Watch Out for This Investment Mistake Avoid this investment mistake, by using the financial snapshot tool. Getting a snapshot view of your finances makes investment decisions easier.

Is The Right Company Managing Your Money? Are you getting customized financial advice? How can you tell if the right/wrong company is managing your money?

3 Steps to Stop Your Retirement Nest Egg from Breaking Do you and your spouse have different ideas of how to invest your retirement nest egg? What should you do if one partner wants to invest more aggressively than the other?

Americans and Mutual Funds – What You Need to Know Are you having difficulty buying American mutual funds because you don't have an American address? Learn about your solutions here.

How to Diversify a Million Dollar Portfolio Diversifying a million dollar portfolio can be tricky. Make sure you start by making a plan and analyzing your financial situation.

Are You Worried About Your Stocks and Market Risk? If the market goes up, do you still need to worry about stocks and market risk? Should you rebalance your portfolio in an up market?

Do Mutual Funds Increase the Risk Level of Your Portfolio? Mutual funds can add risk to your portfolio. If you want to limit your risk exposure, pay attention to what mutual funds and ETFs you own.

Do These 4 Things to Have a Financially Successful Retirement To make sure you have a financially successful retirement in Israel, follow these 4 easy tricks.  

4 Times You Should Speak with a Financial Advisor What should motivate you to get financial advice? Learn when you should speak to a financial advisor about your situation, and what he can do to help.

How to Claim an Inheritance from Abroad Claiming an inheritance from abroad can be confus-ing and overwhelming. Learn what steps you need to take so the funds will appear in your account.

Retirees Fired by Their Brokers in America If you were asked to move your money out of your brokerage firm, be reassured you that you aren’t alone. This financial break-up is happening to many people without American addresses. Here’s what you should do.

Do you want steady income from your dollar deposits? Is your investment goal to receive a steady income from dollar deposits? If so, take these 3 steps to help you reach your goal.

Should You Have Bonds in Your Investment Portfolio? Many people love the income and relative safety bonds provide, but other people hate them. It’s important to understand why investors love and hate bonds. Should you have bonds in your investment portfolio?

Are You Getting High Interest Rates on Your Dollar Deposits? The good old days of getting high interest rates on your dollar deposits may be coming back. Consider the pros and cons of investing in bonds as opposed to FDIC insured CDs.  

Want to Boost Your Monthly Investment Income? One way to boost monthly investment income is using bond funds. There are different types of bonds funds, read more to learn if they are appropriate for your financial situation.

How To Squeeze More Dollars Out Of Your Investments Want to increase your investment income. Can using bonds squeeze more dollars out of your investments? Learn why retirees frequently choose to invest in bonds.

How to Invest Your Dollars when You Live in Israel Should olim move their American brokerage accounts to Israel?

Did You Get the “Dear Client, We Can’t Help You Letter”? Many American brokerage companies stopped servicing clients with foreign addresses, including those who made aliya. Don’t liquidate your account, learn what alternatives you have.

Expecting an Inheritance? Here’s What You Need to Know Expecting an inheritance? Here are answers to questions you may have when receiving an inheritance. Excerpt from, and link to The Inheritance Book.

Should You Leave Your Children an Inheritance? If you leave your children an inheritance what will they do with it? Will they save or squander it? Here’s how to teach your heirs to use the lump sum wisely.

What American Expats Need to Know About Foreign Mutual Funds The IRS considers foreign mutual funds Passive Foreign Income Companies (PFIC). These incur extra taxes for U.S. citizens. How can U.S. expats invest in mutual funds?

Want Help Understanding and Organizing your Money? Consolidating your various banks and financial firms can help you understand and organize your money better. Learn how consolidating your accounts can make investing easier.

Why Receiving an Inheritance is Difficult: It’s not “free” money Receiving an inheritance can be an emotionally fraught time. Learn what you should do to facilitate a smooth transfer of assets

Can Mutual Funds or ETFs Improve Your Portfolio’s Performance? Learn how Americans living abroad can use mutual funds or ETFs to improve their portfolio’s performance.  

Here’s a Quick Way to Invest in the Stock Market When you want to invest in the stock market, how do you choose a stock? Peter Lynch invested in L’Eggs because his wife wore stockings. But is that a reason to buy a stock?

The Investment Tool You Need to Invest Your Money Like the Pros Professional money managers are a good investment tool to use if you don’t want to think too much about your investments. Learn how “regular” people can use money managers just like the pros do.

How to Make Money in Your IRA What guidelines should you follow when withdrawing money from an IRA? How do you know if you are withdrawing principal or interest? Is it important?

How to Discuss Money Matters With Your Parents Sometimes aging parents find it hard to discuss money matters with their adult children. How can you talk about finances with your parents more easily?  

What Happens to Your IRA Account When You Make Aliya? What happens to your IRA account when you make aliya? Should you transfer it to Israel, or is there a better way to manage your investments?

How to Avoid Inheritance Anxiety If you get a sudden windfall, how do you avoid inheritance anxiety and make the right decisions? This blogpost explains the steps you need to take.

A 4-minute financial podcast Worrying about your stocks when the market is volatile is only natural. Here are 3 steps to take to minimize your worries and stay in the stock market.

What You Need to Know about Moving Money If you’re thinking of moving money from one account or country to another, here are some tips to help you do it more easily and efficiently.

How Much Money Can You Afford to Lose in a Risky Investment? When looking at a possible investment, consider how much money you might potentially lose. Your risk tolerance needs to be taken into account.

How Memory Loss Can Affect Your Money What happens to your finances if you suffer from memory loss? What can you do to protect yourself and your money?

Here’s When to Stop Supporting Your Children When should you stop supporting your children? What is the difference between monetary gifts that help or encourage bad habits? This tale of two couples explains.

Why Are Dividend-Paying Stocks like a Paycheck? Find out how dividend-paying stocks can help increase cash flow. Can income investors earn higher total returns through dividend reinvestment plans?

How to Protect Someone You Love from Financial Abuse Financial abuse among the elderly is growing. What do you need to know to protect your parents and other people that you love?

Is It Easier to Invest with an American Brokerage Firm or with an Israeli Bank? What do American olim need to know about investing with Israeli banks? Read this article to find out and for a possible solution.

Why Getting an Inheritance Doesn't Always Make You Rich Getting an inheritance will not make you rich unless you use it wisely. Read this to find out about the mistakes you need to avoid.

Why You Shouldn’t Worry about Market Volatility Market volatility affects the risk-return trade-off of your investments. Learn what you should do to protect your money.

The Financial Lesson that I Learned From Chess What financial tactic can you learn from a world chess champion? Why is it important to look at the big picture when making investing decisions?

Is It Easier to Make Money or Lose Money? Why is it harder to make money than to lose money? Find out why it’s better to avoid loss in the first place than trying to recoup lost funds.

Should You Engage in Copycat Trading? Find out why copycat investing vs. copycat trading is the more prudent strategy for growing your retirement portfolio

Is the global economy on the verge of another collapse?

Gambling vs. Investing: Where Are You More Likely to Win? Is there a difference between investing and gambling? Understanding gambling risks can improve your investing performance.

What do you need to know when choosing a financial advisor? Make sure to ask these questions to any potential investment advisor that you are considering.

Are bonds safe as an investment? Explore how they can provide safety and increase diversification in an investment portfolio

Do Market Timers Generate High Returns? Why do market timers think they can outperform the market? Understanding why market timers underperform passive investors can improve your investment performance.

Is There a Difference between Growth and Value Stocks? What is the difference between growth and value stocks? Does one have a better chance of growing your portfolio? 

What Is the Best Way to Teach Children Investing? What’s the best way to teach children investing? How should they learn basic concepts in personal finance? Should you use investment games or real money?

“Over My Dead Body!” Use a Will or Trust to Help Avoid Battles over Your Estate A will or trust can prevent long, expensive court battles over your estate assets. Find out which would be more appropriate for your situation.

Why a Stock’s Price Doesn’t Matter High stock prices may be intimidating, but they do not necessarily reflect the company’s value. Read here to learn why.

Growth vs. Income Investing: Is the Cost of Growth Too High? Retirement portfolio: Learn how to allocate growth vs. income investing, according to your risk profile.

Should Retirees Diversify Globally to Protect Their Savings? If you diversify globally will it improve the risk-adjusted returns on your investment portfolio? Learn how global diversification adds non-correlated assets to a retirement portfolio.

Do Simple Investments Generate Higher Returns? What type of investments yield the higher returns: complicated or simple investments? You may be surprised to learn that simple investments tend to have better, consistent returns. Read to find out why.

