tag:blogger.com,1999:blog-16879435220270072062024-03-13T19:30:23.209+02:00Investing by AccidentBecause your money should make aliyah, too!Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-1687943522027007206.post-2649153238592316192014-12-29T16:11:00.003+02:002014-12-29T16:11:58.549+02:00We’ve Moved!<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Well, I warned you that this would happen.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Investing by Accident has been rebooted, and we’ve
moved to a new platform. We have a whole new website and you can find the blog at<a href="http://www.investingbyaccident.com/blog">http://www.investingbyaccident.com/blog</a>. (Or, you should be able to as soon as the DNS updates.)<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You should definitely check it out. I am posting
Investing by Accident’s most sought after content in easy-to-find “pages.” This
is good because it looks super-professional. Also, by offloading the pesky “content”
to “pages,” we can keep the blog short, light and full of snark.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Looking forward to seeing you in our new place!<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com2tag:blogger.com,1999:blog-1687943522027007206.post-55732600010584284442014-12-24T20:00:00.000+02:002014-12-24T20:00:57.623+02:00Reboot Required<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I have been avoiding an uncomfortable technical matter
relating to this blog. I don’t like to talk about technical matters because I
am somewhat of an expert in this area.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, we all must do things from time-to-time that
we are not comfortable with, like taking our babies to <i>tipat chalav </i>to learn
that we are truly terrible parents. Frankly, it’s amazing that they let us take
our babies home afterwards.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Several loyal readers have indicated to me that
they no longer get email updates when I post a new blog. I told them to do what
any computer expert would tell them in this scenario: reboot your computer. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Apparently, this did not fix the problem. Of
course, I knew it wouldn’t because the problem has nothing to do with their
computers.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You see, “rebooting your computer” is something computer people like me tell ordinary people to do to give them time
to figure out what the real issue is. Incidentally, this explains why it has
been taking longer and longer to boot your computer over the years. This is
being done by design to give me more time to figure out how to fix things.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case, while they were rebooting, I checked
to see what I could do about this problem. I am an expert in this area, so I
don’t think it will come as a surprise that I have no idea. However, I decided on
a course of action that I think makes sense in this case: I am just going to
start the blog all over again.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It’s already been a year since I launched Investing
by Accident. In start-up years, that is about three decades, which makes us way
overdue for an update of our strategic roadmap. </div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Hopefully, the email will work this time around. If not, we can always try to reinstall. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com4tag:blogger.com,1999:blog-1687943522027007206.post-86998565923508613612014-12-10T14:36:00.002+02:002014-12-10T14:36:32.992+02:00Making Me a Millionaire<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As my loyal readers already know, I am a
mysterious vessel of innovative ideas. At first it looks like there are only enough
ideas for one start-up, but it turns out that there are enough to last all
eight nights.</div>
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<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In this continuation of my hi-tech millionaire
series, I present an open appeal to fund my new hi-tech start-up.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I believe that extraordinary innovation starts
with the mundane. Through the simple observation of our everyday world, we can
think of creative new ways to make our lives our better.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am currently enjoying the relatively unique
opportunity of 11 weeks of paternity leave. This has afforded me ample
opportunity to engage in the everyday reality of caring for babies. Naturally,
I have channeled this opportunity to develop several highly innovative ideas in
baby care.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You can trust my innovations because I have a distinct
advantage in the space. As the partner parent to the internet’s foremost
non-expert on parenting, I have access to one of the most insightful minds in
child rearing. We have engaged in countless hours of intense brainstorming
sessions around my ideas. Or, we would have if we were able to hear each other
over all of the crying. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Hi-Tech Babies<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Let me jump right in to our flagship product: <i>The
Internet Connected Breast Milk Flow Monitor. <o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This innovation occurred to me while searching the
internet for “how do I know if my infant is eating enough?” Judging by how
quickly this came up in auto-complete, it is clear that this is an all too common
question for parents of infants.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you bottle feed, the answer to this problem is
very straightforward. It’s just a matter of measuring how much you give your
baby at each feeding. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, I was very alarmed to learn that parents
who breastfeed have only primitive means to answer this question. The only
option is to measure your baby’s output and infer from these imprecise diaper
measurements that your baby is eating enough.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
We can do much better! The <i>Internet Connected
Breast Milk Flow Monitor</i> will be able to measure exactly how much input your
baby is receiving. At first, I thought we could obtain these measurements
through a specially designed mouthpiece for the babies, but then I realized
that it would better to design an adapter for the mothers. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The adapter is great because it will also be designed to control the rate at which the milk is dispensed. This will solve a huge problem today, as currently there is no way for mothers and babies to control the flow. Clearly, this is a
problem that needs to be solved because why else do bottles come in many
different “stages”?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is a hi-tech product and the most powerful
features will come from the built-in internet connectivity. We can do all sorts
of things with internet connectivity that you definitely will want. For
example, we can automatically post Facebook status updates on how much your
baby is eating.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But even more impressively, we will be able to
collect data from babies all over the world on how much they are eating. We can
do almost anything with this data. For example, I’m positive that we could use
it to cure ebola. If you think about it, it makes perfect sense because we are
just at the beginning of the hype curve on “big data”.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Roadmap<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I have a roadmap that includes many more innovative ideas for
this hi-tech baby company, but I can’t tell you any more of them until you send
me your investment. And now is definitely the time to invest. For the right
price, I would even sell you the entire company.</div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com4tag:blogger.com,1999:blog-1687943522027007206.post-26483272311024892292014-12-03T14:25:00.001+02:002014-12-03T14:25:58.738+02:00Accidental Millionaires<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I interrupt my normally scheduled detailed
analysis of a random personal financial issue for an important message:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><i>CONGRATULATIONS! <o:p></o:p></i></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To my friends at <a href="http://www.glide.me/">Glide</a>, who were just in the news for receiving $20 million of funding on a reported
$100 million valuation. Wow!<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
And also, to my friends at <a href="http://www.aorato.com/">Aorato</a> for being acquired by Microsoft for $200 million dollars. Well done!<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You’ve got to hand to these hi-tech millionaires.
