The crisis that brought about a million and a half employees to voluntary leave, brought with it a need to find sources of funding. • Should you take out a mortgage instead of a regular loan? • Questions and Answers

Do you want to redeem training funds to go through this period?

If you have a liquidity fund, in most cases you should not redeem it, as this will involve a high tax payment. Therefore the question is mainly relevant to liquid education funds. Many have already withdrawn the liquidity funds in the outbreak of the crisis and mass spending to the USSR in March. In any case, both the liquidity funds and those whose liquidity funds cannot obtain against a loan under good market conditions. It is advisable to consider such a loan instead of repaying the fund, thus maintaining a level of repayment. The savings and the investment considered solid. 

Netanyahu and window announce: The economy is moving into an emergency format // Photo: Connect

Do you want to redeem mutual funds due to the situation?

To date, the public has attracted more than NIS 6 billion from mutual funds due to the situation. The decision to withdraw investment in a mutual fund, as in other securities investments, may be due to the need for cash or investment viability. On the face of it, the decision to withdraw money from investments rather than finance the other commitments from credit - is correct. 

If it is a decision that comes from the investment's feasibility, then in retrospect it was right to do so when the crisis broke out. But that is wisdom in retrospect ... Today the market has already returned some of the declines, but the situation is still unclear. In the case of an uncertain market, be careful about investing surplus funds, rather than funds intended for use in the near term. 

Is it right to use pension money instead of taking out additional loans?

Omar Ashkenazi, CEO of Financial Solutions Agenda, recently approached Finance Minister Moshe Kahlon with a proposal to increase the exemption from pension savings to the average salary level in the economy, to self-employed and salaried employees, in response to the Corona's cash shortage.

This proposal is intended to replace the current proposal that the Treasury has discussed, according to which the self-employed can withdraw about one-third of their pension money, or up to a one-year deposit limit - totaling NIS 12,200 (whichever is lower). According to the same proposal, unlike the self-employed, the employees will not be able to withdraw from their pension funds free of 35% tax on the withdrawal. 

Already, according to the Income Tax Regulations ("Poor Conditions"), anyone in Israel today who earns less than the minimum wage is entitled to withdraw from the pension fund, the provident fund or his / her executive insurance income supplement up to the minimum wage - NIS 5,300 today, with tax exemption. The regulations allow the withdrawal for three months. In other words, if you earn NIS 3,000, you can withdraw NIS 2,300 from your pension savings each month for three months. A household with children up to the age of 18 has the option to withdraw up to twice the minimum wage.

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Therefore, Ashkenazi's proposal is to increase the amount of attraction per person - from the minimum wage to the average wage in the economy, which stands at NIS 10,550. Accordingly, families with children up to the age of 18 can withdraw up to NIS 21,000. This means: a couple with a child who earns about NIS 30,000 in aggregate (self-employed or salaried), and now, following the corona's income, cut in half - with the new proposal, he can withdraw about NIS 6,000 from the pension savings each month for the next three months in order to deal with the financial distress.

However, the amount will be offset from non-work income - such as Social Security annuities, rent payments, etc. - contrary to the Treasury offer now, whereby withdrawing one third of pension money will not be dependent on additional income. 

In summary, it is already possible under certain conditions to withdraw from the pension free of tax, but these are cases of poor ability. In other cases, this is certainly not desirable. Spending trends need to be monitored before you can consider your steps against other financing options. 

Should you take out a mortgage instead of another loan to finance your expenses in the near future?

Its mortgage is a relatively inexpensive loan because it pledges an asset as collateral and thus reduces the risk of the lender - the bank, insurance companies or another non-bank lender. The provision of the mortgage is more expensive because of the need to assess the mortgaged property and other tests of the applicant's nature. If the funding is deemed to be long-term - for more than two to four years, you may want to consider taking out a loan against an asset (relevant only to assets that are free of other liens), as it will be cheaper than other loans.

If it is estimated that the loan can be repaid within a few years, it would be preferable to take a slightly expensive loan. The long-term mortgage payment starts with a very high interest repayment and a low repayment, so if the mortgage is repaid after a few years, before the end of the loan's life, the actual effective interest payment will be higher than the short-term loan.