Should I Sell Out before Losing Money in a Stock Market Crash? Protect your portfolio from a stock market crash by reducing risk and producing more consistent performance through diversification

Are Emerging Markets’ Potential Returns Worth the Risks? Learn how diversification can help you manage the risks and returns of investing in emerging markets.

Will Dividends or Interest Boost My Retirement Savings More? Can dividends or interest boost your bottom line? Learn why both dividend- and interest-yielding positions have a place in your investment portfolio.

When Does Past Performance in Investments Matter? When analyzing a company, look at past performance and fundamental assets. Profile Investment Service’s most important asset is its dedication to clients.

3 Important Things to Do Before the New Fiscal Year There are 3 steps you should take at the end of every fiscal year. Find out why some calendar dates are important in personal finance.

I Don't Feel Inflation. Is It Hurting My Savings? Understand how inflation affects your buying behavior, spending patterns and savings.

How to Manage a Multicurrency Lifestyle Overseas retires and expat need to use multi-currency strategies to save money, reduce fraud risk, and optimize overseas investing.

Corporate or Treasury Bonds: Which Bonds Are Better? Corporate and Treasury bonds each have advantages. Which should you include in your investment portfolio?

What Is the Best Way to Reduce Risk in Your Portfolio? Learn how to grow your investments at a steady rate by reducing risk in your portfolio.

What Percentage of Your Retirement Portfolio Should Be Bonds? How should you invest your retirement portfolio if you want it to both grow and have little risk? Are bonds appropriate for preparing for retirement?

Does Investor Bias Make You Underperform the Market? By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel A friend recently had a losing streak at the casino. Instead of walking away, he played more hands of blackjack. “I was determined to win,” he lamented. In fact, he was playing to recoup his losses. He was a victim of investment biases subconsciously affecting his decision-making. Gambler’s Fallacy – the belief that after a streak of losses his luck would turn – duped him into doubling his losses. A recent study of Major League Baseball umpires showed how biases are at work in all forms of decision-making. In 1.5 million pitches, umpires were less likely to call a strike if the previous pitch was a strike. Investor bias can lead you to make bad investing decisions. Biases are shortcuts in decision-making; you may, for example, increase your position in gold stocks beca

Should You Follow Investment Trends or Bet against the Masses? By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel Today, many “investment trend” websites are enticing online traders to join. Investors who follow the trend – also known as “momentum trading” – invest in stocks based on rising market prices rather than company fundamentals. The strategy of following the investment trend performs best in a bull market. However, selling before the trend reverses is a skill that eludes most investors. When many investors buy the same stock, the market price can rise above the underlying value of the company. Eventually, as investors’ emotions stabilize, rationality may return, and prices fall into line with the fundamental value of the company (based on measures of revenues, earnings, etc.). Short-term momentum players who try to time market fluctuations seldom outperform buy-and-hold investors in the l

Do You Look at the Risk-Reward Ratio of Your Stocks and Bonds? By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel The risk-reward ratio is an attempt to quantify the amount of risk you need to take in order to get an anticipated return from any investment. If you were to only consider past returns when deciding whether to invest in stocks or bonds, stocks would appear to be the clear winner. From 2007 to 2016, stocks had an average annual return of 9% versus about 5% for 10-year U.S. Treasury bonds. If past returns are your only measurement of performance, then perhaps you should consider high-yield corporate bonds. This year, Harvard University’s endowment fund made its largest allocation to a high-yield corporate bond exchange traded fund (ETF), which had a one-year return (through March 2017) of 13

Can Optimism Increase Your Investment Returns? By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel Are your investment returns determined by your worldview? Are people hardwired to be pessimists? Millions of years ago, if an optimistic caveman dismissed a rustle in a bush as the wind blowing, our ancestor may have ended up as a tiger’s lunch. As a result of this early conditioning, the part of our brain called the amygdala scans everything we see and hear for negative news. But according to Dr. Peter Diamandis, the founder of the coveted X Prize for Technology Innovation (and guest on The Goldstein On Gelt Show), this bias is more of a short circuit rather than an intelligent system design. He claims that in life and investing, it pays to be an optimist, as humans pay ten times more attention to negative news than positive news. Why optimism outperforms Technol

How to Safely Boost Returns in a Low Interest Rate Environment By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel To the dismay of yield-seeking investors, interest rates remain at historic lows. Although rates on long-term bonds may begin to inch up, analysts generally expect that we may remain in a low-interest-rate environment for a while longer. So, what are income investors to do? It is important to understand the risks of reaching for higher yields and realize there may be less risky ways to increase income. It’s all about the Risk-Reward Relationship When investing for any purpose, returns always boil down to the risk-reward relationship. The laws of investing dictate that it is very difficult to increase your return without also increasing your risk. While you can increase your yield by investing in lower-grade or longer-term bonds, you also increase your risk should i

Secrets to a Financially Strong Marriage By Douglas Goldstein, CFP® - helping you handle your American investments Displayed prominently in our living room is a list titled, “Abba’s Secrets to Success” Now, as my oldest daughter is about to get married, I’ve compiled “Abba’s Secrets to a Financially Secure Marriage” for her and her groom. With their permission, I’d like to share it with you: 1. Be completely honest – Open communication is better than financial infidelity. Hidden spending not only damages your future goals but erodes trust. Discuss money regularly, not just when you have a big bill to pay. 2. Work on joint financial goals – Don’t fall into roles of good cop/bad cop where one of you wants to spend and the other wants to save. You’re merging your lives; now merge your money. There is no such thing as “my” money – no matter who brings home the paycheck, consider it “ours

Do You Have to Stop Working When You Reach Retirement Age? By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel Does reaching retirement age mean you have to stop working? In Israel, the official retirement age for a man is 67. For women, it fluctuates between 60 and 62, depending on date of birth. Retirees until the age of 70 (or 69 for a woman born before 1950), are eligible for a state pension, but entitlement is affected by additional sources of income. From 70 onwards, a state pension is given regardless of other income. So what is the best age to retire? Before making a decision, ask yourself the following questions: Are you physically able? As you age, your regular routine may become tiring. You may also develop health issues that make working full time difficult. So before you decide to keep on working, make sure that i

How to Prepare for the Next Stock Market Crash By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel Over the past several years, the market has climbed to historic highs, prompting analysts to sound the alarm over the next stock market crash. While I can’t say when the next crash will occur, I can say it’s reasonable to assume that there will be another stock market drop at some point. How can you prepare for it? Market crashes are inevitable Crashes are more about the speed of decline than its depth or duration. The Flash Crash of 2010 saw the market plunge 1,000 points in minutes. In the 2008 crash, the market fell more than 20% within days. The good news is that each time the market crashed, it fully recovered and went on to greater gains. In 2010, it took a couple of days to recover, while in 2008 it took about 17 months. Past performance is no guarantee of future re

Debunking 3 Myths About Not Needing an Emergency Fund By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel One of the most fundamental principles of financial planning is to prepare for the unexpected by keeping three to six months’ worth of living expenses in an emergency fund. The trouble is many people succumb to the myth that emergency funds aren’t necessary because you can always withdraw from savings. Here are 3 myths about emergency funds and why they are wrong: The best place to keep an emergency fund is in your investment portfolio Yes, an investment account is technically marketable; and it can provide you with access to cash should you need it. However, you can lose real money if you are forced to sell assets at the wrong time. Imagine selling off $5,000 of your equities to cover an emergency expense after the market has declined 25%. It could take you years to gain t

Short on Retirement Savings? Here’s What You Need to Do By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel More than 10,000 baby boomers cross the retirement threshold every day, and nearly one in four of them of haven’t saved enough to retire comfortably. If you’ve reached that point and realize your retirement savings won’t last your lifetime, it’s time to have an uncomfortable conversation with a financial advisor because there are several things that need to be done. But it all starts with having a plan. Create a realistic plan Establish realistic goals based on what you expect to happen. That should include a new time line for critical milestones, such as when you expect to stop working, when to start Social Security and Bituach Leumi, and when (or if) you will need to begin digging into your capital. Crunch the numbers to come up with a pre- and post-retirement spending

How to Keep Financial Harmony in Your Marriage By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel What’s the best way to achieve financial harmony in a marriage? When two people get married, they don’t only join their lives together, but also their money. If differences in money attitudes and practices are not addressed early on, people can become set in their ways, making it more difficult to overcome any disagreements. However, where there is love, there are also ways to heal the financial divide. Find shared values and purpose Couples need to come together with a shared vision of their future based on joint values. If they share a mission and purpos

What You Should Know About Low-Risk Investments By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel Recently, a new client told me that his portfolio mostly contained low-risk investments. When I saw that the majority of his investments were mutual funds, I asked him why he believed mutual funds were “low-risk,” as his funds contained stocks. What he was missing was the mutual funds contained stocks which are risky, so even though the funds were diversified, he was exposed to a lot of risk. What is a low-risk investment? An example of a low-risk investment is a bank deposit, or CD (certificate of deposit). A CD pays a fixed interest rate and matures on a specific date. It is “safer” than a stock, the value of which can fluctuate dramatically, since if the CD investor holds the CD until maturity, he knows he’ll get his principal and interest paid in full.