While the rest of us were busy writing snarky blogs about PFICs, these folks
were bringing innovative new products to the world. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Who knows? Maybe they were even doing it on
purpose.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As the internet’s foremost non-expert on multi-million-dollar
hi-tech companies, it is only natural for me to provide a penetrating commentary
on these deals. Fortunately, to guide me in my analysis, I recently received these two actual accidental
questions:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>#1. “How could Glide possibly need $20 million?”<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This question comes from the internet’s foremost
non-expert on parenting. Unfortunately, it clearly misunderstands how hi-tech companies
work. I personally have visited Glide’s offices, so what I am about to say is
absolutely accurate. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Glide does not have a full-time barista to make coffee
for their engineers. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Shocking, I know. It’s hard to believe how far they have
come while having to prepare their own coffee. Thankfully, they now have the
funding to address this critical gap in their business strategy. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Glide on, Glide! <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>#2. “What will be the next big innovative idea
that will be worth millions of dollars?” <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I have pondered this question for as long as I
have known up-and-coming hi-tech millionaires. I personally believe that great new
ideas comes from relatively simple observations of our everyday reality. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am currently enjoying paternity leave and my
everyday reality is about babies. This has given me ample opportunity to think
about clever and innovate new products in the up-and-coming field of hi-tech baby
care. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As an open appeal for funding my new company, I
will publish these ideas in next week’s blog. Unless, of course, someone
acquires me before then. <o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com0tag:blogger.com,1999:blog-1687943522027007206.post-36942956455714483952014-11-26T11:08:00.000+02:002014-11-26T11:08:53.462+02:00Run away! Run away!<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In this
exciting continuation of being wrong, I present you with the second time in the
past few weeks that I have been wrong. Before last week, I would have said that my second wrong
is not very surprising for a blog that does everything by accident. However, now that I am the authoritative source on American ex-pat
taxation in Israel, this mistake is deeply disappointing.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u>Wrong
#2<o:p></o:p></u></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In <a href="http://www.investingbyaccident.com/2014/04/running-away-from-pfic.html">Running Away from a PFIC</a>,
I concluded “that <span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-language: HE; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">תעודות סל</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>
are a viable investment option for U.S. taxpayers, assuming that these
taxpayers are comfortable with the risk that ‘viable’ could become ‘not all
viable’ at any time.”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Whoops! That’s
not true. Israeli ETNs are PFICs. Run away!<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Amendment
16<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
At the time
I wrote <a href="http://www.investingbyaccident.com/2014/04/running-away-from-pfic.html">Running Away from a PFIC</a>,
I attempted to research whether there was anything in how Israeli ETNs are
structured that would cause them to be different than U.S.-based ETNs. I failed
at this because the prospectuses were too hard to read.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, I
should have found <a href="http://www.isa.gov.il/sites/ISAEng/Supervised%20Departments/Exchange%20Traded%20Notes/4948/Documents/IsaFile_6930.pdf">this summary of Amendment 16 of the Joint Investments in Trust law</a>. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I really have
no excuse for not finding this summary. It is right on the <a href="http://www.isa.gov.il/sites/ISAEng/Supervised%20Departments/Exchange%20Traded%20Notes/4948/Pages/ETN.aspx">landing page for ETNso n the Israeli Security Authority’s website</a>.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This
document summarizes in plain English (<a href="http://www.isa.gov.il/ETN/4477/Documents/IsaFile_6270.pdf">or Hebrew</a>, if you prefer it that way) the new regulations
for ETNs that came into effect when the amendment was approved on November 15,
2009. Included in this change is the following:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
As
part of this switch, the ownership of the ETN's underlying assets will be
transferred to investors, and will be in trust on their behalf by the trustee. Currently,
these assets are property of the ETN issuer, and are pledged to the trustee.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If the
investors in the ETN have ownership in the ETNs assets, I would say that for
tax purposes this is no longer a <i><u>note</u><b>.</b></i> Actually, it
becomes almost exactly like a <i><u>fund</u></i>. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This may be
why the summary also says the following: <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Amendment
16 aims to regulate and supervise ETNs in a manner similar to the mutual fund
market.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I stand
corrected. Israeli ETNs are PFICs just like Israeli ETFs. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Authoritative Guidance<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Unless you
want to get eaten by a PFIC, you should not invest in an Israeli ETN. However,
as the authoritative source on this matter, I just need to add that what I just
said may still be wrong. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The summary
is not a legal document. It is conceivable that the actual, legal way in which
ownership of the assets is structured is not so straightforward. In that case,
there may still be room to claim that Israeli ETNs are not PFICs. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Specifically,
I wonder whether the ETN shareholder actually <b><u>owns</u></b> the underlying
assets directly. Or, whether the shareholder actually owns something resembling
a <b><u>lien</u></b> on the assets. I suspect that it could be a lien because under
the new regulations, the ETN is still able to function as an ETN. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The basic
structure of the ETN under the amendment is that the issuer receives an
investment and is obligated to return that investment with an adjustment
according to a calculated index (e.g., the S&P 500). The issuer is also
obligated to hold the securities that compose this index (e.g., the stocks of
the S&P 500) as the underlying assets.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In a fund,
the shareholder is entitled to exactly what the underlying assets are worth.
However, the ETN (even under the amendment) works a bit differently.. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the ETN,
if the underlying assets are not sufficient to repay the obligation (e.g., the underlying assets happen to lag a bit behind the index), the
issuer must supplement from his own funds to make up the difference. And the same in reverse. If the value of
the underlying assets is more than the obligation, the issuer is entitled to keep the
excess. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This
important nuance leads me to suspect that the actual legal ownership
arrangement between the shareholder and the issuer of the ETN is much more like
a lien. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, I cannot
say for certain whether or not this is actually case. I attempted to find the
text of Amendment 16, but was not able to find it anywhere. If you have a copy,
please send it to me.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I also
attempted – again! – to read an actual prospectus for an Israeli ETN. I got
further this time, but still could not decode anything specific about the
ownership arrangement that could help determine exactly how the ownership is structured.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you
happen to be someone that writes Hebrew prospectuses (or even someone who just
reads them), please let me know if you see anything in there that could help
us. I would absolutely love to be wrong about this again.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the
meantime, I recommend running away from Israeli ETNs.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com2tag:blogger.com,1999:blog-1687943522027007206.post-91572182002545245262014-11-19T11:30:00.000+02:002014-11-19T11:30:00.943+02:00I was (very) wrong… twice!<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Loyal
readers, I owe you a deep apology. It has been brought to my attention that I
was wrong. Very wrong. Twice.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Well, I can’t
say that I feel too bad. After all, you should not be taking advice from a blog
that calls itself an accident. Still, we have standards to uphold.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This week and
next week, I beg your forgiveness by presenting you with a complete analysis of
where I was wrong. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Wrong #1<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
My first
wrong came to me as a tremendous shock. As my loyal readers know, I regularly
claim to be the internet’s foremost non-expert on financial matters. However, it
turns out that I am actually the internet’s authoritative source for U.S. tax
issues for ex-pats living in Israel.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I know this
because my definition of a PFIC was shamelessly copied by Dan Dobry <span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span>)</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>“<span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">דן דוברי</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>”<span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span>(</span><span dir="LTR"></span><span dir="LTR"></span><span lang="HE"><span dir="LTR"></span><span dir="LTR"></span> </span>in <a href="http://www.funder.co.il/article.aspx?idx=41467">an article he wrote</a> about taxation issues for Israelis
with U.S. citizenship.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is my
authoritative definition of a PFIC from <a href="http://www.investingbyaccident.com/2014/03/getting-eaten-by-pfic.html">Getting Eaten by PFIC</a>.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
A
PFIC is a semi-mythological creature that roams the earth outside of the United
States of America. It seeks out American taxpayers wherever they may be living,
watches carefully to see if they invest their money outside of the United
States, and then eats them. It does this by levying the highest possible tax
calculation on the earnings from these investments.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
It
tends to eat them slowly, so that at first they may not feel all that much
pain. After time, they experience extreme agony.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is Mr.
