant” status and offer you less than the market wage. They feel that you will be willing to ‘settle’ and be so happy to get any job that you will forgo a competitive salary. Hang tough when negotiating salary. As they say in the local vernacular: “Don’t be a frier!”    

When discussing compensation, it is important to know that there are many social benefits that salaried workers are entitled to and you should make it clear that you want them as well. In fact, in most cases, it is now the law that you receive certain pension plans. Savings plans, both short term (Keren Hishtalmut) and long term (Kupat Gemmel), can help you realize the goals that you have set forth for yourself. Such expenses are often covered by the money that the worker has put away over the years, which is matched by their employer according to the terms of the policy.

Recent reforms in savings plans give more choice to employees than ever before. It’s important to speak with a professional to understand what you are going to be getting and which provider to choose. It is also important to verify that you are receiving your full complement of sick days and vacation days. 

Your U.S. Investment Account

Since the 9/11 terrorist attacks, US investment firms have taken a very strict approach to non-US domiciled accounts (accounts without a US address). With the enactment of the Patriot Act and other new laws, it has become much harder for these firms to accept accounts from U.S. citizens living abroad.  Many firms have just decided that they would rather not deal with the issue and have made clients close down accounts or have stopped servicing these accounts. Some firms will not accept transactions from clients living here and others have stopped allowing their advisors to speak with clients residing abroad. 

Olim should investigate how their investment firms are treating the issue, and if there is a problem, I would recommend going local. I would find an advisor who is licensed both in Israel and in the U.S. to handle the accounts.  A local professional with an arrangement with a U.S. firm should not have the same problem. He should have all the compliance in place for his clients to access the wide array of investment choices and advice that you’re used to. 

Where to bank

While 20 years ago Israeli banks may have been the butt of jokes, today Israel has developed a very sophisticated banking system.  While there are only a few banks which control the lion’s share of the market, they are all very competitive and offer a full range of investment products. While customer service has improved, it is still lacking what you were used to pre-Aliyah. As such, when investigating local banks you need to evaluate the plusses and minuses of each one and NOT compare them to your bank back in the U.S. 

I would take that one step further: In order to integrate into Israeli society, it’s not productive to compare everything to the way it was back in the old country. It’s not worse – it’s just different.  Some things may even be better here! 

Here’s to an easy integration. 

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995 visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.

First and foremost I want to take the opportunity to wish a big “Mazel Tov” to the thousands of freshly minted North American olim that have arrived in Israel over the last couple of months. I wish you all an easy acclimation process, and as I am sure you already know, you are definitely in good hands with the tremendous support provided by Nefesh B’Nefesh as well the Jewish Agency.  As the euphoria of your Aliyah starts to wane and reality starts to sink in, you need to get yourself settled not just socially but financially as well. Here are a few tips that will make your financial Aliyah a bit smoother.

New Budget

While it may seem easier to wait until you are settled before practicing fiscal discipline, it is extremely important to make a budget as soon as possible. Chances are that you will blow through the limits of this budget with the various miscellaneous expenses that will arise at the beginning of your new life in Israel. Nevertheless, getting used to living within a framework is important.

As time goes by and you get more accustomed to your new life in Israel, your budget should be flexible enough to be able to accommodate your new lifestyle. Keep in mind that while certain things in Israel are much cheaper, such as your children’s education, other things may cost more (like appliances and cars), and there is a good chance that you will be making far less money than in the old country. It may be very difficult to save at the beginning due to the unexpected expenses that often occur, but you should still try to set some kind of time frame when you can start to save.

Don’t Forget Your IRA

New olim (as well as old time immigrants to Israel) need to keep their IRAs (Individual Retirement Account) up to date. One of the most common issues I see when I meet with prospective clients is that they haven’t looked at their IRAs in years. I fully understand that tending to retirement accounts for a new immigrant is not at the top of the list of things that need to be done upon arrival. Finding a place to live, getting your children adjusted to their new surroundings and school are more urgent issues which need to be attended to. It’s just that I find that when it comes to both retirement accounts and investments abroad in general, inertia tends to sit in. Olim tend to forget about these accounts altogether, only to wake up in a decade or so to realize that the value of their account is the same as it was pre-Aliyah.

Earlier this week, I met with a couple who were perspective clients, and as we were going through their assets, I asked both of them about any retirement plans that they received while working in the US. Both of them said that they had IRAs but because they were relatively small in nature, they rarely, if ever, looked at statements. When I asked them the size of their IRA’s one answered $29,000 and the other said $68,000.  I then asked each of them what the value of these accounts was when they came to Israel, and they both answered that they had roughly the same amount then as they do now.

I can’t tell you how many times I have heard similar stories. If you have a long-term savings account and you never look at it, you are doing yourself a disservice. In fact you are defeating the whole purpose of these types of accounts. While you may think that $29,000 is a small amount of money, in 15-20 years, that ‘small’ sum can — and statistically should — turn into a much larger sum. By putting off dealing with these accounts you could potentially lose tens of thousands of dollars. Again, I understand that getting children settled takes precedence but it can be costly to leave your finances unattended.

Next week I will provide some more tips to help in your Financial Aliyah, and in the meantime, take pride in the courageous decision you made to come live in Israel.

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995 visit www.aaronkatsman.com  or email aaron@lighthousecapital.co.il.