Can I Safely Withdraw My Principal in Retirement? By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel As a cross-border financial advisor, one question I hear nearly every day is, “Can I afford to withdraw my principal in retirement?” For most of my clients, the short answer is, yes, but it is important to know how much and from which accounts you can dip into your principal. When withdrawal is part of a strategy The financial planning industry’s “4 Percent Rule” is commonly applied in determining how much principal you can draw down annually without risking outliving your money. Based on historical worst-case scenarios for a portfolio allocation of 60% stocks and 40% bonds over the last 100 years, 4% is considered a safe withdrawal rate in most situations. However, since each person’s situation is different, don’t rely on a rule of thumb as customized financial plan. A

How to Invest When You Can’t Predict Market Direction By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel If you’re thinking of investing in stocks but you’re concerned about which direction the stock market will move, here’s what you need to know: If you are a new investor with a long-term perspective, it shouldn’t matter which direction the stock market moves in the short term. What you should know is that a bull market (up market) generally follows a bear (down) market. On average, bear markets in the United States last about 11 months, while bull markets average 32 months. In the past, the average bear market decline was 27%, while the average bull market gain was 119%, though past performance is no guarantee of future returns. Remember that historically down markets were temporary. More importantly, not only does a bull market erase declines, but in the past, the gains of the previ

Why You Need to Talk to Your Adult Children about Your Finances By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel Do you find it difficult to discuss with your adult children what should happen with your finances towards the end of your life? If so, you’re not alone. People don’t like thinking about their own mortality or losing control. Moreover, as family relationships aren’t always easy, discussing issues such as power of attorney, healthcare proxies, and estate planning can get very complicated. For these reasons, many families push off this conversation for as long as possible. If you don’t speak with your adult children about your finances, they may have difficulty picking up the pieces and taking care of you and your affairs if you become too infirm to take care of yourself. The emotional and monetary effects of taking care of an elderly parent with

Steps You Need to Take 5 Years before Retirement By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel Will you have “enough” money to live comfortably? The months and years before retirement may be filled with trepidation and financial worries. In order to minimize financial concerns before retirement, here are some steps you should take in the five years leading up to it: Organize your assets for tax efficiency Most retirees underestimate the impact taxes will have on their retirement income. If you have an idea of what your retirement tax bracket will be, work with your advisor to arrange your assets in a way to create the greatest tax efficiency when you start withdrawing. Selling assets might trigger large capital gains taxes, and there may be additional taxes on pension payments. Know your pension options For some people, delaying taking Socia

How to Choose the Right Financial Advisor for You By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel Choosing the right financial advisor can be like seeking the right life partner. Your financial advisor needs to be the perfect match for you and your situation. Your advisor must be knowledgeable, honest, reliable, and, most importantly, have your best interests in mind. There are many financial professionals, who all offer a range of services and expertise. How should you choose? When considering whether to work with a prospective advisor, ask yourself these questions: Is this financial advisor qualified? Before you set foot inside a financial advisor’s office, make sure that he is licensed and has expertise with the types of investments that interest you. You can check out his qualifications, background, and experience through the

What You Need to Know About Rolling Your 401(k) to an IRA By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel When you change jobs, everything you need to take with you can be neatly packed into a box – except your retirement plan. When you leave your job, you need to think about rolling your 401(k) into an IRA (Individual Retirement Account). If you left your job to make aliya, this question becomes even more crucial, as cross-border financial regulations come into play with keeping the tax-beneficial status of American retirement accounts. What are your options? If you leave your American job to move to Israel, you have four options for your 401(k): • Keep the money with your former employer’s 401(k) plan, • Roll your funds into an IRA, • Roll your money into your new employer’s plan if it’s allowed, • Cash out your 401(k) plan by withd

How to Make a Good Investment Decision By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel Since one person’s good investment choice may be a huge mistake for someone else, what factors should you consider when deciding upon a potential investment? In investing, the only hard and fast rule is that past performance never guarantees future returns. Though you should try to understand why a security acted in a specific way in the past, the most important thing you can do is make sound decisions based upon your personal situation. To help you make an even clearer decision, use an investment evaluation tool like the one available at Profile-Financial.com/investment-evaluation All too often, folks lose money as a result of not asking the right questions. So, when deciding what to invest in, ask yourself: What is your net worth? <br /

Was Miguel Cervantes’ Don Quixote fighting imaginary windmills or market volatility when he said, “Don’t put all of your eggs in one basket?” Putting all of your assets in one basket doesn’t keep them as safe as you might think because there is always a risk that you might lose them all at once. The way to counter this is the investment strategy of asset allocation. Asset allocation, or diversification, may be even more important than picking the “right” stocks. The idea is to diversify your money among different types of assets, such as equities, fixed income, and cash and its equivalents, rather than putting all your money into one single asset class. Minimize potential losses The main reason for practicing asset allocation and having a diversified portfolio is to minimize potential losses. If you invest in a single asset class, and it does badly, you could sustain a heavy loss. However, if you spread your investments among dif

Why You Need to Build an Emergency Fund By Douglas Goldstein CFP®- helping olim handle their U.S. investments from Israel What would happen if you had an emergency – like a huge dental bill or unexpected car repair? And even worse, what if you had lost your job a month before and couldn’t even get an interview for a new one? To top it off, you get a call that a close relative in the States is sick and you desperately want to fly in to help. Do you have cash available to pay, or would you need to withdraw from your long-term retirement account or sell investments (possibly incurring a large tax bill)? How to build an effective emergency fund Generally, folks should have three to six months’ worth of essential living expenses as the benchmark, and sometimes as much as twelve months or more, depending on their other assets and job prospects. Your emergency fund money should b

The Things Not to Do With an Inheritance By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel When you get an inheritance, your first question may be, “What should I do now?” But perhaps a better question is “What shouldn’t I do now?” An emotional rollercoaster Getting an inheritance arouses many emotions. Sometimes, people get too excited and they spend all the money without thinking about the best uses for it. Others feel uncertain that they know how to manage the wealth they just received. Their fear paralyzes them, preventing them from making good investment decisions. What are the mistakes to avoid? When you get an inheritance, try not to let the tangle of emotions interfere with making the right choices. Avoid the following: Impulse spending. While you may have always wante

How Can You Increase Your Retirement Income? By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel How can you increase your retirement income and avoid risk? That’s tricky, and a lot of folks simply opt to put their money in the bank. But the good news is that there are other options, aside from the bank, for reducing risk and generating more retirement income. While banks present a lower risk than the markets, bank deposits historically have low yields. This is very significant in retirement because you need sufficient income from your investments to replace your paycheck. Your bank savings may not grow if interest rates are low, and may even lose value over time due to inflation. Income-producing investments These two income-producing investments, while more risky than bank deposits, may be appropriate for some investors, and it’s worth asking a professi

What Happens to Your U.S. Brokerage Account When You Leave America? By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel The good news is that if you are an American expat, or you are not a U.S. citizen at all, you can still benefit from having a U.S. brokerage account. (For more information about managing your American brokerage account from abroad, download the Profile Toolkit.) Why have an American brokerage account? There are many reasons to keep your investments inside a U.S. brokerage account. These include: transparency and efficiency, lower transaction fees, and an opportunity to profit from worldwide markets in both dollars and foreign currencies. You can diversify your holdings inside a U.S. brokerage account, with CDs (certificates of deposit in a bank), mutual bunds, stocks, bonds, and much more. Additionally, if you are an American expat, keeping your investments in

Are Foreign Investments Good for Your Retirement Plan? By Douglas Goldstein, CFP® - helping olim handle their U.S. investments from Israel Do you want to minimize risk in your retirement accounts? If so, consider diversifying your holdings to include foreign investments. Investing internationally may boost your returns and minimize risk, as you’re “geographically diversified” and not relying on any single country’s economic performance. Geographic diversification can be achieved by buying foreign stocks, ETFs, mutual funds, REITs, and foreign corporate and/governmental bonds. Saving your pension in one country and keeping your assets in another country is another form of geographic diversification. If you want to know more about minimizing risk in retirement planning, download The Retirement Planning Book, at: Profile-Financial.com/rpb Examples of global investment opportunities: Owning Foreign

