When making aliya, many olim move their American assets to Israel and convert all their dollars to shekels. However, there is a strong case to be made for leaving your dollars in America. Having helped Americans living in Israel open and maintain U.S. IRA and investment accounts for over 25 years, I can tell you the main reasons that olim benefit from having American accounts.
U.S. securities markets may still be the most efficient, and individual-investor friendly in the world. You can have a diversified basket of global assets within a “regular” U.S. brokerage account, and do it cost effectively. America has an established market, with steady government regulations and investor protection programs like SIPC, protecting investors and their assets.
A U.S. brokerage account can host a variety of investment vehicles in American or global companies. Furthermore, you can have checks, debit cards, and other instant access to your funds, even if you are an ocean away.
Mutual funds are an easy way to spread risk among different stocks and bonds. They are one of the most popular investment vehicles, both for beginning and professional investors, and they come in many forms, including “Exchange Traded Funds” (ETFs). Dual citizens generally should not buy mutual funds run by companies based outside the U.S. because those funds are considered “offshore” and gains are taxed at higher rates. American olim, therefore, should normally do their mutual fund investing through a U.S. company.
Uncle Sam’s bureaucracy
Having the majority of your financial investments in the United States means it might be simpler to file an FBAR, as there will be fewer foreign institutions and accounts to report. Having U.S. compliant accounts makes it easier to meet all your reporting requirements.
Make sure your financial professional is licensed in both the United States and Israel, and has experience dealing with issues that you are facing.
For more about having a U.S. brokerage account from Israel, download the comprehensive, simple-to-use guide, “Toolkit for Opening U.S. Brokerage Accounts from Overseas” at Profile-Financial.com/toolkit
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published January 30, 2017. Updated January 2019, Updated September 2021