Living in Israel is a thrilling adventure—but dealing with cross-border finances can feel like trying to solve a never-ending puzzle. But here’s the good news: You can take control of your financial future. By learning the basics and making well-informed decisions, you’ll find that managing your investments—even across borders—doesn’t have to be daunting.
Let’s walk through some key concepts that can help you regain financial clarity and confidence.
Step One: Time to Shine! Get to Know Your Current Financial Situation
The first step to taking charge of your finances is understanding what’s going on with your current accounts. Think of this as a backstage pass to your financial life. What’s working? What’s outdated? It’s like cleaning out your closet—find out what still fits and what needs to go.
A new client of mine, who had been living in Israel for a few years, was feeling lost in her financial life. She had several U.S.-based accounts, but because she hadn’t reviewed them in years, they no longer fit her needs. The first thing we did was go over each account and asset, checking whether they still made sense for her situation. It turned out that a few small changes, like rebalancing her portfolio to reflect her current life stage, were all she needed to regain control.
The takeaway? Start with what you know. Even if you don’t make any big moves right away, simply understanding your financial landscape can provide clarity and direction. Think of it as a financial health checkup—a necessary step before moving forward with any new strategy.
Avoid the Investment Maze
If you’re living abroad, it’s likely you’re juggling investments across multiple tax systems. This isn’t as straightforward as managing investments within one country, especially if you’re unaware of the tax implications in both the U.S. and Israel. Cross-border investing requires a deeper understanding of how each country’s tax laws apply to your situation.
For example, many American citizens living in Israel might not realize that owning Israeli mutual funds can trigger significant U.S. tax consequences. These penalties often come from something called the PFIC (Passive Foreign Investment Company) tax rules, which tax foreign mutual funds in a way that’s far less favorable than domestic ones.
This is why it’s essential to consult both a U.S. and an Israeli accountant when managing your portfolio. They can guide you through the tax maze and help you avoid costly mistakes. It’s not just about picking the right investments—it’s about picking the right investments for your situation.
Say ‘No’ Like a Pro! Avoid the Pressure to Make Risky Moves
We’ve all been there: someone’s pushing you to make a fast decision. Banks and brokers are always promoting fancy financial products that seem too good to pass up. But here’s the truth: you don’t have to say yes!
Warren Buffett, the legendary investor, once said, “The stock market is a device for transferring money from the impatient to the patient.” That’s Buffett’s way of telling you that being patient and selective is a winning strategy. Don’t feel rushed.
A client in Israel once came to me with a pitch from her bank for high-risk mutual funds. The promise? Big returns. The risk? A lot of sleepless nights! We reviewed the options, and she opted for safer, steadier investments that made her feel more comfortable. Remember: saying ‘no’ is just as powerful as saying ‘yes.’
Keep Calm and Diversify: Why Currency Matters More Than You Think
Here’s a plot twist many people forget about: currency fluctuations. If you’ve got all your money in U.S. dollars but live in Israel, a change in exchange rates could throw off your whole financial plan. That’s why diversifying across currencies is a game-changer.
Take the example of a retired couple I worked with. They spent half the year in Israel and half the year in the U.S. To make their portfolio more in line with their needs, they chose to keep most of their investments in dollars but still decided to put some into shekel-based bank deposits.
This approach—called currency diversification—allows you to spread your risk and not expose you to only one currency.
Why Talking About Money is the Real Power Move
As you work through your financial plans, remember this: Communication is crucial. Whether you’re discussing finances with your spouse, children, or financial advisor, keeping everyone on the same page helps avoid misunderstandings. I’ve seen situations where one spouse was completely unaware of the family’s financial details, leading to confusion and poor decisions when a crisis hit.
Take the time to have regular financial check-ins with your family or advisor. Talk about your goals, your plans, and any concerns you may have. Open dialogue makes sure everyone involved is aligned, and it can prevent stress down the road.
Managing cross-border investments doesn’t have to be overwhelming. If you’re looking for ways to reduce stress and take control of your financial future, check out Stress Less: Transform Your Investment Approach Today. Learn practical strategies that will help you simplify your portfolio, lower risk, and feel more confident in your financial decisions. Take the next step toward a more secure and stress-free investment journey—start transforming your approach today!
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. Neither Profile nor Portfolio Resources Group, Inc. or its affiliates, provide tax or legal advice. 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.