Is there a safe investment that carries little risk? Bonds are often described as a “safe investment” since, compared with other investments, they have a smaller risk of losing principal. However, just because some people call them “safe,” that does not mean they cannot lose money. Bonds are popular because they distribute interest payments on a set schedule, providing a reliable source of predictable income. When choosing which bonds to buy, investors can select issues according to their individual risk tolerance – higher yields often correlate with higher risk. This choice gives investors a sense of control, because they can decide how much they are willing to risk to get a particular interest rate in return. There are many different types of bonds on the market: Treasury bonds, municipal bonds, premium bonds, junk bonds, and more. In fact, bonds are so popular that the bond market is larger than the stock market! Bonds, bond funds, and bond ladders can

When you plan for retirement, you must have the right tools. What are the most important things that you need? An emergency fund Before you begin saving for retirement, create an emergency fund for unexpected expenses. This way, you will always have money available in a crisis and you won’t need to withdraw from savings or take a loan. Ideally, your emergency fund should cover at least 3-6 months’ worth of expenses. Keep this money liquid, in a bank account, so that you can withdraw it easily in a time of need. You might not earn much interest on it, but the purpose of this money is to be accessible in an emergency rather than growth. Time It’s never too early to start saving for retirement. Even if you are just beginning your career, you need to put money aside into savings, in addition to maximizing contributions to your pension and other tax-deferred accounts. The earlier you start saving, the more chance you have for

Is your investment account in jeopardy because of your address? If your American brokerage firm no longer wants to hold your account because your legal address is not in the United States, you may find the information contained in the Profile Toolkit useful. (Free download at Profile-Financial.com/toolkit) Financial companies follow strict regulations for all their clients. However, some companies are deterred by the expenses and time involved in managing accounts belonging to U.S. citizens living abroad. American expats in this situation are left wondering what to do with their U.S. assets once they leave the United States. Should you transfer your assets out of the United States? While it is useful having sufficient assets in Israel to cover day-to-day expenses, the question of whether you should move your entire investment portfolio to Israel is complicated. There are points you should consider on both the American and Israeli side.<

An Exchange Traded Fund (ETF) is a security that owns a basket of assets (like stocks or bonds), the ownership of which is divided into shares. It is often compared with a “mutual fund,” as a mutual fund is also a basket of assets. One of the main differences between the two, however, is that an ETF trades on an exchange (like the New York Stock Exchange) throughout the trading day. A regular (or “open end”) mutual fund, on the other hand, normally only trades once a day. All the investors in a mutual fund will get the same price when the fund trades at the end of the day. Why do people invest in ETFs? Since the ETF encompasses many different assets divided into shares, it has built-in diversification. There are different types of ETFs specializing in different sectors, so you can choose the type of ETF that suits you. As ETFs are a marketable investment, they can be traded throughout the day. ETFs tend to cost less than mutual

Why Money Transfers Aren’t as Easy as They Used to Be By Douglas Goldstein, CFP®, - helping olim handle U.S. brokerage accounts, including IRS, from Israel If you attempted a money transfer recently, you may have been surprised at the amount of documentation you were asked to provide. Any financial institution can ask for proof as to why you’re moving money. They do this to make sure that they are in compliance with anti-money-laundering regulations. Even law-abiding citizens may need to submit extra proof when they want to transfer funds from one financial institution to another, especially between banks and brokerage firms. Bank accounts enable you to take care of daily money needs: pay bills, write checks, use credit cards, or make automatic bank transfers. An investment account is geared to long-term growth or, depending on the holdings, steady income payments (bond interest, dividends

Can Bonds Increase Income from Your Investment Portfolio? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel A retired widow met with me last week to discuss how to increase income from her investment portfolio. I reviewed her account and made some suggestions for restructuring her investments to get predictable income. We spoke a lot about bonds. Here’s why:   Bonds pay a set amount on a fixed schedule, so if you are looking for predictable income, bonds may work for you. A bond’s interest rate is often commensurate with the level of risk; if you buy a “high-yield bond” (or “junk bond”) you get a higher interest rate than if you buy a high-quality bond. A well-designed portfolio incorporates different types of bonds in order to diversify risk and maximize returns, and it reflects the risk tolerance of the client.   Bui

What should you do if you receive a lump sum, such as an inheritance, legal settlement, or pension payment? Should it be invested for growth or for income? Invest for growth A “growth investment” tries to increase the amount of money you have. Growth investments often entail some level of risk, so if you plan on using the money in the short term, you should consider a more conservative investment. If you hope to grow the lump sum to be able to meet a long-term goal, then consider the amount of risk you can take. What would happen if you lost part or all of the principal? Growth investments have the plus of potentially increasing the real value of your money over time, since growth investments – like the stock market – could outpace inflation. If you don’t need the extra funds to live now and can tolerate market volatility (which means you could lose money), growth investments may be the appropriate place for your lump

The Best Way to Update Investments in an Inherited IRA By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel If you inherit an IRA (Individual Retirement Account), you must be aware of the regulations concerning transferring the account to you, the “beneficiary.” Apart from the technical requirements for processing the account, which a financial advisor should be able to handle, some people also feel a moral responsibility. When a client recently called me about an inherited IRA, he said, “I would like to sell some of the stocks in the account. Am I legally allowed? And if I do, am I being disloyal to my father’s memory by getting rid of what he bought?” Personal finance is personal This client is far from unusual in the loyalty he feels to his benefactor. Many beneficiaries feel as if they are betraying the person who left them the account if they change anything in it. But that is far

What Should You Do With Money in the Bank? By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   Recently, a couple asked me what they should do with their money in the bank. I hear this question quite often. However, as every individual investor’s situation and circumstances are different, there is no standard response that fits everyone. To figure out an answer for this particular couple, I asked:   What’s the intended purpose of this money? The couple answered that it was the sum of their retirement savings that they had accumulated over the past 18 years. They had over $650,000 in bank deposits, carefully spread out among several U.S. banks so that they were fully insured by the FDIC (Federal Depository Insurance Corporation). However, they also admitted that they were earning next to nothing in terms of in

How to Overcome the Challenges of Receiving an Inheritance By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel What would be your first reaction if you received an inheritance? When a client received an inheritance from her elderly aunt, she told me: “I thought she was going to leave everything to my cousin. I never imagined in my wildest dreams that any of it would come to me. Although the extra money will come in useful, I don’t know what to do with it! I spend my nights worrying about whether I should invest it or if I can spend any of it.” You are not alone This client’s anxiety about what to do with an inheritance is not unusual. Strange as it may sound, many people who receive an inheritance or windfall worry about losing their new assets, and this fear paralyzes them. Other people go to the opposite extreme and spend it all without a sec

Avoid This Portfolio Management Mistake By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   At an initial meeting, a new retiree told me, “I’m not really sure what stocks I own.” When I asked how he had put together his portfolio, he explained that some of the positions came from an inheritance, while others… “Well, I’m not really sure,” and a couple of stocks were recommendations from “this guy who sits next to me in shul.” When I asked him if that guy still thinks they’re good stocks, the gentleman admitted, “I don't know. I don't go to that shul anymore!”   This conversation is a superb illustration of a huge mistake that people often make with their investments: following a “hands-off approach to investing” – in other words, not having a clear strategy and buying/selling stocks without oversight. They don’t give much thought to

What Happens to Your Retirement Plans When You Make Aliya? By Douglas Goldstein, CFP®, - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   As a Certified Financial PlannerTM sitting in Jerusalem, I work mostly with American immigrants who keep the majority of their assets in American investment accounts. When a recent oleh listed the various retirement plans that he held in the United States, he mentioned: Individual Retirement Account (IRA) 401(k) retirement plan from an old employer 403(b) plan from when he taught in a school. Although he had some upcoming financial obligations, most of the money was intended for long-term investment.   He told me that his biggest financial problem was that his investments and money “were all over the place,” and with his busy schedule he was unable to keep track

4 Points to Remember at the End of the Financial Year   By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   The end of the financial year is a good time to conduct an annual review of your financial situation. If your savings plan, or the market as a whole, has swerved off course, now is an opportune time to adjust accordingly.   Saving goals Are your long-term and short-term goals the same as they were last year? If your goals are both time and dollar specific, it’s easy to tell whether you are on target to meeting them.   Does the saving component of your financial plan include tax-deferred pension plans?  Review the details of your pension plan to determine if the division of funds among the saving and insurance components of the plan is still appropriate for your current stage in life.   Asset allocati

