A study fund is a savings fund for salaried employees and the self-employed alike. It was originally intended to serve such employees in financing their advanced study programs (such as professional conventions and continuing education), but today it serves primarily as a mid-term general savings channel – the only non-long-term channel still exempt from tax following the Israel’s capital market taxation reforms.

First, some history. Study funds in Israel began as a savings provident fund intended to finance advanced study programs and professional conventions, associate degrees or continuing education programs for teachers and other professionals. Today, the money may be used for any purpose and the fund still offers the same attractive terms. See below for elaboration on the exact benefits provided by this savings channel.

Who can open a study fund?

A study fund can only be opened by an employer opening one for his employees or by a self-employed person opening one for themselves.

Proper savings in a study fund can translate, down the line, into profits of tens and even hundreds of thousands of shekels.

Structure of the deposits

Salaried employees

In most cases, the employee under whose name the fund is opened will deposit approximately 2.5% of their wage every month, and their employer will deposit up to 7.5% of the wage. The deposits into the fund can be out of the full wage, but in most cases they are made up to a wage limit of 15,712 shekels, a limit up to which the employer’s deposits are not considered to be income held by the employee, and accordingly the employee does not pay the amount of the tax for the employer’s deposit. Also, up to that limit, the profits accrued by the fund will be exempt from capital gains tax.

Self-employed people

The self-employed population has two different limits:

  1. A preferred deposit limit in a study fund for the self-employed (the limit up to which the expense is recognized for a self-employed person) – as of 2023 the recognized deposit for a self-employed person is 4.5% of the deposit’s amount and up to an annual limit of NIS 284,000.
  2. A record income limit for a self-employed person in a study fund (the limit up to which the self-employed person is exempted from paying capital gains tax for the profits accrued in the fund) – an annual deposit in the amount of NIS 19,920.

Deposits can be made regularly (monthly deposits), as a lump sum (usually at the end of the year) or in a combination of these options.

You can naturally also deposit amounts in excess of the limit, but the tax benefits will not apply beyond these limits.

Investment tracks and returns

The returns obtained from study funds arise from investing the fund’s assets in various instruments such as securities and non-negotiable assets, and from the profit gained from such instruments’ appreciation.

When you select and open the study fund, you have to select your desired investment track. The track defines the policy for investing the funds and can roughly be broken down to the following categories:

  • Share tracks, which pose a greater risk and can therefore create larger profits (but in the event of a loss, the loss would also be greater);
  • Balanced tracks comprising both securities and assets considered to be more solid;
  • Shekel tracks, primarily comprising shekel deposits and bond tracks – both o which are considered as posing a lower risk and accordingly have lower potential for gain.

All the above is qualified by the fact that returns can almost never be guaranteed, and even if a certain study fund achieved excellent returns in the past, there is no guarantee that it will continue doing so in the future.

When can you redeem funds from your study fund?

A study fund becomes liquid after six years of seniority (withdrawal of a study fund of less than six years will be charged with either 45% tax or with marginal tax, whichever is higher). After six years of savings, the fund can be redeemed without paying income tax and without paying capital gains tax for the profits accrued (up to a limit). However, if you are patient and withdraw the money only upon reaching the age of retirement, you can avoid paying capital gains tax and also enjoy the return accrued in the fund over the years – which grows exponentially every year thanks to the compound interest effect.

There are three exceptions allowing you to make a tax-free withdrawal of the money after a period of less than six years. They are as follows:

  1. Withdrawal for the purpose of paying an academic institution for studies / an advanced study program (after the withdrawal has been preapproved by the fund).
  2. Application of seniority – if there is an additional fund which has completed six full years (and no withdrawal has been made from it in the past) – its seniority can be applied to the nonliquid fund and both funds can be redeemed.
  3. Reaching the age of retirement.

Proper and strategic planning of a deposit to a study fun

A study fund is a mid- and long-term savings plan, and as such, the monthly deposits should express your financial goals for the distant future. There are plenty of study funds, offering different investment tracks and different performance, and your selection of a fund and of investment tracks will determine the profits and returns you will eventually obtain. This choice can have considerable impact on your future financial welfare. Kali’s experts will help you select the study fund, or the combination of funds, precisely tailored to meet your needs and your definition of a secure financial future. After we complete the planning and fund selection stage, we will monitor your fund’s long-term performance.



Costs and benefits for a securities purchase/sale fee will be upgraded according to the investment house’s arrangement.
Kali Group – Insurance and Investment Marketing Agency Ltd. holds an investment marketing license as provided in the Regulation of Engagement in Investment Consulting, Investment Marketing and Portfolio Management Law, 5755-1995 (hereinafter and respectively: “Investment Marketing” and the “Consulting Law”), and does not have an investment consulting license. It is affiliated with the manufacturers of the financial products and services marketed by it as part of the provision of the services to the client. For a list of the manufacturers, click here.
The above information may not be treated as a substitute for investment marketing adjusted to meet the client’s needs. Use of the information and data is at the user’s sole risk.

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