Dobry’s definition of a PFIC along with an actual Hebrew-to-English internet
translation: <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" dir="RTL" style="direction: rtl; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .6in; margin-right: .4in; margin-top: 0in; text-align: right; unicode-bidi: embed;">
<span lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">ה - </span><span dir="LTR">PFIC</span><span dir="RTL"></span><span dir="RTL"></span><span style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span> <span lang="HE">זו חיה מטולוגית, שמטיילת
ברחבי העולם מחוץ לגבולות ארה"ב. היא מחפשת את אזרחי ארה"ב איפה שהם לא גרים
ומביטה על ההשקעות שלהם. אם הם משקיעים מחוץ לגבולות ארה"ב היא "אוכלת"
אותם.....</span></span><span dir="LTR"><o:p></o:p></span></div>
<div class="MsoNormal" dir="RTL" style="direction: rtl; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .6in; margin-right: .4in; margin-top: 0in; text-align: right; unicode-bidi: embed;">
<span lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">היא עושה זאת באמצעות הטלת מיסים גבוהים במיוחד על
ההכנסות מהשקעות אילו.</span><span dir="LTR"><o:p></o:p></span></div>
<div class="MsoNormal" dir="RTL" style="direction: rtl; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .6in; margin-right: .4in; margin-top: 0in; text-align: right; unicode-bidi: embed;">
<span lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">אך היא "אוכלת" אותם לאט – בהתחלה היא
מעניקה את התחושה שזה לא כואב במיוחד אך עם הזמן זה הופך להיות כואב באופן קיצוני</span><span dir="LTR"><o:p></o:p></span></div>
<div class="MsoNormal" dir="RTL" style="direction: rtl; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .6in; margin-right: .4in; margin-top: 0in; text-align: right; unicode-bidi: embed;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
The PFIC
is an animal mythical, travel around the world outside the United States. She
is looking for U.S. citizens wherever they live, and not looking at their
investments. If they invest outside the United States is "eating"
them… It does so by imposing very high taxes on investment income while. But
she “eats” them slowly – at first it gives the impression that it was not particularly
painful but over time it becomes extremely painful.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I know that
Mr. Dobry is a financial expert because he is the CEO <span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span>)</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>“<span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-language: HE; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">יו"ר</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>”<span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span>(</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span> of Global Investment Solutions Ltd (“<span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">איגוד המתכננים הפיננסים</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>”). Here are <a href="http://www.gisfinance.com/ENGLISH.htm">his exact words from his biography</a>:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Dan
Is dedicated to finding for the Israeli Financial Institution's solutions and
accumulated Knowledge.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Imitation is
the highest form of flattery, and I am deeply flattered to be the internet’s
authoritative source on PFICs. However, I must apologize to the internet (and
to Mr. Dobry) for being somewhat misleading in <a href="http://www.investingbyaccident.com/2014/03/getting-eaten-by-pfic.html">Getting Eaten by a PFIC</a>.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You see, the
PFIC is not actually a mythological creature, and it does not actually roam the
earth. It cannot actually eat you. It is just tax regulation which I personified
as hyperbole in an attempt to provide entertainment value to my readers. Or,
you could say: <span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">סתם</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Unfortunately, Mr. Dobry seems to have taken this literally.
Or maybe, this is not unfortunate at all. It has provided us with a bit of accidental
entertainment by juxtaposing an utterly snarky definition of a PFIC in an otherwise
entirely serious article. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am certain that he is serious because he offers practical
advice for his readers to overcome U.S. taxation issues. Specifically, they
should consult with an expert. He doesn’t provide a full list of who these “experts”
could be. He mentions himself and then his list appears to get cut off. I suppose
if he continued, I would have been on the list, but I guess we will never know.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case, now that I am an expert, I really
should shamelessly copy-and-paste something from another expert. I found this
in Mr. Dobry’s article, and it seems appropriate. I will use an internet
translation engine to make sure I don’t miss anything:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" dir="RTL" style="direction: rtl; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .6in; margin-right: .4in; margin-top: 0in; text-align: right; unicode-bidi: embed;">
<span lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">כל האמור בכתבה זו אינו מהווה תחליף לייעוץ משפטי
או מקצועי ובכל מקרה מומלץ לקיים התייעצות עם בעלי מקצוע מיומנים בתחום זה</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"><span dir="LTR"></span><span dir="LTR"></span>.</span><span lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
All
of this article is not a substitute for legal or professional advice in any
case it is recommended to hold consultations with skilled professionals in this
field.<span dir="RTL" lang="AR-SA" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com1tag:blogger.com,1999:blog-1687943522027007206.post-74892696866835682522014-11-12T09:58:00.000+02:002014-11-12T09:58:10.843+02:00How to Run Away from a Keren Hishtalmut<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The blog
returns this week after a longer-than-expected unexpected delinquency.
