Managing wealth might seem daunting, especially if financial jargon feels like a foreign language. However, when you understand strategies like donating appreciated stock, these tools become clear and accessible. Americans living in Israel have a unique opportunity to maximize their financial impact while staying true to Jewish values. Let’s explore how you can use this strategy to align your investments with the mitzvah of tzedakah, or charitable giving.
The Mitzvah of Giving: A Pillar of Jewish Life
In Jewish tradition, tzedakah is more than a suggestion; it’s a commandment. The Torah instructs, “When you reap the harvest of your land, you shall not wholly reap the corners of your field…you shall leave them for the poor and for the stranger: I am the Lord your God” (Leviticus 19:10). This ancient directive still resonates today, especially in managing our financial resources. We must set aside a portion of what we have to help those in need.
For olim, donating appreciated stock offers a modern way to fulfill this ancient mitzvah. You aren’t just giving—you’re giving wisely, ensuring that your contributions have the greatest impact.
Understanding Appreciated Stock: A Simple Breakdown
Appreciated stock refers to any stock that has increased in value since you purchased it. For instance, if you bought shares for $50,000 and those shares are now worth $75,000, the $25,000 increase represents your appreciation.
Why does this matter? When you sell the stock, you’d likely owe taxes on that $25,000 gain. By donating the stock directly to a charity, you avoid those taxes. This allows the charity to receive the full $75,000 value and maximizes the impact of your donation.
This approach aligns with the Torah’s call to “Honor the Lord with your wealth, with the first fruits of all your crops” (Proverbs 3:9). Just as our ancestors gave the best of their harvest, you can give the “first fruits” of your financial gains without having to take some off for taxes, ensuring your charitable giving is as impactful as possible.
Selecting the Right Stocks to Donate: A Thoughtful Approach
Not every stock serves as a good candidate for donation. Carefully select which assets you give away, exercising financial wisdom.
When evaluating your portfolio, focus on stocks that have appreciated significantly but aren’t essential to your long-term financial goals. These might be smaller or more speculative investments that have performed well but aren’t crucial to your overall strategy. By donating these stocks, you can give generously without destabilizing your financial future.
Timing and Opportunity: Acting at the Right Moment
Timing plays a crucial role in both investing and charitable giving. The value of your stocks can fluctuate, sometimes significantly. When you see a substantial gain, seize the opportunity to donate. This aligns with the Torah’s guidance: “Do not withhold good from those to whom it is due, when it is in your power to act” (Proverbs 3:27).
Imagine holding onto a stock that has significantly increased in value. Rather than worry about capital gains taxes, consider donating the stock. This action allows you to avoid taxes while making a meaningful contribution. Recognizing the right moment to give—and acting on it—amplifies the impact of your charitable efforts.
Make Your U.S. Investments Work for You—and Israel
For Americans living in Israel, U.S. investments can play a pivotal role in supporting both your financial future and the well-being of the land and its people. By carefully selecting and timing your donations of appreciated stock, you aren’t just managing wealth—you’re aligning your financial decisions with the values of tzedakah and community support.
To deepen your understanding of this strategy, listen to the episode, Maximize Your Charitable Impact by Donating Appreciated Stock on The Goldstein on Gelt Show podcast. This episode provides real-life scenarios and insights on how donating appreciated stock can optimize tax savings and enhance the impact of your charitable contributions.
Don’t miss this chance to make your investments work harder for you and your community.
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of this website, Portfolio Resources Group, Inc. or its affiliates. Nothing in this article is intended to be investment, tax, or legal advice. Information in this article is gathered from sources considered reliable, but we cannot guarantee their accuracy. Past performance is no guarantee of future returns.
