Have you reached a crossroads where you are asking yourself where to invest your savings? Like many others, you are probably debating whether it is worth putting all your eggs in one basket or spreading the risks, what is the recommended level of risk, and where you can get the highest return without risking a bet. The answers to these questions differ from investor to investor according to various variables such as: the amount of savings, the purpose of the investment, and the desired level of risk.
In order to encompass the topic from all sides, we have created the following guide that reviews 15 different investment channels and strives to provide an answer to the million-dollar question: What is the recommended investment channel for you? A review of each investment channel includes a breakdown of the advantages, disadvantages, and the type of investor audience for which it is suitable. By the way, the first recommended investment channel is 5 minutes of reading this article…
Economic Savings: The Need and Value
The cost of living, the abolition of the era of provident funds and continuing education on behalf of the employer, and the culture of excess consumption, have made the culture of saving a challenging task for the self-employed and employees in the Israeli economy. These figures, along with an increase in the level of inflation and a rise in the prime interest rate, cause equity to lose its value and make it difficult to save.
Nevertheless, the importance of investing savings funds remains the same, and investing money for economic investments is an essential action even today. Leveraging equity and creating a stable financial infrastructure are the products of high-yield investments. So, how can we invest our money wisely?
Recommended Investment Channels: An Overview
Real Estate Investments – Real Estate in Israel
Real estate investments in Israel are considered a relatively safe investment channel and until a few years ago they were considered a very popular and lucrative field. With the halt in the rise in housing prices in Israel and the reduction in the level of rent that is customary in the market, the level of demand for real estate investment here in Israel has declined in accordance with a low return relative to the level of investment.
Despite the decline in demand, real estate investments in Israel still provide a number of important advantages:
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- According to the forecast, in accordance with the demographic indicators in Israel, in the coming years there will be an increase in housing prices related to the expected population growth.
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- Purchasing an apartment for investment in the periphery is expected to yield about a 4% rental return.
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- The possibility of intergenerational inheritance of a high-value asset.
Thus, it appears that despite the decline in demand for apartments, this investment channel will still serve as a major player in the field of income-producing investment channels.
Projects marketed by the Meni Group:
Real Estate Abroad
With the difficulty of investing in Israeli properties, many Israelis are looking for their luck in purchasing properties abroad, and many Israelis are looking for real estate investments in the European region that are considered yielding and have an annual return of %-12% percent. The difficulty in managing the investment remotely led to a solution in which the maintenance of the property is entrusted to local management companies that issue a coupon for the geographical distance of the investors. However, they provide particularly effective services for dealing with linguistic, cultural, and knowledge gaps in various legislative and insurance issues.
At the same time, there are investors who manage their real estate investment independently in an optimal manner. For those who have no experience, investing in this industry is recommended with professional guidance only.
Commercial Real Estate
Commercial real estate is considered an investment that carries a very high return of %-8% annual returns from the purchase price. Another advantage associated with this type of investment is the low equity compared to other investments as an initial payment.
The valuation of the property is based on the business’s business report. In this type of investment, it is customary that the expenses of the property are not imposed on the property owner.
However, the business owner’s responsibility must include the maintenance of common areas, various safety aspects, and dealing with the rental of the commercial space by a number of businesses, all of which certainly require developed management skills and abilities. Here, too, there are those who choose to transfer the authority of managing the current property to a professional holding company. In such a case, the calculation of the cost of the investment should also include maintenance and operating expenses.
Procedures for Changing the Zoning of Investment Lands
Significant population growth and a decline in the level of property supply in Israel are leading to a trend of land rezoning procedures in Israel. Thus, lands for sale that have been defined as agricultural are thawed in an ongoing process, at the end of which they allow them to be used for residential, commercial, tourism and industrial purposes.
This investment option is suitable for those with patience and patience, as the process may take many years. As a rule, as the process progresses, the yield potential of the land increases. The possible return in the investment channel of land in rezoning proceedings is tens or even hundreds of percent of the investment price.