Fortunately, Bituah Leumi is being kind enough to sponsor 11 weeks of paternity
leave which will allow me an extraordinary amount of time to ponder important
financial issues while changing diapers. In fact, I plan to honor this
unprecedented leave from work with a special blog in which I will share my
personal tips on how to save money running your household.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But first, in
this final blog about whether the Keren Hishtalmut is a PFIC, I present you
with Investing by Accident’s not-at-all-proven methods for running away from
the PFIC inside of your Keren Hishtalmut. Also, by a horrible act of ill-luck,
you can also use the same methods to run away from the PFIC inside of your
Israeli pension. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Method #1:
Renounce Your Citizenship<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Renouncing
your U.S. citizenship is like selling your
apartment and moving to a big house in a far-off place where no one
wants to live in order to save a lot of money. It is really popular to talk
about with your Friend, but no one actually does it. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Frankly, it
would be very un-American to renounce your citizenship. I can’t even consider
it because there is no one who is more American than me. Well, except perhaps
for Americans who still live in America and don’t talk renouncing their
citizenship on their blog. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
this would only be a forward looking solution. You would still need to pay
taxes for the years up until you renounce your citizenship.<span dir="RTL" lang="HE" style="font-family: "Arial",sans-serif; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Method #2:
Temporary Regulations<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The
<a href="http://www.irs.gov/irb/2014-3_IRB/ar05.html">regulations</a> published by
the IRS are “temporary,” which is an English word that is generally used to
refer to something that is not yet permanent. I’m not sure that it means the
same thing in IRS-English, but the bulletin includes a contact phone number: (202)
317-6934. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I suppose
you could call the number and ask them to change the regulations. Please let me
know what they say.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Method #3:
Update the Tax Treaty<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am already
planning to speak with John Kerry about the tax treaty next time he is in the
region. I will ask how he feels about designating Israeli pensions for special
treatment as if they are U.S. qualified plans. If we could this, we could
escape the PFIC inside of the Israeli pension plan. There is no harm in asking
him if we would be open to do the same for the Keren Hishtalmut. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I will
definitely let you know what he says. Until then, there is one option left. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Method #4:
Deal With It<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If the money
in your pension or Keren Histhtalmut is a mutual fund, it is a PFIC. According
to the (temporary) regulations, you will need to report it accordingly.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This means
that you need to file PFIC Form 8621 form with your tax return. Your accountant
will not be happy about this. Very likely, he will express his displeasure by charging
you more money to complete your return. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However,
there is a bright side. After you go to the trouble of filing the PFIC form, you
will find that it actually makes no difference in how much tax you owe. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 274.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Tax Calculations<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As you know
if you didn’t use the skipping tags, there are basically three ways that you
get eaten by a PFIC when you buy a regular Israeli mutual fund in an ordinary taxable
investment account. As it happens, none of these is relevant when the money is
invested inside of an employees’ trust like your Keren Hishtalmut or Israeli
pension.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The first way
that you normally get eaten by PFIC is that the only practical way to report
the income is to use the mark-to-market calculation. This calculation treats
all earnings the same and taxes them at your incremental income tax rate. When
this happens on an ordinary “passive” investment, it costs you money because
you lose out on the lower tax that you would have paid on long term capital
gains and qualified dividends.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, any
investment gain inside of an employees’ trust is anyway treated as regular
income. I’m not an expert, but it seems to me that it should not matter whether
you report this gain directly on your tax return or via form 8621. In either
case, you should add it as other income earned in connection with your
employment. It is taxed at your ordinary income rate because it is not “passive,”
but that’s ok because it also means that you can apply a credit for Israeli
income tax paid to cover any tax you may owe. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The second
way that you normally get eaten by a PFIC is that the mark-to-market
calculation forces you to realize “pretend” gains (or losses) as the exchange
rate between the dollar and shekel changes. The reason for this is that you report
the value of a PFIC as the change in the investment value – in dollars – between
January 1 and December 31. If the same money was not in a PFIC, you would still
have to report interest, dividends and capital gains in dollars, but you would
do this throughout the year whenever these events occurred.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also here,
it happens to be that the same thing happens anyway in an employees’ trust,
even if it wasn’t in a PFIC. When you calculate the investment gain to add to
your income each year, you should be using the same dollar-based calculation. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The third
reason that you normally get eaten by PFIC when you invest in an Israeli mutual
fund is that you will need to pay taxes to the United States on the investment
gain every year, but you only need to pay taxes to Israel when you sell your
investment. This could easily cause a situation of double-taxation in which you
pay taxes to the United States on your investment in one year and then pay more
tax on the same money to Israel in the next year. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
With money
in your Keren Hishtalmut, double taxation is not a concern for the simple
reason that you never pay tax to Israel on this money anyway. However, interestingly
(or maybe, sadly) this could be a problem with your Israeli pension in certain
cases. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>What’s
Next?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The conclusion
is that if you hold a mutual fund inside of your Keren Hishtalmut it is a PFIC.
However, the irony is that this will not make a difference on your tax bill if
you treat the Keren Hishtalmut as an employees’ trust.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, I
did find in my research that there are two things that may be worth considering
in managing your Keren Hishtalmut and Israeli pension.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The first is that you could avoid the problem of the PFIC (at least for
your Keren Hishtalmut) by moving your Keren Hishtalmut to a self-managed
account. This would allow you to buy individual stocks and bonds and avoid the
PFIC entirely. <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You could do
this. Or, you could not do this. It really doesn’t matter that much. As long as you
are treating your Keren Histalmut as an employees’ trust, there is no advantage
in terms of the bottom line on your tax bill. The only reason you may want to
do this is for the peace of mind of knowing that no one will ever ask you to
complete form 8621.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The second thing
I found is very subtle, but very important. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
There is a double-edge with the
Keren Hishtalmut and the Israeli pension being employees’ trusts. On the one
hand, the earnings are not “passive” and you can take a credit for Israeli
income tax that you paid. On the other hand, you will pay tax at the rate of
ordinary income on these investments, even if some of the gain comes from
dividends and long-term capital gains. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Generally,
this is not at all a concern because you should have enough credit for the
Israeli income tax that you paid to more than cover any tax due. However, this would
change if you reach a point where the investment gains in your Keren Hishtalmut
and your pension become very large (and/or your income gets very small) to the
point where you actually do not have enough credit.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If this were
to ever happen to you, it would make sense for you to close your Keren
Hishtalmut (and to the extent that you could, your pension) and place these
investments in a regular taxable investment account instead. You could then use
Investing by Accident’s <b><a href="http://www.investingbyaccident.com/2014/02/an-accidental-guide-to-taxes.html">Tax Equilibrium Calculator</a></b> to manage these investments and pay only around 25% in taxes.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As my loyal
readers know, I am a bona fide non-expert. This is why I did the only thing a
non-expert could possibly do in this situation. I created a spreadsheet to
calculate when it would make sense to close my Keren Hishtalmut and/or take
money out of my pension. The good news is that this only happens when you are
rather wealthy. The bad news is that this could reasonably be the case as you
get closer to retirement.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, maybe
that isn’t bad news. After all, it would be nice to be rather wealthy.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
if you would like to see the spreadsheet, email me at
donny 'at' investingbyaccident.com and I’ll send it to you.</div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com1tag:blogger.com,1999:blog-1687943522027007206.post-77493545589523204922014-10-07T11:08:00.002+03:002014-10-07T11:08:19.302+03:00More Americans!<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Wow! Just in
time to read the answer on whether a Keren Hishtalmut is a PFIC, <a href="http://aliyahbyaccident.blogspot.co.il/2014/10/introducing-for-very-first-time-on-this.html">two more Americans have joined the family</a>.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<o:p>Actually, these new ones are technically not yet American. For now, they are only Israeli. However, I’m assuming that they won’t read these blogs in time, and will have their U.S. passports before realizing what they got themselves into.</o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The news was just broken on the internet’s foremost source for Pro-Parenting Tips. For example, Pro-Parenting Tip #816: if you always answer “no” to questions without listening to them, be careful to time it correctly so that your children do not notice. Otherwise, they will outsmart you by asking their questions in the negative.</div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p><br /></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
time to change a diaper or two. Investing by Accident is on vacation on purpose for Sukkot and returns <i>acharei hachag</i> with the exciting
conclusion on how to minimize the impact of getting eaten by a PFIC in your Keren
Hishtalmut.</div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com2tag:blogger.com,1999:blog-1687943522027007206.post-60893013176354739902014-10-01T14:23:00.000+03:002014-10-01T14:23:05.975+03:00PFICs in the Keren Hishtalmut<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In my
non-expert assessment, I’m inclined to say that the Keren Hishtalmut and the
Israeli pension are both employees’ trusts. This brings us to the question of what
happens if the money inside of the Keren Hishtalmut or pension is invested in a
PFIC.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Escaping
the PFIC?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
On the one
hand, I would like say that the structure of the Keren Hishtalmut or pension
shelters the investments inside of the account in such a way that it longer
matters what the investments are. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The
conceptual support for this approach comes from the way we are reporting the investment
gains for tax purposes. We are taking the gains as income each year (and not as
passive income), regardless of what the gain was from (interest, capital gains
or dividends). It is almost as if the “trust” obfuscates the investments such
that we no longer care if the underlying invest is a PFIC.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is a
nice line of thinking and it makes me happy to think about the world this way.
