It’s no secret that NIS 100 is price lower than it was price prior to now, since costs have gone up over time. So though you may even see precisely the identical quantity in your checking account, that sum of money buys much less. That’s what inflation is all about; eroding the worth of your cash, even if you happen to don’t all the time take note of it.
If you have a look at some detailed numbers, it turns into arduous to digest. Each NIS 100 you left in your present account 30 years in the past is now price simply NIS 49, in accordance with an examination by Phoenix Monetary chief economist Matan Shitrit. As a result of your cash wasn’t “working for you”, it misplaced over half its worth.
However, in accordance with Shirit, had been the identical sum invested in a share fund (40% Israel, 60% abroad), you’d now see in your checking account virtually NIS 1,400, which, after permitting for inflation, could be price NIS 684. On a big quantity, say NIS 100,000, you possibly can achieve tons of of hundreds of shekels, or lose tens of hundreds in actual phrases.
The principle argument in opposition to investing in shares is all the time the identical; it’s dangerous. However it could possibly be that the definition of threat itself wants revising. “When folks discuss threat in funding, they imply short-term volatility,” says Shitirit. “However whenever you have a look at a horizon of many years, the chance to households is definitely lack of buying energy due to lack of publicity to property that generate an actual return. Over a interval of thirty years, funding in shares is much less dangerous than holding money, as a result of erosion of the money is for certain, whereas over a time interval resembling this the anticipated annual return on shares is round 6-7%. So the true threat is holding money.”
NIS 1.5 trillion doing nothing
However, too many Israelis concern dropping their cash and depart it of their financial institution present account. The figures converse for themselves. In line with the Financial institution of Israel, final October Israelis held some NIS 420 billion in present accounts. Practically one in ten holds greater than NIS 100,000 in a present account. Along with deposits and money in hand, the whole is a few NIS 1.5 trillion. That is cash the worth of which is slowly being eroded, maybe with out the proprietor being conscious of it.
“There are individuals who depart cash of their present accounts considering that it’s protected and taken care of. They fail to understand that the cash there accumulates no return and is eroded,” says Yogev Ben-Ziv, VP and head of finance at Migdal’s long-term financial savings division. “What’s sitting in a present account at present might be eroded in actual phrases in a yr’s time in accordance with the speed of inflation, and that’s a loss.” One other group that Ben-Ziv identifies is those that save by way of financial institution deposits. “They imagine that they’re investing the cash and accumulating a return, however the returns on these accounts are low and don’t protect the buying energy of the cash.”
18% inflation in 5 years
The previous few years have made the story extra tragic. From 2013 to 2020, cumulative inflation in Israel was beneath 2%, however from 2021 to 2025 it shot as much as a cumulative18%. Shitrit explains that inflation is constructed into the financial system, and so should be taken under consideration. “Central banks, together with the Financial institution of Israel, have inflation targets (1-3% yearly for the Financial institution of Israel, N.A.), which signifies that costs rise yearly and the worth of money is eroded.”
To be El Al’s associate
So what’s the answer? Gat Megiddo, associate and CEO at Finessa Capital, gives an intuitive approach of understanding the matter. “I all the time give the instance of El Al, which raised fares throughout the Swords of Iron warfare. As a buyer of the airline you might be solely on the buyer facet and solely see your energy to purchase tickets eroded, or you may spend money on El Al shares and protect your buying energy or your capital, by way of being a associate within the enterprise. ‘Partnership’ with the enterprise sector reduces the chance to your buying energy and its volatility over time, and even higher than that.”
Ben-Ziv provides, “The advice is after all to spend money on property that may protect the true worth of the cash, that’s, shares, bonds, actual property, and different various investments, not essentially 100% in shares.”
It needs to be pressured that not one of the consultants recommends transferring all the pieces to shares tomorrow morning. “Clearly there’s a spot for money for day-to-day wants and to offer a security cushion,” says Shitrit, “however for medium to long-term financial savings, the message is straightforward: holding massive sums in money over time is a selection during which the chance of abrasion in actual phrases is a certainty.”
In line with an examination by “Globes”, since 2011 the share monitor in superior coaching funds has offered an actual annual return (web of inflation) of 212% (virtually 300% in nominal phrases); the final monitor has offered an actual return of 112% (nominal 160%); and the true return on the credit score and bond monitor with as much as 25% shares was 70% (nominal 109%).
Against this, the shekel monitor, like financial institution deposits, barely preserved the capital, and offered an actual return of just one.7% (nominal 25%).
That is with out taking account the truth that within the case of financial institution deposits 15% tax is payable on the curiosity “from the primary shekel”, whereas on financial savings in funding provident funds, for instance, the speed of tax is 25%, however solely on actual good points.
“Let your cash be just right for you” isn’t just a advertising slogan however primary safety of your wealth. Opposite to what could be thought, leaving the cash “in a protected place” on the financial institution is just not a conservative choice however, quite the opposite, a choice to lose cash.
Printed by Globes, Israel enterprise information – en.globes.co.il – on February 1, 2026.
© Copyright of Globes Writer Itonut (1983) Ltd., 2026.
