In our latest expert interview we sat down for an in-depth conversation with Baruch Labinsky, Financial Planner and Investment Manager, on his New Book A Financial Guide to Aliyah and Life in Israel.
Baruch is an independent financial planner and investment manager. He has devoted his career to helping families and individuals get the most out of their finances, and has even developed his own course for helping people understand their finances in the simplest language possible, and is a frequent speaker on many finance, investment, and personal money management topics - which is exactly what we're here to talk about today.
Thank you, Baruch, for joining us today. Please tell us a bit about yourself.
As a financial planner and investment portfolio manager licensed by the Israel Securities Authority, I specialize in helping olim to transition their finances successfully to Israel. I made Aliyah almost 20 years ago from Canada and live in Ramat Beit Shemesh together with my wife and 7 children. I lecture regularly for Aliyah organizations in Israel and around the world on various financial topics. I have recently published my new book, A Financial Guide to Aliyah and Life in Israel so I have managed to reach out and help many more people who are contemplating Aliyah, or those already living here who need some help navigating the differences in the financial set up here in Israel.
In your new book, you give readers a 3 steps plan for financing their Aliyah. Can you give us a brief overview of those steps and why they are so important?
To my mind there are three crucial steps to financing a successful Aliyah – regardless of whether you are pre or post Aliyah – it’s never too early and never too late.
Set your goals! Prioritize what’s most important to you and your family. Where do you want to be in the short and long term? Be as specific as possible in outlining your goals so that you can visualise what you are trying to accomplish. Break your goals into manageable steps.
Build a net worth statement. This will take time and effort, but it’s impossible to move forward into a secure financial future if you don’t have this critical starting point. You must gather data, retrieve past records and organise virtually all your financial information into a statement where your assets (what you own) and your liabilities (what you owe) are listed clearly. When you have successfully outlined your financial situation, you will be in a position to make better financial decisions.
Create a sample Aliyah budget. You need to have an idea of your income and expenses for your life in Israel. The standard of living in Israel is different to that of many Western countries, and you need to understand what your financial position will be in Israel, and what, if any, changes in lifestyle you may need to make.
These three steps are vital because without them, olim are potentially depriving themselves of financial stability in a very different financial set-up. - Baruch Labinski
If you own a house outside of Israel and are making Aliyah. Is it best to sell the home or rent it out when I make Aliyah?
Obviously everyone’s financial situation is unique. The question of what to do with a property outside of Israel will depend on to what degree all or some of the asset’s value is needed to help finance the oleh’s life in Israel. There are arguments, both for and against, keeping a property in your home country – whereas it might offer you much-needed security, it also involves management fees and long-distance responsibility. This is definitely an issue where each individual needs to discuss his/her unique situation with a financial professional.
What are some basic tips for young and middle-aged families for retirement planning in Israel?
My first tip has to be just get that retirement plan in place! Israeli law requires under most scenarios for workers and their employers to be savings large amounts of money towards your retirement, in addition to the base salary you receive. But these mandatory savings may not be enough for you to live at the standard of living that you want in retirement. Supplemental savings and investments can reduce the shortfall and the sooner you start saving, the longer you have to let your money grow. Assess all your sources of potential income and compare them to future projected expenses. Remember, the more years you invest in your plan, the larger your pension will be when you come to retire.
Are there any differences between the various banks for opening checking accounts? Which bank is best?
The best advice I can give here is shop around. Identify the most important things you need from your bank. Do you need it close by? Is it important that they have an English speaking staff? All the banks are eager for your account, and different banks offer different incentives. More and more of the smaller banks have been offering very low fees on standard checking accounts if you commit to depositing your monthly salary with them. But remember, if one bank is offering a particular offer, you can always take that offer to another bank and see if they’ll match it. Most fees are negotiable. Do the rounds and see who you feel you can work best with, and take your best offer to them to match.
What currency transfer and foreign exchange issues are involved in Aliyah?
Currency transfers always offer added complications due to the volatility of currency markets. You need to be very organized when living far away from your money so that you can time your transfers to your best advantage. Try focusing on long term currency trends and have the patience to wait for better rates. But of course this can become very challenging when you need the money urgently so don’t wait till the last minute. Plan ahead!
How do I know if I can afford to own a house in Israel? Is it better to rent?
I devoted a chapter in my book to this very topic! As with most issues there are pros and cons involved with both options. Make sure you are aware of all the additional costs involved in buying a property, and then you can make the decision whether you can afford to buy. Once you know what you can afford to buy, determine whether you want to buy at that price. It’s not always advisable to buy and many people live here for decades without ever buying because it can come out cheaper to rent. The subject is complicated, so speak to a professional who can explain clearly the options open to you.
There's an old saying that the way to make a small fortune in Israel is by bringing a big one. Does this still apply?
In my opinion – absolutely not! I believe very strongly that in order to meet long-term financial requirements and to reduce long-term risk, expatriates who are resident in Israel need to work within the Israeli financial system. Not only does investing locally stimulate our economy and benefit ourselves in the process, but I genuinely believe that Israel offers excellent investment opportunities that need to be considered by all Israelis (and not just the multinationals who invest billions in our economy). In addition, investing part of your money in the local currency also reduces your long-term currency exposure and matches future expenses with future revenues to reduce long-term financial risk.
Once I get to Israel, how do I build a real budge I can stick to?
A budget is not a static, inflexible plan. Once you have made your sample budget, you will see that reality pans out differently, and you will have to reassess and adjust your budget accordingly. It is crucial that you check and amend your budget or else it will become irrelevant and counterproductive. Ensure that you periodically assess your priorities as well as your assets and liabilities so that you ensure that you live within your means, with money for your most important expenses.
How much money do I need to make Aliyah?
This has to be one of the most frequently asked questions. And unfortunately there is no magic number. Every person’s situation is different, and you need to ask yourself some brutally honest questions. Can you survive at a lower standard of living? Can you reasonably expect to be able to support yourself on an Israeli salary? Depending on those answers you may well have to adjust the financial buffer that you need. Just make sure that you have a clear plan and budget, and update your annual net worth statement so you can see how much of your savings you are using.
You can learn more about Labinsky Financial by going to www.labinsky.com and you can reach Baruch at 972 (0) 2-991-0029. You can also find Labinsky Financial on Facebook.