What Happens When You File U.S. Taxes From Abroad? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   American citizens living overseas often need to file U.S. taxes from abroad, even if they don’t owe any money. If you live in Israel, gathering the information you need to complete your taxes from Israeli banking and financial institutions can be tricky since foreign institutions don’t produce 1099 forms. So what is an American living abroad to do?   Dangers of investing overseas The IRS requires American citizens to disclose information about their investments, no matter where they are held.   The end-of-year statements from your Israeli bank or investment company don’t provide the same information that appears on a standard 1099 – and probably won’t be in English! This means that when filing your American taxes, you (or yo

Did You Get an Unpleasant Surprise From Your Stateside Broker? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   When your stateside broker sent you a surprise letter, did it contain good news? Many Americans in Israel (and non-Americans, too) have received a letter from their U.S. investment firm or bank informing them that they need to close out their account. In some cases, the brokerage firm does not shut down the account, but limits its services because the client no longer lives in the United States.   10-step solution I recently produced a toolkit, which you can download for free, which answers the most common questions about handling American accounts from Israel. One of the most popular sections of the toolkit is called, “10 Steps to Opening a U.S. Brokerage Account.” Get this great

How to Grow Your Money Twice as Fast: Save More By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel What’s the best way to save, and how much money should you save?   As a panelist on the “Money Tree Investing Podcast,” I recently answered a question about how to invest monthly savings. Here’s what I advised:   Save more Before discussing specific investment tactics, I suggested doubling the amount of money the listener was saving. My experience as a financial advisor has taught me that many folks don’t save as much as they can. One common rule of thumb is to save 20% of your income. If you reach that level or more, you’re well on your way to building serious wealth.   Choose investments carefully There are two principles that every investor should follow:   Keep i

If you worked in America before your move to Israel, chances are you have an IRA account. What should you do with this American account if you live an ocean away?   Should you transfer your retirement accounts to Israel? An IRA is an “Individual Retirement Account.” There are several categories of IRA, including traditional, Roth, Simple, and SEP IRAs. The main differences between them relate to when taxes are paid. (Check with your accountant about your own situation since this article does not constitute tax advice.)   Another common type of retirement account in the United States is the 401(k), which is a “defined contribution” plan. Contributions to the account are deducted from your paycheck and you only pay tax on them when you make a withdrawal. Sometimes contributions are matched by employers, which make it an especially sweet way to save. However, when you work in Israel, you normally cannot continue contributing to the pl

Should Your American Assets Stay in the United States?  By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel When making aliya, many olim move their American assets to Israel and convert all their dollars to shekels. However, there is a strong case to be made for leaving your dollars in America. Here’s why: Efficiency U.S. securities markets may still be the most efficient, and individual-investor friendly in the world. You can have a diversified basket of global assets within a “regular” U.S. brokerage account, and do it cost effectively. America has an established market, with steady government regulations and

Why Gender Bias is a Good Thing in Financial Planning By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel One area where gender bias isn’t discussed enough is in financial planning. Financial planning for women must be different than for men. What do women need to know when planning their financial future? Women work fewer years than men Even though men are more involved with domestic duties than in previous generations, typically women take time off after childbirth more often than men take paternity leave. When children are young, mothers are more likely than fathers to work part-time or to stop working entirely for

Is Risk Management the Best Financial Strategy? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel What is risk management, and how does it affect your investment decisions? Every investment is risky Every investment carries a chance of making a profit – and a risk of sustaining a loss. However, some investments are riskier than others. Generally speaking, the more profitable investments contain the most risk; if an investment can potentially make a high profit, it can also cause just as much of a loss. So if you’re thinking about an investment that could give a high return, ask yourself if you could handle that level of loss if it doesn’t work out. <

Estate Planning: What Happens to Your Money After You Die? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel One of the most important issues in estate planning is what happens to your money after you die. How quickly your heirs receive the inheritance depends largely on your estate planning. (If you’re having any difficulties with an inheritance, please email me at [email protected].) 3 things to consider when planning your estate When setting up U.S. IRA and brokerage accounts for clients who live in Israel, I ask them to consider what will happen when they no longer need their money. Here’s where to start: <span style="font-size:

Avoid These Common Mistakes When You Receive an Inheritance By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel A new client recently told me, “My late father left me an inheritance of an IRA (Individual Retirement Account) worth $1.5 million, and I’m the sole beneficiary. What should I do with it? If I bring the money to Israel, I’ll have to sell the stocks and wire the money to my account here. But if I do that, I’ll have to pay tax in the United States and maybe Israel, too.” Unfortunately, many beneficiaries make costly money mistakes. Read about the mistakes you should avoid if one day you receive an inheritance, and then check out our free interactive tool at www.profile-financial.com/interactive. Don’t take money out of the IRA If a beneficiary withdraws the funds from the IRA, he’ll lose a fantastic American tax benefit. People

A Guide to the Tax Implications of a Legal Settlement By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel This is a two-part article addressing questions that arise when people receive lump sums. For the entire article, go to: www.profile-financial.com/settlement. I recently helped a number of people who are in the midst of receiving a cash settlement from a lawsuit, and had to point out that winning a lawsuit is not “free money.” In addition to having survived personal injury and a long-drawn out legal case, there may be tax implications to a legal settlement. Lost wages or profits If you are unfairly dismissed from employment, you may receive a settlement for lost wages, benefits, severance, back pay, or other income. According to the IRS, this sett

A Guide to the Tax Implications of a Legal Settlement By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel   This is a two-part article addressing questions that arise when people receive lump sums. For the entire article, go to: www.profile-financial.com/settlement.   I recently helped a number of people who are in the midst of receiving a cash settlement from a lawsuit, and had to point out that winning a lawsuit is not “free money.” In addition to having survived personal injury and a long-drawn out legal case, there may be tax implications to a legal settlement. Lost wages or profits If you are unfairly dismissed from employment, you may receive a settlement for lost wages, benefits, severance, back pay, or other inco

Did You Make a Mistake When You Opened Your Bank Account? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel What happened when you opened your first Israeli bank account after making aliya? A new oleh recently told me: “I just tried your online tool [www.profile-financial.com/olim] to find out what I need to know about having a U.S. brokerage account now that I’ve made aliya. But I think I made a mistake when I opened my new Israeli bank account.” He had gone to a local bank and told them that he wanted to bring some money over to Israel. The clerk there answered that as there is now an information exchange agreement between Israel and the United Stat

What You Need to Know About Premium Bonds By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel Premium bonds may be a good investment choice for retirees looking to increase their income. (For solutions to other problems retirees face, download a free copy of The Retirement Planning Book at www.profile-financial.com/rpb.) Consider premium bonds In today’s low interest rate environment, if you park your money in bank deposits or money markets, the interest you receive generally will not be enough to pay your bills. Even leaving a million dollars in Certificates of Deposit (CDs) in a bank will only generate a few thousand dollars a year of spending money. S

The Best Way to Invest When You Want to Gift Money By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel Recently, a couple with four children of various ages asked me for advice on how to invest funds that they had just inherited. They didn’t need the inheritance for themselves, and they wanted to pass it along to their children. The couple’s oldest child was married and wanted to buy a house, so getting her share of the funds now made a lot of sense. “What stocks should we invest in for her?” the clients asked. “None,” I said. “Money that you want to use in the short term should be in cash or short-term bank deposits because it needs to be safe. The stock market carries risk.” As

Why Interest Rate Risk is Important By Douglas Goldstein, CFP® Conservative investors who buy bonds to avoid high risk might inadvertently be exposing themselves to a potentially devastating risk: interest rate risk. If you are concerned that you may have interest rate risk or other hidden risks in your investments, call my office at 02-624-2788 to discuss your portfolio. Are bonds safe? When you buy a bond, you lock in a specific interest rate that you'll earn until the bond matures. Assuming the issuer of the bond remains solvent, you’ll receive your interest payments (usually every six months), and on the "maturity date" you’ll get the principal value of the bond. That’s what ha

What You Need to Know About Financial News By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel Should financial news and media reports affect the way you make your investment decisions? Recently, a client said: “I just read about _________ (fill in Israeli company name) in The Jerusalem Post, and I’d like to buy 1000 shares.” I hear comments like this fairly often. Since I help people who live in Israel with their U.S.-based IRA and brokerage accounts, I am able to help them trade stocks. However, before putting in an order, I recommend that they ask a few questions before considering buying an investment. How accurate is the news? <span st