Another advantage is the fact that minimal involvement in the treatment of the land is required, unlike the ongoing maintenance that characterizes built properties.
It should be taken into account that the date of the land thawing is unknown and in some cases may even take decades, however, for the most part, patience pays off.
Real Estate Funds
These funds, also known as REITs, invest in income-producing real estate securities owned by public real estate companies. The investment is made by these entities in the purchase of residential, commercial and office buildings for the purpose of renting the properties for the long term and achieving a stable return.
The advantages of this investment channel include relatively low risk, a measurable level of return even before the investment process, and frequent payment of dividends.
However, despite these advantages, it is important to understand that it is not possible to rely on the performance of real estate funds in the past as the market is very dynamic. Another disadvantage is the impossibility of independent conduct on the part of the investor.
Another information that you should know is that there are real estate funds that are available for investment only for large-scale investors who are well-known in this market. By the way, depending on the type of investors, it is possible to choose suitable real estate funds: this way, an investor who prefers a solid investment channel will be able to choose real estate funds that provide a low but stable return. On the other hand, investors who are interested in a higher level of risk will be able to choose funds based on opportunistic investments that may yield a high return alongside a accordingly high level of risk.
Investment Provident Fund
Under this heading, a number of pension savings instruments are grouped. This is a passive savings intended for the medium to long term. This savings is liquid and allows the withdrawal of funds at any time, even before retirement – without paying fines.
This savings channel is considered flexible and allows switching between tracks without the transaction being considered a tax-deductible expense.
An investment provident fund offers tax benefits on pensions and capital gains tax on withdrawals regardless of the level of salary, a figure that defines it as an attractive investment channel for different time periods.
Investors in an investment provident fund may enjoy a return of up to 10% per year when the capital market is on the rise. The management fee for an investment provident fund ranges from %-0.7%.
The disadvantage of this investment channel is the limitation on annual accumulation funds. The ceiling for the cumulative sum is NIS 71,000.
Study Fund
A study fund is a medium-term investment channel in which the savings funds can be released after 6 years of accumulation. A study fund is exempt from capital gains tax up to a certain relatively high ceiling and is therefore considered a preferred option among salaried and self-employed employees.
Before investing in a study fund, it is important to check the level of risk in investing in the study fund, the level of return of the fund, and the amount of management fees.
Investing in the stock market and the capital market
Investments in the capital market will usually be made through banks, investment houses or financial companies. These entities manage investment portfolios for investors, subject to the supervision of the Israel Securities Authority and other regulatory bodies. There is an option for independent trading in the capital market and the stock exchange, with those who choose this option saving high management fees. However, the choice of professional management of an investment portfolio offers collateral from investment entities and close supervision.
Investing through a managed portfolio allows peace of mind and minimal dealing, while investing independently reduces the cost of the investment. Each investor must examine his abilities and the level of his inquiries and consider an independent investment versus managing a portfolio by a supervised body.
Recommendations for Yielding Investment Channels
Other investment channels recommended by experts in the investment world include investing in forex, gold, digital currencies, savings policies, social investments, and the acquisition of active businesses. Each investment channel has advantages as well as disadvantages, which requires each investor to examine the nature of the investment that is suitable for him. Of course, in order to minimize the level of risk, it is recommended to spread the risks as much as possible and choose several investment channels at the same time. In addition, in order to get an accurate indication, it is imperative to thoroughly study the various investment markets and consume professional information that can provide significant value when choosing the relevant investment channels.
In any case, it is recommended to consult with an investment professional who is well acquainted with the market in order to create the right and yielding investment mix with maximum return and minimum risk according to the amount of savings and the nature of the investor.
Meni Group – The Home for Income-Producing Financial Real Estate
Mani Group, a professional investment consulting firm, provides a personal navigation service through the maze of investment channels. The company has developed dedicated investment tracks that enable investment with minimal risk, with an emphasis on achieving profits already within the investment process and not only when it reaches its end.
Are you interested in creating the right investment mix for your savings funds? Contact Meni Group’s investment advisors now to create the optimal formula for achieving significant profits.
