The Bank of Israel has recently announced that it would allow banks to charge a commission for investment advice. This means that we should pay careful attention to analyzing our household's investment portfolio, getting to know the professional services one uses or should be using, and making changes if necessary.
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Gathering the information is the first stage. This includes understanding the types of investments available, such as stocks, bonds, and other securities, pension products such as pension funds, keren hishtalmut (short-term, tax-free savings plan), and long-term saving instruments, real estate assets, etc. The information should include amounts, liquidity, taxation, and other relevant information depending on the type of investment.
Several important factors are to be taken into account when analyzing the investment portfolio. Firstly, the investment goals: Creating a monthly income? Purchasing an apartment? Saving for retirement? Helping a family member with school?
Second, the household's financial situation must be considered: income, expenses, debt, and assets. A stable economic situation will allow for taking greater risks in investments compared to a less stable economic situation.
It is important to take into account the age of the family members and the stage of life they are in. Young people can afford to take bigger risks than adults nearing retirement. Also vital is the household's prior investment experience and skills.
A seasoned household can manage a more complex investment portfolio with less professional assistance than those less experienced and knowledgeable.
It is important to adjust the investments to the market conditions and the general economic situation – what is the current and expected economic situation in Israel and the world, the inflation and interest rate forecasts, and the capital market forecasts.
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