managing your US investments from Israel

While you may be tempted to consolidate all your savings and investments in an Israeli bank, there are compelling reasons to have a U.S. brokerage account…even (read: especially) if you live in Israel. 

Efficiency – U.S. securities markets may be the most efficient and investor-friendly in the world. While emerging markets may shine for a bit, there’s nothing like an established market with steady government regulations and investor protection programs. Compared to many global banks, American markets have lower fees. And, you can have checks, debit cards, and instant access to your funds, even from overseas. 

Diversification – A U.S. brokerage account can host a variety of investment vehicles, like stocks, bonds, mutual funds, ETFs (Exchange Traded Funds), and CDs. You can invest in both American or global companies. If you feel particularly Zionistic, you can invest in the numerous Israeli firms that trade on Wall Street. 

Dividend Income – American tax laws require reporting dividend income on worldwide investments. However, foreign brokerage companies/banks don’t produce a 1099 with a summary of dividend income. Furthermore, various countries have different definitions of long- or short- term capital gains, taxable interest, etc., so it is easiest to meet Uncle Sam’s reporting requirements if the reports come from an American firm.  

Security – SIPC insurance insures that if the broker-dealer fails, investors have $500K of coverage/account. Often brokerage firms buy third-party insurance to cover up to the full net market value of the account. If you have CDs or money market deposits, FIDC insurance covers up to $250K/institution. Currently, there is no such equivalent in Israeli investment accounts. 

Bureaucracy – Having the majority of your financial investments in the U.S. means it might be simpler to file an FBAR (Report of Foreign Bank and Financial Accounts), as there will be fewer accounts to report.  

Cross-Border Expertise – Managing currency risk, investments and dual-country tax reporting is complicated. Make sure your financial professional is licensed both in Israel and America and has experience dealing with the issues that you are facing.  

Profile Investment Services, Ltd. has been helping people with their U.S. investments and financial goals for almost 25 years. Call today (02-624-2788) to see how we can help you. 

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Published December 26, 2019. Updated June 2021

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