An investment provident fund is an excellent product for financial savings, in which funds can be saved regularly for the whole family.
What is the difference between a regular provident fund and an investment provident fund?
In 2008 the traditional provident funds became a long-term savings product whose funds can be withdrawn only after retirement age. Subsequently, the Ministry of Finance approved a new savings product called an investment provident fund. The difference between the two products is that while in a regular provident fund the funds can be withdrawn only after age 60, in an investment provident fund the savings can be withdrawn at any time, without withdrawal or exit penalties, excluding a 25% capital gains tax on real profit accumulated in the fund. For this reason, an investment provident fund is an attractive product that is suitable for children, adults as well as seniors.
How much can you deposit per year?
As of 2021, up to NIS 70,913 in a calendar year per person can be deposited in an investment provident fund (according to ID) and there is no limit to a family unit. The funds can be deposited in one of two ways, or combined:
- Current deposit: By means of a standing order when opening the plan, you can choose a fixed monthly amount for the deposit (at any stage you can change the amount or stop it).
- One-time deposits: During the savings, you can make bank transfers from the current account at the bank or deposit by check.
How do you open an investment provident fund?
We at Shekel will be happy to help you and your family members open an investment provident fund or tailor another financial savings route for you. Leave details and a consultant from our finance department will get back to you soon!