However, does it have a basis in the tax regulations?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I think
until recently this was the case. However, since December 2013, we can no
longer use this reasoning. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>IRS
Regulations on PFIC Ownership<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 82.65pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Last
December, the <a href="http://www.irs.gov/irb/2014-3_IRB/ar05.html">IRS published temporary regulations</a> to specify exactly when the
underlying investments in a trust require PFIC treatment and when they do not. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is what
it says about foreign pensions: <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Foreign pension funds. A United States
person that is treated as the owner of any portion of a trust … that owns,
directly or indirectly, any interest in a PFIC is not required under section
1298(f) and these regulations to file Form 8621 (or successor form) with
respect to the PFIC if the foreign trust is a foreign pension fund … operated
principally to provide pension or retirement benefits, and, pursuant to an
income tax convention to which the United States is a party, income earned by
the pension fund may be taxed as the income of the owner of the trust only when
and to the extent the income is paid to, or for the benefit of, the owner.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I really
want this to mean that an Israeli pension which holds a foreign mutual fund
would not have to deal with a PFIC. However, that is not what it says. The
get-out-of-PFIC-free card only works for a foreign pension that is treated like
a qualified plan according to a tax treaty. In that case, the foreign pension
would have the same status as a U.S. qualified plan in which any PFICs held
within the plan are obfuscated by the trust and do not require any special treatment.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The Israeli
pension is not covered in a tax treaty. Instead, like a Keren Hishtalmut, it is
an employees’ trust. This is a type of nongrantor trust. You know this is the
right term because you eat potato berukas.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 183.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In that
case, the following paragraph applies to the Keren Hishtalmut and to the
Israeli pension: <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Estates and nongrantor trusts. If a
foreign or domestic estate or nongrantor trust … directly or indirectly owns
stock, each beneficiary of the estate or trust is considered to own a
proportionate amount of such stock. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
When you
have a Keren Hishtalmut or the Israeli pension, you are the “beneficiary” of
the trust. The IRS regulations published in December 2013 state that in this
case you are “considered to own a proportionate amount” of any of the stock in
the trust. If the stock is a foreign mutual fund, it means you have ownership
in a PFIC and are required to file form 8621.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>What Now?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The bad news
is that in my non-expert opinion, you cannot escape a PFIC with a Keren
Hishtalmut or an Israeli pension.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, the
good news is that since this PFIC is inside of an employees’ trust, its impact will
be minimized. Next week, I explain the options for dealing with this PFIC.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com0tag:blogger.com,1999:blog-1687943522027007206.post-5087842974828912642014-09-17T22:00:00.000+03:002014-09-17T22:00:01.190+03:00Keren Hishtalmut U.S. Tax Treatment: Part II<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Last week, I
presented the case that the Keren Hishtalmut – like an Israeli pension – would
be treated like an employees’ trust for U.S. tax purposes. This week, I ask
several non-expert questions about this.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>1. Is a
Keren Hishtalmut really an employees’ trust?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
My first question
is whether the Keren Hishtalmut can really be considered an employees’ trust.
After all, the employee has complete control over it. To be a “trust,” wouldn’t
it need to be administered by the employer?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Admittedly,
this question is somewhat silly considering that we made up the criteria for
what constitutes an employees’ trust in the first place. However, we are having
so much fun that we should think about this. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you think
that the Keren Hishtalmut is not an employees’ trust, then you would probably
have to say the same thing about an Israeli pension. In both cases, the
employee has complete control over the investments and the plans are not
administered by the employer. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Perhaps you
would argue that a pension is different because it has a set of clear and
strict government regulations which make it more “trust-like.” However, if you
did that, I would argue that the Keren Hishtalmut has an equally clear and
strict set of government regulations. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The only way
I could see that a distinction could be made between the Keren Hishtalmut and
the pension would be if the IRS would explicitly rule them to be different. Or,
perhaps more reasonably, if Israel and the United States were to update the tax
treaty to explicitly treat them differently. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Updating the
tax treaty to address Israeli pensions would be very nice and make sense. I
personally volunteer to speak with John Kerry about this next time he is in the
area. My recommendation will be that Israeli pensions should be treated like
qualified retirement plans, and that Keren Hishtalmut would be treated
explicitly like an employees’ trust. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>2.
Employees’ trust for the self-employed?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
My second
question is that assuming an Israeli pension and Keren Hishtalmut would be
considered employees’ trust, could this also extend to the same plans set up by
someone who is self-employed? In that case the employee is the owner. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Can you set
up an employees’ trust for yourself?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I wouldn’t
think so. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Fortunately,
no one cares what I think. The answer should be “yes” because Section 402(i)
specifically allows this. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>3. Are
the first 6 years different?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Does it make
any difference that withdrawals are allowed from the Keren Hishtalmut after 3
years for educational purposes, or after 6 years for any reason? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Although this
sounds like an important criteria that should somehow factor into our tax
treatment, I can’t think of any tangible reason why this makes a difference. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It may sound
relevant because it seems similar to “vesting.” In an employee’s trust, the
contributions and earnings are taken into income only once they belong to the
employee. You may want to say that this happens only after the Keren Hishtalmut
“unlocks” after 6 years. However, I do not think this is correct. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In a Keren
Hishtalmut, the money is yours the moment it is deposited. The limitation on
withdrawal from the Keren Hishtalmut prior to 6 years is only an Israeli tax
consequence. You <i>could </i>withdraw money early; you would just need to pay
tax on it. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The vesting
component for employees’ trust may applying to severance pay, but that is a
separate question. Fortunately, no one has accidently asked me that question so
I don’t need to answer it. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>4. What
about the fact that the Keren Hishtalmut is exempt from FATCA reporting? <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Finally, is
the fact the Keren Hishtalmut is exempt from FATCA reporting have any impact on
this question?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Like the 6
years, this also sounds like it should somehow factor into our tax treatment.