How to Increase Your Retirement Cash Flow By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel When you retire, your cash flow changes. Since most pensions won’t replace 100% of your pre-retirement income, you need other ways to increase your monthly cash flow. A bank may not meet your needs If you put your money in a regular savings account in the bank, you have little risk of losing your principal. But, you also will receive relatively low interest, as banks normally pay the lowest yields in the world of fixed income. This prevents you from “growing” your money. Whatever money you have may lose value due to inflation. If you have the tolerance to take on some le

What to Do When You Inherit an IRA? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel If you inherit an IRA (Individual Retirement Account), you may be tempted to simply withdraw the funds and put them into your own name. But if you do, you would possibly be making a big mistake. Instead, you should transfer the money into a “beneficiary IRA” account. Money in an IRA is tax deferred in America, meaning that any interest, dividends, and capital gains inside the account are not subject to U.S. taxation. Once you withdraw the money, or move it overseas, you’ll probably owe money to the IRS. So by asking the brokerage firm to set up a beneficiary IRA for you, and moving the assets directly from the deceased’s IRA account into

Do You Need to Worry About a Market Crash? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel No one knows if or when there will be another market crash. Anyone who could accurately predict the ups and downs of the market on a consistent basis would make an absolute fortune. Even if the market’s exact moves can’t be predicted, you can be sure that the market will take a hit sometime in the future. In fact, if you’re planning to hold investments for the next few decades, get ready for many crashes, of varying degrees. That’s the way the market works. Successful investors, by and large, are those who are well prepared to ride out volatility. Smooth out the ride</s

What Really Happened in the 2008 Market Meltdown: A book review and analysis of Ben Bernanke’s book, The Courage to Act: A Memoir of a Crisis and Its Aftermath Douglas Goldstein, CFP® As a financial advisor who worked with clients throughout the 2008 market meltdown, I was particularly interested in understanding the Chairman of Federal Reserve Bank’s perspective of that period. Ben Bernanke’s book The Courage to Act: A Memoir of a Crisis and Its Aftermath is an exceptionally well-written autobiography that explains the background of the banking crisis, the crisis itself, and its aftermath. The perspective that Bernanke shares, however, does more than put another page in the history textbook of the world economy; it raises a number of fundamental questions about how the mess b

How Non-Americans Can Benefit from American Brokerage Accounts By Douglas Goldstein, CFP®, helping people in Israel with their U.S. IRA and investment accounts This past week, my office phone rang several times with non-Americans inquiring about opening American brokerage accounts. Given the hassles of dealing in some of the more popular offshore jurisdictions, and given the many benefits of keeping investments in the United States, these people were happy to see how they could easily invest through a U.S. brokerage firm. Why non-Americans have American investment accounts There are two parts to having a brokerage account: the specific investments and the “custodian” of the funds.  The specific inv

What Should You Do About the FBAR? By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel Whenever I mention the acronym FBAR, Americans often say one of two things: “F what??” or “I don’t need to do that.”   What’s an FBAR? The “Report of Foreign Bank Accounts” (FBAR) is a required U.S. government form, which is important in the post-9/11 world. The purpose of the form is to alert the authorities about accounts held outside the United States with a total value of $10,000 or more at any time during the year.   Can I just skip

Is Your Brokerage Account in Danger of Being Sold Out? By Douglas Goldstein, CFP® Imagine if your brokerage firm called you up and told you that they were going to sell out all of the positions in your brokerage account within the next 60 days. “Why?” you ask them. They respond that due to increasing regulatory restrictions they will no longer service your account. They give you two options: Transfer your assets to another financial institution, Distribute the assets directly to you. Believe it or not, many people in Israel are receiving such a call. This is because they are U.S. citizens, and due to tough regulations regarding Americans living abroad originally intended to prevent m

Can Your Israeli Bank Provide Investment Services?       By Douglas Goldstein, CFP® Have you found that your Israeli bank no longer provides investment services for Americans living in Israel? Because if onerous reporting requirements to the American government, many Israeli banks have stopped opening investment accounts for U.S. citizens. While dual American-Israelis can continue with banking and checking services, they need to look elsewhere for their long-term investing. Where can Americans open investment accounts? If American firms turn away U.S. citizens with a foreign address and Israeli banks don’t open accounts for Americans, how can Americans living in Israel have investment accounts? That’s where investment firms with relationships with U.S. brokerage houses and Israeli investment licenses come into play. Profile Investment Services, Ltd. is one of a select few com

Read This Before You Transfer Your Money to Israel By Douglas Goldstein, CFP® Making aliya doesn’t mean you need to close your American brokerage accounts. In fact, there are many sound reasons for maintaining assets in America even if you move away. Think twice before converting your American retirement accounts to shekels and bringing them to Israel. Recently, some American brokerage firms asked their non-resident clients to transfer out their accounts. To the shock of many clients in Israel, major firms decided to end long-term relationships with them. If this has happened to you (or you fear it may) don’t panic! There are U.S. brokerage firms who realize the benefit in holding accounts for law-abiding and tax-paying citizens who just happen to have a non-U.S. address. As a licensed financial planner in both Israel and America, I have over two decades experience in counseling American olim on the benefits of maintaini

Is Financial Success Just a Matter of Luck? By Douglas Goldstein, CFP® Is financial success more about planning or luck? In the book Rich Kids, Tom Corley discusses three different kinds of luck: Random luck is the kind of luck we can’t control. Random good luck includes winning the lottery or getting an unexpected windfall. Conversely, examples of random bad luck include sudden illness or being struck by lightning. Opportunity luck is good luck created as a result of your actions. You can create good luck by following positive “rich” habits that enrich your lifestyle and protect you from fiscal harm. An example of this would be getting an unexpected bonus from work, based on your diligent work. If you hadn’t worked hard and made yourself indispensable to your company, you may not have received a reward. In other words, your hard work created this piece of good luck. By fo

How Modern Portfolio Theory Can Make You a Better Investor By Douglas Goldstein, CFP® Can “Modern Portfolio Theory” increase your investment returns? Recently, on The Goldstein on Gelt Show, I spoke with the inventor of Modern Portfolio Theory, Nobel Prize in Economics winner, Dr. Harry Markowitz. Dr. Markowitz explained various aspects of Modern Portfolio Theory and its impact on the individual investor. His theory explains how to construct an investment portfolio by optimizing expected returns based on the level of market risk. The goal is to help investors construct portfolios to maximize returns while limiting risk as much as possible. By combining various asset classes in one portfolio, Markowitz explains, the overall accou

Avoid Making This Mistake with an Inherited IRA By Douglas Goldstein, CFP® If you are the beneficiary of an inherited IRA, avoid immediately withdrawing the money. If you make an immediate withdrawal, you might forfeit the tax-deferred status of the account and be subject to paying taxes. A proper withdrawal strategy for an inherited IRA can minimize your tax bill. What you need to know when you inherit an IRA In an effort to encourage savings, America lets the assets inside an IRA account grow tax deferred – owners only pay tax once the funds are withdrawn. If you are the beneficiary of an IRA, depending on how you title the account and withdraw the assets, you too can take advantage of tax-deferred growth. Any mistake m

How to Avoid Tax Mistakes When You Receive an Inheritance By Douglas Goldstein, CFP® When receiving an inheritance, it’s important to avoid making tax mistakes. Certain tactics, such as opening a U.S. brokerage account (see below for an interactive tool) can help. Watch out for these mistakes: Mistake #1 – Taking money out of an IRA To maintain the tax-deferred status of an inherited IRA (Individual Retirement Account), the money must remain in a specially titled account. As an heir, you can transfer the IRA into a “beneficiary IRA” (a.k.a. “stretch IRA”) and not pay taxes on the account’s capital growth until money is withdrawn. Transferring the money overseas jeopardizes the tax beneficial status. As many overseas banke

Why You Might Benefit from Having a U.S. Brokerage Account By Douglas Goldstein, CFP® Unsure of the benefits of a U.S. brokerage account? Use a free interactive form to find why it may be helpful to keep some of your investments in America even though you live in Israel. See the URL below. One of the most common financial problems Americans living in Israel face is when their U.S. investment company closes their account because of their Israeli address. There is no legal reason why you can’t have an Israeli address on American brokerage and IRA accounts. In fact, while some investment companies balk at your foreign address, others have no problem. (My company, Profile Investment Services, Ltd., specializes in dealing with people

The Best Way to Pay for a Wedding By Douglas Goldstein, CFP® After accepting all the good wishes and mazal tovs, the first thing parents of a newly engaged couple need to think about is the best way to pay for a wedding. Making a wedding can be costly. If you have savings to cover the cost, great. That’s the topic of today’s article. If you haven’t saved for the big day, however, you’ll need to adjust your child’s expectations since you should certainly not take on debt to cover a four-hour party (no matter how much your bank – or children – encourage you). From which account should you withdraw? If you have retirement accounts, don’t use those funds to pay f

