Israelis let NIS 1.5 trillion slowly evaporate

It’s no secret that NIS 100 is worth less than it was worth in the past, since prices have gone up over the years. So although you may see exactly the same number in your bank account, that amount of money buys less. That’s what inflation is all about; eroding the value of your money, even if you don’t always pay attention to it.

When you look at some detailed numbers, it becomes hard to digest. Every NIS 100 you left in your current account 30 years ago is now worth just NIS 49, according to an examination by Phoenix Financial chief economist Matan Shitrit. Because your money wasn’t “working for you”, it lost over half its value.

On the other hand, according to Shirit, were the same sum invested in a share fund (40% Israel, 60% overseas), you would now see in your bank account almost NIS 1,400, which, after allowing for inflation, would be worth NIS 684. On a large amount, say NIS 100,000, you could gain hundreds of thousands of shekels, or lose tens of thousands in real terms.

The main argument against investing in stocks is always the same; it’s risky. But it could be that the definition of risk itself needs revising. “When people talk about risk in investment, they mean short-term volatility,” says Shitirit. “But when you look at a horizon of decades, the risk to households is actually loss of purchasing power because of lack of exposure to assets that generate a real return. Over a period of thirty years, investment in stocks is less risky than holding cash, because erosion of the cash is certain, whereas over a time period such as this the expected annual return on stocks is around 6-7%. So the real risk is holding cash.”

NIS 1.5 trillion doing nothing

Nevertheless, too many Israelis fear losing their money and leave it in their bank current account. The figures speak for themselves. According to the Bank of Israel, last October Israelis held some NIS 420 billion in current accounts. Nearly one in ten holds more than NIS 100,000 in a current account. Together with deposits and cash in hand, the total is some NIS 1.5 trillion. This is money the value of which is slowly being eroded, perhaps without the owner being aware of it.

“There are people who leave money in their current accounts thinking that it’s safe and looked after. They fail to realize that the money there accumulates no return and is eroded,” says Yogev Ben-Ziv, VP and head of finance at Migdal’s long-term savings division. “What’s sitting in a current account today will be eroded in real terms in a year’s time in accordance with the rate of inflation, and that’s a loss.” Another group that Ben-Ziv identifies is those who save through bank deposits. “They believe that they’re investing the money and accumulating a return, but the returns on those accounts are low and don’t preserve the purchasing power of the money.”

18% inflation in five years

The past few years have made the story more tragic. From 2013 to 2020, cumulative inflation in Israel was under 2%, but from 2021 to 2025 it shot up to a cumulative18%. Shitrit explains that inflation is built into the economy, and so must be taken into account. “Central banks, including the Bank of Israel, have inflation targets (1-3% annually for the Bank of Israel, N.A.), which means that prices rise every year and the value of cash is eroded.”

To be El Al’s partner

So what’s the solution? Gat Megiddo, partner and CEO at Finessa Capital, offers an intuitive way of understanding the matter. “I always give the example of El Al, which raised fares during the Swords of Iron war. As a customer of the airline you can be solely on the consumer side and only see your power to buy tickets eroded, or you can invest in El Al shares and preserve your purchasing power or your capital, through being a partner in the business. ‘Partnership’ with the business sector reduces the risk to your purchasing power and its volatility over time, and even better than that.”

Ben-Ziv adds, “The recommendation is of course to invest in assets that can preserve the real value of the money, that is, stocks, bonds, real estate, and other alternative investments, not necessarily 100% in stocks.”

It should be stressed that none of the experts recommends transferring everything to stocks tomorrow morning. “Clearly there’s a place for cash for day-to-day needs and to give a safety cushion,” says Shitrit, “but for medium to long-term savings, the message is simple: holding large sums in cash over time is a choice in which the risk of erosion in real terms is a certainty.”

According to an examination by “Globes”, since 2011 the share track in advanced training funds has provided a real annual return (net of inflation) of 212% (almost 300% in nominal terms); the general track has provided a real return of 112% (nominal 160%); and the real return on the credit and bond track with up to 25% shares was 70% (nominal 109%).

By contrast, the shekel track, like bank deposits, barely preserved the capital, and provided a real return of only 1.7% (nominal 25%).

This is without taking account the fact that in the case of bank deposits 15% tax is payable on the interest “from the first shekel”, whereas on savings in investment provident funds, for example, the rate of tax is 25%, but only on real gains.

“Let your money work for you” is not just a marketing slogan but basic protection of your wealth. Contrary to what might be thought, leaving the money “in a safe place” at the bank is not a conservative decision but, on the contrary, a decision to lose money.

Published by Globes, Israel business news – en.globes.co.il – on February 1, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.