However, I don’t think it does.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Specially,
the <a href="http://www.irs.gov/pub/newsroom/reg-121647-10.pdf">IRS regulations for FATCA</a> in 1.1471-5 (b)(2)(i) allows exemptions from reporting for (A) foreign “retirement
and pension accounts,” and (B) foreign tax-advantaged “non-retirement savings accounts.”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For (B), the
regulations exempt accounts that are “tax-favored with regard to the
jurisdiction in which the account is maintained, subject to government
regulation as a savings vehicle for purposes other than for retirement.” There
are several conditions that must be met to qualify for this exemption, and I
believe the Keren Hishtalmut meets all of them.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is a
very nice bit of accidental research which explains why your Keren Hishtalmut
provider never asked you to fill out a W9 form. However, I do not think there
is any reason why this would have an impact on how the contributions and the
earnings in the account should be treated for U.S. tax purposes.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Conclusion?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am now
convinced that the Keren Hishtalmut can be treated as an employees’ trust. This
brings us to the critical question regarding PFICs.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If the money
in the employees’ trust is invested in a foreign mutual fund, does it need to
be reported as a PFIC or not? </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com12tag:blogger.com,1999:blog-1687943522027007206.post-12306574036201695712014-09-10T13:28:00.000+03:002014-09-10T13:28:18.968+03:00Keren Hishtalmut U.S. Tax Treatment: Part I<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Accidental
readers everywhere want to know whether or not they will get eaten by PFIC if
they have a Keren Hishtalmut.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It is important
to keep in mind that this is an important tax issue, which means that you shouldn’t
listen to anything you read by accident on a blog. Instead, you should ask your
accountant for guidance. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Unless you
don’t like what your accountant has to say on the topic. In that case, you
should do exactly what you would do if you wanted an answer from your rabbi.
Keep asking until you get the answer you want. When you find it, please post it
in the comments so that we can all take part.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
And that is
how it came to be that no one visiting Israel observes two days of chag.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Keren
Hishtalmut as a Brokerage Account<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If we didn’t
know any better, we would just assume that a Keren Hishtalmut is no different
than a regular brokerage account.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The logic
behind this way of thinking would be that although the Keren Hishtalmut has
special tax treatment in Israel, that doesn’t mean anything for U.S. taxes. The
only way it would be different is if there was a special agreement in the tax
treaty between the United States and Israel. There isn’t.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This a very
simple and clean way to think about the Keren Hishtalmut, but I don’t like it
very much. It would mean that you will get eaten completely by PFIC if you own
a mutual fund in your Keren Hishtalmut. I have a Keren Hishtalmut and I don’t
want to get eaten.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Keren
Hishtalmut like a Pension <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For us to
avoid (or, lessen the impact of) the PFIC, we need find an alternative tax
treatment for the Keren Hishtalmut. To do this, we simply need to read the U.S.
tax code and find something that sounds similar enough to a Keren Hishtalmut
that is more favorable. Our best option in this regard is to treat the Keren
Hishtalmut the same way that we would treat an Israeli pension plan. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Foreign
Pensions<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the U.S.,
pension plans have special tax treatment. For example, if you have a 401(k)
plan in the U.S., you and your employer can make contributions into the plan
which are tax deductible. You also do not pay any tax on the gains inside of
the 401(k) each year. Rather, you will pay income tax when you withdraw the
money, either at retirement age or earlier under special conditions.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This special
tax treatment is only available to “qualified plans” that meet the requirements
of section 401(a). <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
One of these
requirements is that the plan is created in the United States. If you were an
expert, you could easily conclude that this means that foreign pension plans
are automatically not qualified. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, if
you were not an expert, you would know that according to 402(d), foreign plans
can still be qualified, provided that they meet all of the requirements of
401(a). Unfortunately, not being an expert in this case will not get you very
far. If you don’t believe me, read 401(a) and use it to determine whether your
Israeli pension plan meets these requirements. (Hint: it will not. The ability
to withdraw the severance pay component from the pension would break the rules.
Also, the Israeli pension will fail to meet the requirement of rollover to
other eligible plans.)<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The only way
you will be able to convince your accountant to treat your foreign pension plan
as a qualified retirement plan would be to show him that there is a special arrangement made in a
tax treaty. This will not work for Israel. As with most countries, the United
States does not have a special provision with Israel to allow pension plans to
be treated as if they are qualified. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, it will be very easy to convince your accountant to observe only one day of chag, especially if he already lives in Israel.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For foreign pension plans that do not have special treatment under a tax treaty, the common understanding is that they should be treated the same way a non-qualified plan would be treated in the United
States. Plans like these in the United States are called, “employees’ trusts.” <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
A trust may
not be qualified for special tax treatment for any number of reasons. For
example, employers may set aside money in a supplementary retirement savings
that exceeds the contribution limits for qualified retirement plans. Or, an
employer may set aside money in special incentive plan that vests over many
years in a type of deferred compensation plan.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the case
of one of these non-qualified plan, you can read section 402(b) to learn how
the tax is assessed. Or, I could just tell you that the contributions and gains
(as soon as they are “vested”) are considered taxable income each year. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The
regulations never state explicitly how a plan must be structured to be
considered an employee’s trust. However, we can imply a lot from various IRS
rulings on the topic and from random searches that I have done on the internet.
