Israel Dollar-Cost Averaging (DCA) Calculator 2025
Calculate the outcome of regular monthly investments in Israel using dollar-cost averaging. Compound growth on monthly ILS contributions, then 25% capital gains tax applied at exit.
Enter your monthly investment amount, expected annual return, and years to see your DCA portfolio value and gain after 25% Israeli capital gains tax.
Final portfolio value (after tax)
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Total invested
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Gross gain
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Tax on gain (25 percent)
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Net gain after tax
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Your breakdown
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How DCA compounding works over time
Each monthly contribution starts compounding from the month it is invested. The first contribution has the full investment period to grow. The last contribution grows for only one month. The sum of all these compounding contributions is the future value of a monthly annuity, calculated as: monthly amount multiplied by ((1 + monthly rate) raised to the number of months minus 1) divided by the monthly rate. At exit, the total invested is subtracted to find the gross gain. Israeli CGT at 25% is applied to the gain only. The total invested (your own money, already taxed when earned) is returned tax-free.
Worked example: 2,000 ILS per month for 20 years at 8 percent
Monthly rate: 8% divided by 12 = 0.667%. Number of months: 240. Portfolio value at exit: approximately 1,176,000 ILS. Total invested: 2,000 multiplied by 240 = 480,000 ILS. Gross gain: approximately 696,000 ILS. Tax at 25%: approximately 174,000 ILS. Net gain: approximately 522,000 ILS. Net portfolio value (cost returned plus net gain): approximately 1,002,000 ILS. The key insight: the gross gain (696,000 ILS) exceeds the total invested (480,000 ILS), meaning investment growth contributes more to the final pot than the actual monthly savings for a 20-year horizon at 8%.
DCA in practice for Israeli investors and tax timing
For Israeli investors using TASE-listed ETFs or mutual funds, the DCA gain is calculated at redemption. For a long-term portfolio held without redemption, no tax is due until exit. This makes a DCA strategy combined with a buy-and-hold approach particularly tax-efficient in Israel. Partial withdrawals (selling some units) trigger tax on the portion sold. Investors can also consider selling and repurchasing to reset the cost basis if the tax-free period of certain savings vehicles is relevant. The Keren Hishtalmut six-year cycle, where gains are completely tax-free, is technically a DCA instrument with a built-in tax exemption at the six-year mark.
Frequently asked questions
What is dollar-cost averaging and how does it work for Israeli investors?
Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals (typically monthly) regardless of market prices. When prices are high, you buy fewer units; when prices are low, you buy more. Over time, this averages out the entry price and removes the stress of trying to time the market. Israeli investors can apply DCA through: monthly contributions to a provident fund (Gemel or Keren Hishtalmut), regular purchase of TASE ETFs (Taeudat Sahl), or monthly investment in foreign ETFs via Israeli brokers or platforms like MTrade or Interactive Brokers. The same 25% capital gains tax applies at exit on the net nominal gain.
How is CGT calculated on a DCA portfolio in Israel?
For a DCA portfolio, each monthly contribution has a different cost basis (the price paid that month). At exit, the capital gain is calculated per lot or as an average cost basis depending on the broker and the specific investment vehicle. For Israeli listed securities, the broker calculates the weighted average cost basis automatically and applies 25% CGT to the total net gain at the time of sale or redemption. In this calculator, we simplify by treating the total invested amount as the cost basis and the portfolio value minus that total as the gain, then applying 25% CGT to that gain.
Is there a monthly savings plan (tashlum hodshi) option in Israel for market investments?
Yes. Most Israeli banks and brokers offer regular monthly savings plan options where a fixed shekel amount is automatically invested in a chosen mutual fund, ETF, or model portfolio. These are called Tochnioth Tashlum (installment plans) or regular investment mandates. The monthly deduction is automated from the current account, making DCA straightforward. Some platforms also offer fractional share investing for lower monthly amounts. Fees vary: bank-affiliated platforms tend to charge higher management fees, while independent brokers and online platforms offer lower-cost options.
Does DCA reduce the capital gains tax burden in Israel compared to a lump sum?
DCA does not inherently reduce the capital gains tax rate, which is always 25% on the real gain. However, it may reduce the total gain (and therefore total tax) in volatile markets if the average entry price ends up being lower than a single lump-sum entry point. In a steadily rising market, a lump-sum investment upfront produces a larger gain and a larger tax bill than DCA, because more of the growth applies to the full invested amount from day one. In a declining or volatile market, DCA typically produces a higher gain than a lump sum for the same total amount invested. Tax efficiency and expected return are therefore linked to market conditions.