Bond Blogs: How to Liquidate Israel Bonds

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Over the past two years, the inflation rate in Israel has been going higher and higher. This can lead to higher yields on bonds from Israel. Although bonds are generally a safe investment, if you expect inflation to decrease in the future, this can be an especially profitable time to invest in them! ​​

On the other hand, you might feel like now is the right time to redeem your Israel bonds. If you have decided to do so, the next question is simply how.

So how can you redeem your bonds with a minimum of hassle? Read on to learn all about how to redeem Israel bonds!

Where Do Israel Bonds Come From?

Israel bonds originate from the government of Israel through DCI. DCI refers to the Development Corporation for Israel. It is the official underwriter for all Israel bonds.

One of the main motivations for creating Israel bonds was to give people a way to support Israel from afar. In particular, there were a lot of people spread throughout the world through the diaspora. Not everybody wanted to move to Israel, but many of these people were interested in buying bonds to support the state of Israel.

Depending on your country, your Israel bonds might come through other entities. For example, if you are in Canada, you can find Israel bonds through Canada-Israel Securities Ltd.

How Do You Redeem Israel Bonds?

You cannot redeem your bonds until they reach maturity. Different bonds have different times until maturity, and the time until maturity will be listed on the bond. At that point, you will have to submit a request to redeem your bond so as to receive the money you invested as well as interest on top of it.

If you are in the United States, then you can submit a request to redeem your bonds to the local fiscal agent in the United States. That agent is located in Rhode Island and is called Computershare.

Along with your request to redeem your bonds, you should also fill out a W-9 form addressed to Computershare, Attn: Israel Bonds, 150 Royall Street, Canton, MA 02021.

For many kinds of bonds, there is a secondary market. That means that you can buy and sell bonds and potentially buy and sell options to buy and sell bonds. However, Israel bonds are a special case.

In the case of Israel bonds, there is no secondary market. That means that rather than selling the bonds that you own, you wait until they reach maturity in order to receive back your investment with interest.

Although you cannot sell your bonds, there are a few cases in which you can transfer ownership of them to other people. You can transfer Israel bonds to your immediate family, to a charitable organization, or to a religious or spiritual institution. Doing so requires that you fill out a formal transfer request form to Computershare.

What Else Can You Do With Israel Bonds?

Because you are generally not able to transfer Israel bonds, you are also not able to transfer them into personal brokerage accounts. Many major financial institutions like Citibank and Merrill Lynch International will allow their clients holdings in Israel bonds if they desire.

What if I Have Lost My Bond Certificate?

In some unfortunate cases, people can end up losing the certificates for their bonds. These certificates are generally used as proof that you are the valid owner of a bond. You should take great care not to lose them.

However, if you do lose your certificate, you may still be able to claim your bonds. At the same time, before you can do so, you will need to fill out a replacement request form and send it to Computershare. You should try to avoid this process, though, since it costs a fee along with time.

Do I Have to Pay Taxes When I Redeem My Bonds?

For most bonds, the interest that you make on them is calculated by the government as profit. As profit, that money counts as taxable income. As a result, you will have to report it on your tax filings and pay appropriate tax amounts.

As we discussed earlier, many people buy Israel Bonds in order to support the state of Israel. This leads some to conclude that buying Israel bonds could be considered a charitable contribution. However, the government does not consider investing in Israel bonds to be a charitable act for tax purposes.

Instead, investments in Israel bonds work only as investments. That does not mean that buying Israel bonds does not help other people, though.

In the past, purchases of Israel bonds have been responsible for building up infrastructure in Israel.

When you are looking at Israel Bond redemption, you may be looking to reinvest your money. You will have to decide if you would like to invest in more state of Israel bonds or if you would prefer to invest in something like equities.

Israel bonds rates can make them an extremely safe investment, but equities tend to outperform Israel bonds’ direct return on investment in the long run.

To learn more about Computershare Israel bonds and how they compared to equities, check out Thejerusalemportfolio.com.

Make the Most of Your Israel Bonds

We hope that you were able to find something useful in this brief article on a few of the most important things you should know when you are redeeming your Israel bonds. Bonds may be a long-term investment, but sooner or later, the time will come to redeem them.

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