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Taking risks with our money is easy, but what about the children's savings?
Most of us would prefer not to, and the data shows that the very decision has cost our children thousands of shekels since January 2017, when the "savings for every child" program began to operate.
The savings routes vary between the banks and the provident funds, with the former guaranteeing a fixed interest rate, linked to the consumer price index, or variable, which averaged 1.6-4% per year, and the latter allow a choice between 3 routes: little, medium or increased risk.
Most of the savings depreciation was received among the provident funds, with significant differences between the routes and between the funds themselves.
The average cumulative interest received in the increased savings routes, for example, was about 69% and was more than 3 times the average cumulative interest for the same period received in the low-risk route, which was about 22%, and almost 2 times the average cumulative interest in the medium-risk route, which was about 35% (see table).
Examining the bodies in the different tracks even widens the gap, but it must be remembered that examining them in the framework of different tracks is not correct since they are different products.
However, examining them within the framework of the risk pathways themselves, also shows considerable gaps.
Savings for each child - cumulative return in 7 years in the increased risk route/image processing, Walla system!
The investment house Analyst recorded the highest return in the savings track for each child at increased risk for the period examined (from February 2017 to December 2023) with a cumulative interest of 102.34%, compared to the one who signed the table from the bottom with a return of 50.36% - the digital provident fund company Slice.
A gap of about 52%.
Analyst also stars at the top of the medium risk savings table with a cumulative interest of 47.11% for the period examined compared to a cumulative interest of 17.41% achieved by the digital provident fund company Slice, which also marks the middle risk track table from the bottom - a gap of about 30%.
Slice also marks the bottom of the low-risk track savings table with a cumulative interest rate of 17.85% for the period examined compared to the cumulative interest achieved by the Altshuler Shaham investment house which was 28.98%, making it the table leader in this track.
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Savings for each child - cumulative return in 7 years in the medium risk route/image processing, Walla system!
The year 2023 also contributed its share to the depreciation of our children's savings plans, when the differences in returns are also noticeable depending on the risk paths.
For example, the average cumulative yield of all the savings plans per child in the increased risk track for 2023 was 17.91% compared to 9.79% in the medium risk track and 6.98% in the low risk track.
In the increased risk track, it was the plan managed by the Infinity Investment House that yielded the highest return, which stood at 27.25% for the period compared to 12.86% yielded by the plan managed by the Moore Investment House.
Infinity also leads the return of 2023 in the medium risk track with 13.07% and in the low risk track with 10.15%, compared to the 7.49% return of the Moore Investment House in the medium risk track and the 4.95% yielded by the low risk plan of the Phoenix Insurance Company and Provident Fund.
Savings for each child - cumulative return in 7 years in the low risk route/image processing, Walla system!
Savings for every child is a program of the Ministry of Finance and National Insurance under which both the parents and the National Insurance deposit NIS 50 per child each month (at the time of its opening, and NIS 57 today) which can be doubled by the parents.
The program is part of the rights given to children through those deposits, which continue until the children reach the age of 18, when they will be able to release the savings directly into their bank account.
However, the data shows, as mentioned, that not all children will start their adult lives with the same cash box, and that those whose parents chose an increased savings route for them will have significant differences in the funds that will be released to their account compared to children whose parents chose a low-risk route or the savings routes of the banks.
Along with all of this, it should be noted that it is not for nothing that the routes were defined at the different levels of risk, and that as far as investments are concerned, it is a pendulum that can easily wipe out the accumulated profits or reduce them, and that the body with which you wish to contract is also important.
The Capital Markets Authority, for example, about a month ago appointed Efi Sandrov, CEO of Amit, as a licensed manager at Slice Gemal, and Prof. Dan Amiram, Dean of the Faculty of Management at Tel Aviv University, as the chairman of the company's investment committee, after the authority began to examine allegations of Arrangements in the conduct of Slice, according to its definition, which manages about NIS 4 billion.
Examining the risk is critical and not everyone can or is willing to take it, certainly when it comes to the children's money.
Alongside this, the data prove that in the long term and until they are examined, there is a considerable gap between those defined as risk-takers and those defined as risk-free.
Therefore, alongside examining the governing bodies and examining the risk index we are willing to be in, perhaps the question we should ask ourselves is from where do we look at the savings - from the bottom or from its possibilities?
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