Rising stock markets along with growth in pension and provident fund savings have generated unprecedented wealth for the Israeli public in the past few years. According to Bank of Israel figures released last week, at the beginning of 2026 (February) the Israeli public’s portfolio of financial assets was worth a record NIS 7.4 trillion. This represents growth of NIS 1.1 trillion within a year, and an 80% rise within six years. At the beginning of 2020, the public’s portfolio was worth NIS 4.1 trillion.
The continual growth in the financial assets portfolio, which includes money held in bank accounts, savings programs (provident funds, pension funds, and mutual funds), and securities, provides a glimpse into the way in which Israelis have managed their money in recent years, the level of risk that they tend to take, and their impact on prices in the local stock market.
Appetite for risk
A glance at the make-up of the public’s financial assets shows that Israeli investors’ appetite for risk has grown considerably. At the end of 2022, the proportion of risk assets (stocks and bonds) in the portfolio was 39%. By the beginning of 2026 it had jumped to 48%.
"When the risk markets rise, then the public naturally wants to participate in these rises, and the growth in the appetite for risk is therefore on the whole understandable," says Ronen Menachem, chief markets economist at Mizrahi Tefahot Bank. "There’s no doubt that the prolonged rises we have seen on the stock markets, in Israel and overseas, has had an impact on the behavior of the individual investor, and ultimately on the public at large."
Amir Kahanovich, chief economist and deputy CEO at Profit Financial Services, agrees. "Clearly it’s connected to the performance of the markets in recent years," he says, but adds, "You need to remember that a standard investment portfolio in the US consists 60% of stocks. Israelis are relatively conservative in their holdings of securities at risk. It can of course be argued that the stock and bond markets in the US are safer than those in Israel, but it’s not certain that that explains why Israelis hold fewer stocks. What we’re seeing is that we are gradually coming into line with the rest of the world, because thanks to financial education and awareness of financial planning and consultancy, people are starting to understand more and thus feel more confident with their money."
On the other hand, Meitav chief economist Alex Zabezhinsky warns that this could also have negative consequences. "When the asset portfolio is so large, and the public relies on it, then when the wheel turns and markets fall, the public is liable to be more sensitive to that than it used to be. Many people did not have savings in the past, and market declines didn’t affect them. Today, in the event of a significant and sustained fall in the markets, we’ll see a bigger impact than in the past."
Home bias
Alongside the rise in the risk profile of Israelis’ portfolios, a switch can also be identified to the local market. "If you compare the aggregate of Israelis’ holdings in stocks in Israel in the first few months of this year with the first months of 2024, you will find a rise of 105%, which is huge growth," says Menachem. "In other words, today Israelis have double the holding in shares in Israel that they had two years ago. That illustrates the bias of Israelis towards local investment, which has grown in recent years.
"In my opinion, this reflects the public’s realization that, in the end, what determines the value of holdings overseas is what happens to the shekel-dollar exchange rate. When they see the impressively consistent strengthening of the shekel against the US dollar, that affects their asset portfolios. And when these figures are compared with the rush to the S&P 500 Index that there was previously, they represent an important statement by the public."
Menachem also attributes the growth partly to "improved familiarity on the part of local investors with stocks in Israel, and the possibility of trading in dual-listed stocks that can be purchased in shekels," and adds, "This is also partly connected to the widely reported diversion of investments by the financial institutions from overseas to exposure to assets in Israel. Among other things this is because stocks overseas rose, and the institutions had to reduce their exposure and convert dollars to shekels, and with these shekels they bought stocks in Israel."
"A feeling of wealth"
Besides the changes in Israelis’ investment preferences, the economists also point to certain consequences that derive from the growth in the asset portfolio. "The NIS 1.1 trillion rise in the public’s financial assets portfolio in the past year is more than the amount paid in wages over the year," Zabezhinsky points out. "When the asset portfolio rises, that creates a sense of wealth. Economic studies show that when a person has a financial or real estate asset and its value rises rapidly, he or she feels more secure and tends to spend more, even if his or her regular income has not grown. There is thus a positive effect on economic activity."
Menachem adds, "As soon as the asset portfolio rises at such a fast rate, this means that the public’s potential for consumption grows, since the possibility of using some of the assets for private consumption is greater. In a situation like that, when the Bank of Israel wants to curb consumption by raising interest rates, that tool becomes less effective."
A bubble market?
Lastly, the question arises whether the growth in the financial assets portfolio, and its changing characteristics, say something about the state of the markets. There are those who see the ratio between the value of the public’s financial assets portfolio and annual GDP as an indicator of pricing levels on the markets. That ratio has jumped from 285% two years ago to 350% today.
"Clearly the market doesn’t have to grow at the same rate as the economy, but as soon as the portfolio grows much more than that, it’s an indication that a bubble may be forming," says Zabezhinsky. "In the end, there’s an economy and there are companies that generate the GDP, so if there’s a very wide gap in comparison to what there was in the past, it makes sense to ask questions, although it’s not certain that the answer is that we’re in a bubble."
Kahanovich too is not certain that this is a definitive indicator. "You have to remember that the capital market prices future profitability, and GDP measures other things, mainly activity in the economy. So this is one more among a million indicators that people like to refer to concerning the capital market. It could be that the capital market is signaling the reverse: that growth in Israel is going to be very strong in the future."
Published by Globes, Israel business news - en.globes.co.il - on May 5, 2026.
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