With Israeli interest rates at record highs and inflation eroding savings, this article launches a new finance column by Tomer Ron, host of the podcast “The Money of Life Itself,” author of “How to Take a Mortgage,” and financial adviser to RiseUp. The piece argues that the most important decision in saving for children is not choosing the perfect product, but starting early and consistently.
Ron illustrates the power of compound interest with a simple example: 300 shekels a month, plus an initial 10,000 shekels, can grow to about 270,000 shekels by age 25 if started at birth. Delay that same plan by two years, until the child’s second birthday, and the final amount falls to about 230,000 shekels. That two-year delay costs roughly 40,000 shekels, mostly because of lost time rather than lower deposits.
The article says child savings should also be paired with financial education at home, but focuses on how to build the investment itself. After choosing the government “Savings for Every Child” plan, many parents consider adding monthly deposits through either an investment provident fund, known as gemel lehashka’a, or a self-managed index fund portfolio. The choice depends on how much control, flexibility, and responsibility the family wants, and whether parents are likely to stick with the plan.
Gemel lehashka’a is easier to operate, with fewer decisions and less friction, but it usually costs more. A child-owned account automatically becomes the child’s full property at age 18, which some parents welcome and others want to avoid by opening the account in a parent’s name. Self-managed portfolios offer more control, no automatic transfer at 18, and lower fees. According to the article, gemel lehashka’a fees usually run 0.6% to 0.8% of assets, plus 0.1% to 0.2% in investment expenses, while index funds in self-managed accounts typically cost about 0.1% to 0.2%. Over 20 to 30 years, that gap can add up to tens of thousands of shekels.
The bottom line, the article says, is that an automated, long-term plan matters most: start first, invest at the right risk level, set up monthly deposits, and only then optimize costs. For families who will otherwise delay forever in search of the perfect setup, the more expensive option that actually gets done may be the better one.
