managing your US investments from Israel

Unfortunately, very few new arrivals in Israel are lucky enough to have a great job lined up for them when they get off the plane. Rather, the vast majority of new olim need to learn Hebrew, set up their homes, and adjust to a new culture. Olim who are around retirement age may have a hard time meeting a similar income level to what they had back in the Old Country.

Should you buy bonds to provide income?

One traditional asset class used by folks looking for predictable income is bonds. Bonds are a loan that you make to a government (i.e., Treasury Bonds, Israel Bonds) or a company for a certain period of time. During the life of the loan, you receive periodic interest payments that you can use to supplement your income. At the bond’s maturity, you get back your principal, presuming the issuer is still solvent.

Are they safe?

Though bonds are traditionally less volatile than stocks, there are still risks. The bond market has ups and downs, and in certain circumstances, you could sell bonds for lower than the purchase price. Also, if the issuer of the bond defaults, you might end up with nothing.

How should I set up my bond portfolio?

A 60-something couple recently came to my office and said they wanted to switch a piece of their investment accounts to buy bonds. We constructed a diversified portfolio using corporate bonds issued by major companies. We then prepared a table showing when each of the bonds would pay its interest, so the couple had a clear sense of the ongoing cash flow and could budget accordingly. If you want to examine the pros and cons of using bonds, speak to a financial advisor or download a free copy of The Retirement Planning Book  which discusses bond investing at length.

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 April 27, 2015.

Read more articles