Living in Israel offers a fulfilling and vibrant lifestyle—new culture, community, and perspectives. Whether you’ve lived here for decades or are still finding your feet, balancing life in Israel with a U.S.-based financial strategy can feel overwhelming.
However, with careful planning and the right strategies, you can regain control of your investments while understanding that financial markets come with uncertainty.
Keep Your Eye on the Ball: Review Your Portfolio Regularly
Think of your portfolio like a garden—if left untended, it can quickly become overgrown. Regular reviews are crucial, especially when managing both Israeli and U.S. assets. Financial markets shift and life changes—moving to Israel, adjusting to new tax systems, or planning for future goals can cause your investments to drift from what you originally intended.
Regular portfolio check-ups—quarterly or at least annually—are essential to ensure your investments align with your current goals. Are you comfortable with your risk level? Have market conditions changed, impacting your holdings? Are there new opportunities to explore? These are key questions that a good portfolio review can answer.
If your investments have become like a mystery novel with too many twists, it might be time for a second opinion. Maybe some Israeli investments that seemed promising now feel overly complex, or U.S.-based assets no longer match your current financial situation. By understanding exactly what you own—and why—you gain the clarity to move forward confidently. Like a well-tended garden, a regularly reviewed portfolio can thrive.
Call in the Experts: U.S. and Israeli Tax Pros are a Must
Albert Einstein once remarked that income tax was one of the hardest things to understand. If even he struggled with it, the rest of us are in good company! Navigating U.S. and Israeli tax laws simultaneously can feel like solving a puzzle with missing pieces. The risk of making mistakes is high, and those errors can be costly.
Each country has its own tax rules, and they often don’t align. For Americans living in Israel, this complexity increases because the U.S. requires its citizens to file taxes no matter where they live. This means balancing U.S. tax obligations while staying on the right side of Israeli tax laws. Add in factors like the Foreign Account Tax Compliance Act (FATCA), foreign account reporting, and differing tax treatments of investments, and it’s easy to see how things can get overwhelming fast.
I had a client who unknowingly sold some Israeli investments without realizing the hefty U.S. tax bill that would follow. Had she consulted a tax expert familiar with both systems, she could have avoided that financial sting. Proper planning, with the help of U.S. and Israeli tax professionals, ensures that your financial decisions are informed, minimizing the chances of unpleasant surprises. Get expert advice before making significant moves. This proactive step allows you to focus on your financial goals without getting bogged down by complex tax laws.
Simplify Your Portfolio (But Don’t Expect Guarantees)
Warren Buffett wisely said, “Risk comes from not knowing what you’re doing.” If your portfolio feels like a jigsaw puzzle with too many pieces, it might be time to simplify. Having too many moving parts can lead to confusion, stress, and inefficiency, especially when juggling both U.S. and Israeli assets.
Simplifying your portfolio doesn’t mean stripping away all risk—it’s about reducing unnecessary complexity to a point where you can clearly understand what you own and how it fits into your overall strategy. Even index funds come with their own risks, like market volatility, but the goal is to ensure your investments align with your comfort level and long-term objectives.
A streamlined portfolio allows for better decision-making and less stress, and it’s easier to adjust as your financial situation evolves. In short, simplifying may not eliminate all risks, but it can give you a clearer path forward and a greater sense of control.
Diversify Your Currency Exposure—It’s Not All About Dollars
If you’re living in Israel but keeping all your investments in U.S. dollars, it might seem like a logical move. After all, the U.S. dollar is known for its stability. However, relying solely on U.S. currency can leave you exposed to currency fluctuations that could impact your purchasing power in Israel.
For example, if the shekel suddenly strengthens against the dollar, your dollar-denominated assets lose value in local terms. You’ll find that the money you thought was secure is now worth less when converted to shekels, meaning day-to-day expenses, like groceries or rent, become more expensive.
Diversifying across currencies allows you to hedge against unpredictable exchange rate fluctuations. Holding assets in both U.S. dollars and Israeli shekels helps balance the risks, offering more protection against currency volatility. While it won’t eliminate risk entirely, it reduces the potential impact, giving you greater financial stability in your dual-currency life.
Take Charge of Your Financial Future—One Step at a Time
Managing U.S. investments while living in Israel doesn’t have to feel like an unsolvable puzzle. With regular reviews, guidance from tax professionals, simplified portfolios, and smart currency diversification, you can regain control of your financial future.
Although no investment strategy can promise success, taking proactive steps makes all the difference. Ready to dive deeper? Check out Tailoring U.S. Investment Portfolios for Life in Israel for more practical tips and strategies on managing your cross-border investments effectively.
Disclaimer: This article is for educational purposes only and should not be considered financial, tax, or legal advice. Always consult a professional advisor for guidance specific to your situation.
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.