Basically, it would need to be at least that, (a) the employer contributions to
the plan are greater than the employee’s, and (b) that the plan is only
available through an employer. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The first
requirement is very important because otherwise the trust would have entirely
different properties. In the case where the employee puts in all of the money
(or most of it), the trust would a “grantor trust.” In that case, you directly
own the trust and a whole set of other tax consequences would apply. The most
significant would the requirement to report your ownership in a foreign trust
using Forms 3520 and 3520-A.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the case
of an employees’ trust you should think of this as precisely not a “grantor
trust.” Or, you could say that an employees’ trust is a type of “nongrantor
trust.”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I suppose
that there could be other types of nongrantor trusts as well. If that sounds
confusing to you, just think of it like a potato pastry. All potato pastries
are knishes, but not all knishes are filled with potato. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, maybe
the potato pastry could also be a <i>bereka</i>. Well, either way, I think my
point is clear.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In practice,
treating your Israeli pension as an employees’ trust would mean that in any
year, all of your contributions and your employer’s contributions would be
considered taxable income. Also, any increase in value in your pension would be
considered taxable income. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The good
news is that because this money came through your employment – and is in an
employees’ trust – this income is not passive income. This means you can apply
a credit for income tax that you paid to Israel to cover any tax due on your
U.S. return for this money.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Keren Hishtalmut<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Treating a
Keren Hishtalmut like an Israeli pension is a rather natural extension. The
only practical difference between them in the way they are structured is that
the pension restricts distributions until retirement age (or, in the case of
severance pay, to termination from employment). This sounds like it may be
significant, but it really isn’t. The tax treatment for the Israeli pension
plan had nothing to do with the fact that it is a retirement account. It is
based on the account being an employees’ trust.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Like an
Israeli pension, the Keren Hishtalmut could be a considered an employees’ trust
because (a) the employer contributions to the plan are greater than the
employee’s, and (b) the plan is only available through an employer.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If so, the
tax treatment for the Keren Hishtalmut would be the same as a pension. In each
year, the contributions (yours and your employer’s) would be considered taxable
income. Likewise, any increases in the value of the Keren Hishtalmut would be
considered taxable income. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also in this
case, because the income is related to your employment, it would not be
considered passive. You could happily apply a credit for income tax that you
paid to Israel to cover any taxes due to the United States.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Conclusion?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Treating the
Keren Hishtalmut and the pension as employees’ trusts is fairly well
established in the accounting business. However, I am not fairly well-established
in the accounting business. I have several questions on this that I will ask
next week.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com3tag:blogger.com,1999:blog-1687943522027007206.post-34747103628715973092014-09-03T12:34:00.000+03:002014-09-03T12:34:34.034+03:00Running Away from a Keren Hishtalmut?<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It may be
somewhat of surprise to you, but it’s true: <a href="http://www.investingbyaccident.com/2014/03/getting-eaten-by-pfic.html">Getting Eaten by PFIC</a> is far and away Investing by Accident’s most popular blog.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, maybe
that isn’t at all surprising. It is consistent with Investing by Accident being
#1 in the internet search results for “pfic israel keren hishtalmut.” <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Unfortunately,
this significant internet achievement brings me to a challenge of conscious. In
<a href="http://www.investingbyaccident.com/2014/03/getting-eaten-by-pfic.html">Getting Eaten by PFIC</a>, I contended that a Keren Hishtalmut is not a PFIC, but I
never explained why. It turns out that my contention was so contentious, that
one Accidental Reader contacted me to ask me about it.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Ordinarily,
I would refuse to answer his question because he asked it on purpose. However,
I was so impressed that he was willing to drive all the way from Jerusalem to
meet me that I am making an exception. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also, I think
I was wrong and need to set the record straight.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Is a
Keren Hishtalmut a PFIC?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I have
pondered this question for at least as long as it was asked to me, and in my
estimation there are exactly three ways that you could go about answering it. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. Your
first option is to completely ignore the question. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In my
non-expert observation, most people choose this path by accident. You probably
just decided to do this. You assume that your accountant will handle this for
you. In a worst case scenario when the IRS starts asking you questions, you
could just say that you only read as far as this sentence in my blog.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Unfortunately,
you no longer have any excuses because you can read my blog using the Skipping
Tags. You will enjoy a good amount skipping, as it will take many blog postings
to fully deal with this question.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. Your
second option would be to search the internet to find someone who has already
posted an answer to this question. Unfortunately, this will not work because no
one has done this. In fact, if you decide to take this path, you will just end
up right back at this blog where you started. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. Your
third option is to perform your own non-expert research on the topic. While
this sounds like an extremely daunting task, it is really only very daunting. I
have already performed this research and can provide you with a simple, short
list of resources for you to use in your own research.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Do-It-Yourself
Non-Expert Research<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is what
you’ll need:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Tax
Treaty. </b>It is always a good idea to begin research on any topic by
reviewing a tax treaty. For example, when I need to find a creative new recipe
to entertain guests, I always start by checking if there is an article in the
tax treaty that may be relevant. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The <a href="http://www.irs.gov/pub/irs-trty/israel.pdf">tax treaty between the U.S. and Israel</a> is available from the IRS website. Be sure not to miss the “savings clause” in Article 6, paragraph 3, which may
mean that you do not need to read the treaty at all. No one knows when the
United States will invoke it, and most people assume that they always will. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But if the
savings clause is always invoked, then why is there a tax treaty in the first
place? This is a good question with no answer. Perhaps it exists to provide a
place to keep the personal correspondence from Jimmy Carter. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>401’s. </b>You
will want brush up on <a href="http://www.law.cornell.edu/uscode/text/26/401">Section 401 of the tax code</a>,
which talks about the special tax treatment for qualified retirement plans. As
an alternative, you could just check the balance in your 401(k). It is
about equally as understandable.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>402’s. </b>After
finishing 401, you should read <a href="http://www.law.cornell.edu/uscode/text/26/402">section 402</a>, especially part (b). This is the section that talks about the taxation of plans that are not
qualified. Or, since it is more-or-less the inverse of section 401, you could
just look at your 401(k) statement in the mirror. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
while you are in the 402’s, it is worthwhile to take a look at parts (d) and
(i) as well.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>FATCA</b>.
You can read the <a href="http://www.irs.gov/pub/newsroom/reg-121647-10.pdf">proposed regulations from the IRS</a> on when foreign financial
institutions are required under FATCA to report accounts held by Americans.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, you
could not read it. It really doesn’t make a difference.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It sounds
like FATCA should be relevant to the question of whether a Keren Hishtalmut is
a PFIC, but it isn’t. However, it will explain why your Keren Hishtalmut
provider has never asked you to complete a W9 form. That isn’t what you are
researching, but it never hurts to learn things by accident.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Comparisons.</b>
The best part of your research will be finding other types of foreign accounts
that are similar to the Keren Hishtalmut and compare how they are taxed by the
United States. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Actually,
this isn’t true because you won’t find any. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But that is ok, because this part
is more about the journey than the destination.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 362.5pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 362.5pt;">
A good place
to start would be in this blog about the <a href="http://www.nysscpa.org/taxstringer/2012/march/cassidy.htm">Tax Implications of Foreign Pension Plan Participation</a>.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You will
want to look up his sources, including reading up on a <a href="http://en.wikipedia.org/wiki/Registered_Retirement_Savings_Plan">Registered Retirement Savings Plan in Canada</a>.
This one is especially fun because you can then read about it in Article 18 of
the <a href="http://www.irs.gov/pub/irs-trty/canada.pdf">tax treaty between the United States and Canada</a>.
Who knows? Maybe they also have a create way to make chicken with maple syrup.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Whatever
happens in your research, make sure not to miss the <a href="http://en.wikipedia.org/wiki/Individual_Savings_Account">Individual Savings Account (ISA)</a> from the U.K. This one is an especially good treat because you can read <a href="http://hodgen.com/is-an-isa-a-foreign-trust/">this blog about whether an ISA is a PFIC</a> which is so good that it may as well have been written by a
non-expert.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To finish it off, I recommend <a href="http://intltax.typepad.com/intltax_blog/foreign-pensions/">this scholarly-sounding piece</a> that talks about the Singapore Central
Provident Fund.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>YouTube</b>.