Should You Have a Shared Savings Account With Your Spouse? By Douglas Goldstein, CFP® What’s the best way to invest with your spouse? Should you have a shared savings account or separate accounts? Whenever I help a couple set up U.S.-based brokerage and investment accounts, I ask whether they want a “joint” account, or whether they want to keep their money separate. Shouldn’t couples always invest together? In an ideal world, spouses would combine both their personal and their financial affairs. But given the complexities of today’s family structure, one account type doesn’t meet everyone’s needs. Some couples enter matrimony on equal financial footing, while others have child

  Some people say the next best thing to being personally financially successful is having rich kids. However, teaching children good financial habits can be challenging. Here’s where Tom Corley and his book Rich Kids comes in handy. This is a great resource for teaching children (of all ages) about money. The three paths to wealth There are three paths to wealth: Live below your means. If you put 20% of your monthly salary into savings, as well as save all raises and bonuses, you are setting yourself up for a safer future. This is because not only do your savings increase with compound interest, but you avoid increasing your lifestyle beyond your means. Expand your means. Find efficient ways for generating more income, such as a

Note: After reading the following true story, try the free Investment Evaluation Tool to determine if you are invested more aggressively than you should be. Details for accessing the tool are below. When I talk with people about how they should structure their U.S. investment accounts, one of the common questions I ask is how long do they plan to keep the money invested. Folks who see themselves as “long-term” investors can often take on the added risk of the stock market. What about long-term investors who don’t need growth? I recently met with a couple who were good earners, solid savers, and on top of it all, had inherited a sizeable amount of money.  They told me that they thought they should invest mostly in the stock market. “Why d

Is Panic the Best Reaction to a Drop in the Market? By Douglas Goldstein, CFP® As an investment advisor who helps olim manage their American brokerage accounts, I’m often asked, “Why should I invest in the stock market when it only goes down?”  If you believe that the stock market only goes down, then putting your money in stocks is a big mistake. The people who tend to make money in the stock market aren’t investing for the short term. They realize the market can, and sometimes does, drop, but their long-term time frame allows for plenty of opportunity for the market to recover. If you’re trying to grow your wealth and believe that the economy will strengthen, the stock market offers many possibilities. Remember: “possibilities” does not mean guaranteed gains; it includes the very real chance of loss. Folks who can’t tolerate volatility should avoid the market. This doesn’t mean tha

How to Solve this Common Problem with American Brokerage Accounts By Douglas Goldstein, CFP® I often receive calls at my office from people who say that their U.S. investment advisor asked them to change firms. It’s not because they don’t meet the minimum balance requirements. Rather, it’s just because they have chosen to live overseas. For various regulatory reasons, several large investment companies in the United States have decided to stop servicing clients who live abroad, many American olim included. Stringent legislation designed to prevent terrorism, money-laundering, and other criminal activities has made it much harder for U.S. brokerage firms to deal with cross-border finance. For this reason, some firms that used to work with U.S. citizens living overseas have decided that it is no longer worth their while to do so. Despite the legislators’ intentions to hurt terrorists, many law-abiding citizens who live

What You Need to Know When Blending Two Families By Douglas Goldstein, CFP® Many second marriages are the blending of two families, not just two people. This situation raises various questions about child support, how to divide household bills, and inheritance issues. To ensure a smooth financial union, make sure to discuss these issues before the actual ceremony takes place. Sign on the dotted line A financial prenuptial agreement detailing which assets belong to whom and which funds will be used for specific purposes such as children’s college funds and weddings is critical in second marriages. Both spouses should use their own lawyer and the couple should meet with a financial advisor who has experience with blended families to discuss the fairest ways to protect their financial responsibilities and their children. Joint and separate accounts Sometimes it makes sens

Why You Need to Think Big and Start Small to Get Rich By Douglas Goldstein, CFP®  One of the most effective ways to achieve your financial goal is to develop good habits. Here’s what you need to know: Rome wasn’t built in a day Acquiring good financial habits does not happen overnight. First, you need to decide what you want to change, such as your spending or saving habits, budgets, etc. Whatever you decide to change, make sure you are beginning with a small step. Habits built on small, but steady, steps take hold quicker and last longer than sudden drastic changes. One small target at a time If you want to become less extravagant and more careful about spending your money, start by writing down what you spend every day for a week. When you have done that, think of which of your regular purchases are unnecessary. Rather than dropping them all at once

What is the Best Way to Transfer Dollars to Israel? By Douglas Goldstein, CFP® When clients ask to transfer dollars from their U.S. investment account to their Israeli bank, the details they must provide sometimes take them by surprise. Living in a different country from your assets means that money transfers are necessary to meet your cash-flow needs. Following procedures properly can expedite the process. The easy system of transferring funds Although we help people choose investments for their U.S. brokerage, IRA, and 401(k) accounts, many clients seek more than advice on what to buy/sell. They are looking for service and attention to details. When transferring funds, you must pay meticulous attention to details. Even if all the account numbers, names, and addresses match up, the clearing firm often asks additional questions. Because of regulatory concerns and anti-money-laundering

Do All Married Couples Need to Share Their Money? By Douglas Goldstein, CFP®           What’s the ideal way to handle your money? In a perfect world, married couples merge their lives as well as their finances, and have joint accounts. However, sometimes a couple can be connected at the heart but have separate bank accounts. While partners should look at their overall assets together, depending on the circumstances, sometimes having separate accounts is more appropriate. A second marriage Most people enter second marriages with financial baggage from their first marriage. Either partners may be supporting children, or they may have debts incurred by the cost of a divorce. This creates a delicate situation, balancing the financial needs of merged families. To resolve issues such as making sure that children from the first marriage are supported or that one spouse is not respon

How to Make the Most Out of Your Parents’ Stocks By Douglas Goldstein, CFP® What should you do if you inherit a portfolio of stocks from your parents? Should you sell them? To answer the question of whether you should sell the stocks, start by asking yourself whether you would buy these stocks if you had extra cash. You have no moral or legal obligation to keep the positions just because your parents owned them. I’ve had people come into my office with stocks that their parents bought decades earlier, and they said, “My father said this was such a great company that I should never sell the stock.”  But how could anyone have known whether a company that was in business 10 or 20 years ago would still be a good investment today? Remember Pan Am, Blockbuster, or Enron?  Even though your father’s research many years ago suggested that a company would be a good buy, times have probably changed.

What You Need to Know About Start-Up Investing By Douglas Goldstein, CFP® In a dramatic repeat of what I saw many times in the late 1990s-2000, another start-up company just collapsed, taking with it millions of dollars from investors’ pockets. Not only are the founders’ dream shattered, but its investors’ profits are destroyed and cash lost. As a financial advisor, I review many new companies from the investor’s viewpoint. In almost every case, the story ends badly. Don’t invest unless you know how The main cause of these disastrous results stems from investors putting their money into an idea instead of into a team. Many great ideas fail because of bad management, but lots of new concepts – even mediocre ones – turn into solid businesses when handled properly. Venture capital professionals won’t even consider investing in a company unless they’re convinced t

What to Do With Your Money at the End of the Year By Douglas Goldstein, CFP® As the fiscal year draws to a close, it’s time to review your financial plan. Here are three important aspects that you need to look at: Savings goals What are your long-term and short-term goals? Are they the same as they were last year? If your goals are both time and dollar specific, it’s easy to tell whether you are on target to meeting them. Take a look at your pension plan. Is the division of funds among its saving and insurance component still relevant to your current stage in life? Asset allocation Apart from saving your money, you also need to grow it. So let’s look at your investments. Are your funds properly invested? Your investments should reflect your risk tolerance, growth objective, and time frame. Recheck your asset allocation to ensure that everything is in order following th

Do You Suffer from “Inheritance Loyalty Syndrome?” by Douglas Goldstein, CFP ® It is common to feel emotional angst after receiving an inheritance. Inheritors may have doubts as to whether they are “allowed” to use the assets as they wish, or whether they somehow have to use them in a way the benefactor would have chosen to use them. There are two ways to approach a sudden influx of money into your control: Spend it on things you would never have been able to afford otherwise. The downside of this is the risk of increasing your overall cost of living and finding yourself none the richer. For example, if you choose to upgrade your car, would you be able to afford higher insurance payments, gas, and upkeep in the future? Incorporate the assets into your overall financial plan. You could use the inheritance to pay off debt (including your mortgage), fund your emergency account, or increase your savings. Other factors to

Don’t Leave Tax-Loss Harvesting to the End of the Year By Douglas Goldstein, CFP® Many investors optimize their portfolio to minimize capital-gains tax. One popular strategy is to do tax-loss harvesting. What is tax-loss harvesting? Tax-loss harvesting is the practice of selling a position at a loss, and matching the loss against a gain of different stock that you sold. By offsetting losses against gains, capital growth taxes are only paid on the net profits. While this may be a tempting tax-savings strategy, there are three reasons to avoid the end-of-the-year market selling frenzy. The wash sale If you sell a security and buy it (or a substantially similar one) back within 30 days of selling it is called a “wash sale.” Wash sales negate any tax-loss selling strategies, and your attempt to harvest a tax-loss would be disallowed by the IRS. Don’t be the short-sighted

What Should You Do When You Get An Inheritance? By Douglas Goldstein, CFP® Many of my client relationships began as a result of receiving an inheritance. The sudden infusion of money is a good impetus for a review of one’s goals. The first thing to do when you get an inheritance is – nothing. There’s usually no rush to spend or invest the money. Let the pain you may feel at losing a loved one and the excitement of “coming into money” die down. Before you make any decisions about what to do, make sure you’re in a calm frame of mind. Explore your options Once you are ready to make some decisions, the next step is to figure out what you really want. Some people immediately use an inheritance to realize a material dream and buy a house, car, or go on a luxury vacation. The problem is that many of those who rush into spending an inheritance often find that in the flurry of excitement, the

How to Help Your Children Become Financially Independent By Douglas Goldstein, CFP® A client told me about her married daughter who is in a financially dysfunctional marriage. The young couple finds it hard to make ends meet, and often applies for help from charitable organizations. Yet despite their lack of funds, they still live a fairly extravagant lifestyle. Occasionally, the daughter asks her mother for money, but the mother refuses. My client realizes that she doesn’t have the means to bail them out – and even if she did, they would never learn to stand on their own two feet. Teaching financial responsibility is one of the toughest lessons a parent faces. Close the Parental Bank Saying no to a child in fiscal trouble is difficult. I know many parents who support an adult child still living at home, or married children who can’t quite make the month. These parents tell me, “What can I do

How To Break Your Bad Habits And Get Rich By Douglas Goldstein, CFP® Money woes are generally not due to a market gone awry or a low salary. The number one cause of most money problems is bad financial habits. Do you spend without tracking what is leaving your wallet, neglect to make regular deposits in savings, and overlook regular financial reviews and discussion of financial goals with your partner? If so, you may be guilty of harboring negative financial habits. Bad financial habits can be as deadly as smoking. Some habits are so ingrained that it seems impossible to break them… but it can be done! I spoke with James Clear, an expert in habit creation, on The Goldstein on Gelt Show about how people could improve their finances by replacing negative habits with positive ones. Why stopping cold turkey doesn’t work Stopping a bad habit by simply not doing it anymore doesn’t t

Are Bonds a Good Investment for You? By Douglas Goldstein, CFP® Bonds are a very popular investment, but before you buy any, let me tell you what I share with my clients about them. Think of a bond as a loan between you and a company or government. Assuming all goes normally, here’s how it looks: You lend them a sum of money They pay you interest periodically until “maturity.” They return the principal of the loan on a specified date. Why buy bonds? Investors looking for steady current income (perhaps to supplement a pension) and wanting to diversify their portfolios often purchase “fixed income” securities (as bonds are often called). Owning bonds may give the investor a sense of security because the issuer guarantees to pay back the principal of the bond. However, bear in mind that the “guarantee” is only as solid as the guarantor, so if the issuer

Problems With Your U.S. Brokerage Account? By Douglas Goldstein, CFP®   Many readers have recently contacted me because they received a letter from their U.S. brokerage firm informing them that either “You can no longer purchase additional shares of mutual funds in your account,” or “We will no longer provide investment advisory services to you and/or you may only enter liquidating orders or non-solicited orders in your account.”   This letter is not a result of new American legislation; rather it means the brokerage firm handling your portfolio is no longer interested in working with clients living outside the United States. Don’t despair. There are solutions that can possibly even improve your situation.   What action step you should take Even if you can’t continue to work with your existing brokerage firm, you do not need to cash out your American account.  Rather, w

How Quickly Should You Invest The Money You Inherit? By Douglas Goldstein, CFP® Though I often advise people to wait before investing an inheritance, sometimes you must take quick action. When do you need to act quickly? If you inherited a risky position, you should consider liquidating it. For example, the grandfather who always managed the stock portfolio passes away, leaving large amounts of money invested in a few individual stocks. Unable to live on her own, the grandmother who now owns the stock portfolio needs to move to a nursing facility. What would happen if she waited 12 - 18 months to deal with the account and then, just before she sold in order to pay her bills, the stock market crashed? How much money do you need now? If you inherit a portfolio of stocks, ask yourself if you are in a position to wait (possibly for years) to use the money. A fancy car or a

Are You Getting The Social Security You Deserve? By Douglas Goldstein, CFP® The “Greenberg Settlement,” the resolution of a class-action lawsuit brought against the Social Security Administration (SSA), changes the way American olim receive their American Social Security payments. Under the SSA’s Windfall Elimination Provision, if you receive a foreign earnings-based pension, your American benefits are reduced. Until now, claimants of Social Security living in Israel who also received Bituach Leumi old age pension had their payments from Social Security reduced under the Windfall Elimination Provision (WEP).  This was because Bituach Leumi was considered as an extra pension and counted as a “windfall.” In 2013, Ephraim Greenberg, a U.S. citizen living in Israel, brought a class action to change this situation because Bituach Leumi pensions are not dependent on earnings and therefore don’t f

When Should You Give Trading Authority to Your Children? By Douglas Goldstein, CFP® Recently, one of my clients had a serious fall at home, breaking his hip, and ended up in the hospital. As a result of his injuries, it was clear that he could not deal with his finances for the foreseeable future and had to hand over trading authority to his daughter.  As this all happened suddenly, decisions had to be made in a hurry, leading to mediocre results. If my client, who is over 80, had agreed to hand over trading authority earlier, he and his daughter would have been better prepared for a scenario where he could no longer make financial decisions. What is trading authority? A trading authority form is a legal document that allows someone else to act as your agent over your account. Your agent can have limited trading authority, which means that he can make transactions on your behalf but not withdraw any

What You Need to Do After You Inherit an IRA By Douglas Goldstein, CFP® If you receive an inheritance, it might come in the form of property, a bank account, or brokerage account. But what if you receive an inheritance from someone’s individual retirement account (often called an “IRA”)? IRAs are different from regular brokerage accounts A regular brokerage account is normally structured as either an “individual” or a “joint” account, and a person’s will determines how the assets will be distributed upon his death. An IRA, on the other hand, is normally distributed via a “beneficiary designation.” That’s actually much easier because when a person sets up his IRA, he instructs the brokerage firm or bank to list the names of primary beneficiaries (and contingent beneficiaries if one of the original ones has died). It’s a comparatively easy procedure to move the money from an IRA to the proper beneficia

By Douglas Goldstein, CFP® Regardless of the more modern way people look at gender, there are significant differences in how men and women should invest their money. Here’s why: Women’s pensions tend to be smaller Women’s pension payouts tend to be lower than men’s payouts, because most women work fewer hours and have lower salaries than their male counterparts. Even though “paternity leave” is becoming more common, most women still take additional non-paid time after having a baby. And, when they return to work, they may return to a part-time position. All this means a lower salary, and a proportionately lower contribution to a pension fund. Women live longer than men In Israel, the average lifespan of a man is 81 years, while a woman’s life expectancy is 84. In the United States, average life expectancy for a man is 76 and for a woman 81. As women generally retire earlier than men an

Non-Americans who want to invest internationally often use U.S. brokerage accounts. While it may seem counter-intuitive for a non-American to open an American brokerage account from overseas, there are several reasons why this is a good move. 2 reasons why non-U.S. folks use American accounts Efficiency – U.S. securities markets may be the most efficient and individual-investor friendly in the world. American regulations place customer protection and transparency at the top of their concerns. You can have a diversified basket of global assets within a “regular” U.S. brokerage account, and do it cost effectively. Diversification – A U.S. brokerage account can host a variety of investment vehicles, such as stocks, bonds, mutual funds, and bank deposits (CDs). American brokerage portfolios can hold investments in both American and global companies. Do non-American heirs need to pay U.S. Inheritance Tax?

Are bonds safe as an investment? Explore how they can provide safety and increase diversification in an investment portfolio.