Next, you will want to watch <a href="https://www.youtube.com/watch?v=u6XAPnuFjJc">this video</a> about what really motivates us. This has nothing at all to do
with taxation of the Keren Hishtalmut. I am just testing to see if you are still
reading this blog. Also, I think it is great how they draw words and pictures
with the voice over. When I grow up, I want to make videos like this. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 206.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>IRS
Regulations.</b> Finally, you should read the <a href="http://www.irs.gov/irb/2014-3_IRB/ar05.html">IRS regulations on what constitutes ownership in a PFIC</a>. I suppose that you could have just started and
finished with this and skipped all of the other research. But, what kind of
journey would that have been?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Is the
Keren Hishtalmut a PFIC?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
What will
all of this non-expert research tell you about whether the Keren Hishtalmut is
a PFIC? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
There is no
way for you to know for sure without doing the research. Actually, there is. I
could tell you because I did the research. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The answer about
whether the mutual fund holdings in a Keren Hishtalmut would be considered a
PFIC is:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I think so. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I’m sorry. I
know this isn’t the answer you were looking for.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, the
good news is that I do not believe you will get eaten by this PFIC in the same
way as you would in a regular brokerage account. In the weeks ahead, I’ll
explain why.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com9tag:blogger.com,1999:blog-1687943522027007206.post-80098062857807023742014-08-06T11:30:00.000+03:002014-08-22T13:57:10.539+03:00Keren Hishtalmut: Part III<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> Many
alert readers have posted comments about tunnels in response to your blogs
about the Keren Hishtalmut. I assume they want to accidentally ask you: <i>how
would you compare the Keren Hishtalmut to terror tunnels?</i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> The
Keren Hishtalmut is far more prevalent than terror tunnels, yet it is far less
likely to get destroyed by the IDF. In fact, you can read some great statistics
on the Keren Hishtalmut on the <a href="http://www.mof.gov.il/BudgetSite/StateBudget/Budget2013_2014/Lists/List/Attachments/3/ThachzitHatavotMas_20132014.pdf">Israeli treasury department’s website</a>. For example:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<ul>
<li>At the end of 2012, there were 120 funds holding a total
of 127 billion shekel in Keronot Hishtalmut</li>
<li>Of this, 16.3 billion were
new deposits in 2012. </li>
<li>The cost in lost tax revenue from
the Keronot Hishtalmut for 2014 is estimated to be 5.8 billion shekel.</li>
</ul>
This is a
lot of money, but I doubt the Israeli government would want to cancel the
program. Or, maybe it’s more like, “I am hoping they won’t.” Either way, a program
that succeeds in encouraging individual savings is great for the economy and hard
to recreate if cancelled or inhibited.<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> If
I am self-employed and want to start saving money, would the Keren Hishtalmut
be the best way; or, should I start a pension? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> If
you plan to save 18,480 shekel per year or less, it would be easiest to just
use a Keren Hishtalmut. The pension is more complicated and less flexible, but would
make sense if you want to save more than 18,480 per year.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 276.0pt;">
<i>[Begin Skipping] <o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Both a
pension and a Keren Hishtalmut will provide you a tax efficient way to save
money. The main advantage of the Keren Hishtalmut is that even if you are
saving strictly for retirement that is many years in the future, you could take
out the money after 6 years if you need it. Also, the money that you withdraw
from the Keren Hishtalmut will be free of Israeli taxes; whereas, you will have
to pay income tax on the money you receive from a pension.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 118.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, you
are limited on the amount you can deposit in the Keren Hishtalmut, currently 18,480
per year. If you want to save more and your time horizon is retirement age, it
may be a good idea to open a pension.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The pension also
has other benefits that may be interesting to you, including death and
disability insurance. These are automatically included in the pension, and you
will pay an upfront load (2.0-2.5%) on every deposit to cover the cost of these
insurances. This fee is hefty, but you will pay much lower ongoing management
fees (0.25-0.5%) which will make everything even out well enough over 10 years
or longer. The other major consideration for a pension is that you will need to
make regular monthly deposits or the insurance benefits will lapse. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> You
said that the limit for contributions for a self-employed Keren Hishtalmut is
18,480 shekel per year. As an employee, the limit would be 7.5% of your monthly
income up to 15,712, which comes out to 18,854 shekel per year. It’s odd that
you write about the limits differently. Is there anything I could deduce from
this? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> Yes.
In fact, you may have accidentally noticed that the way the Israeli tax law is
written, if you are self-employed you could contribute up to 18,480 shekel into
your Keren Hishtalmut, regardless of how much money you earn. The only “catch”
is how much of your yearly contribution is tax deductible. This is limited to 11,880,
or to 4.5% of your income, whichever is
lower.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is clever because it means that someone
who is self-employed and only makes 10,000 shekel during the year, could still contribute
18,480 into his Keren Hishtalmut. Of the 18,480, only 450 shekel would
deductible from income tax. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
Wow! That is an incredible accidental tax loophole. Why does it exist?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> I
don’t know because I am not an expert. However, I would guess that it would
otherwise be very hard to administer the Keren Hishtalmut for the self-employed.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In Israel,
taxes are assessed by the financial institution. For those who are employed, Keren
Hishtalmut contributes are made through payroll deductions which make it very
easy for the Keren Hishtalmut provider to keep track of the limits. For the
self-employed, the money can be deposited at any time during the year and it would
be very cumbersome for the Keren Hishtalmut provider to collect different information
on each self-employed contributor as to exactly how much revenue each one made during
the year. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But, I
wouldn’t know. I’m just guessing.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 166.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
This sounds terrific. Thank you for all of the information about the Keren
Hishtalmut.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b>
You’re welcome.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q. </b>Oh!<b>
</b>Wait a minute! I just realized something. If the money in a Keren Hishtalmut
is invested in a mutual fund, won’t this mean that if I have a Keren Hishtalmut
I will get eaten by a PFIC?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A</b>.
Wow, you are very alert reader. You even read the parts of <a href="http://www.investingbyaccident.com/2014/03/getting-eaten-by-pfic.html">Getting Eaten by a PFIC</a> that you could have skipped. I am very impressed. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
You are such an outstanding writer than even the boring parts are exciting<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A</b>.
Thank you. Flattery will get you everywhere with me. I am so impressed with
this question that I will devote an entire blog to it after I return from my summer
vacation in September.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q</b>.
You could call your posting, “Running Away from a Keren Hishtalmut?”</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A</b>. I
like it! It was especially clever how you ended your statement with a question. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com9tag:blogger.com,1999:blog-1687943522027007206.post-42767290934000623342014-07-30T10:56:00.001+03:002014-07-30T10:56:30.980+03:00Keren Hishtalmut: Part II<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
“Keren Hishtalmut” means “education fund,” but what does it have to do with
education?</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>Nothing.
It was originally created to help people save for education expenses and was
later expanded. You can still use it to save for education. In that case,
instead of waiting 6 years to withdraw the money tax free, you can do so after
just 3 years. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
Where can I invest the money?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>Your
Keren Hishtalmut is held by an investment company of your choosing. Each
company has different “<span dir="RTL" lang="HE" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">מסלולים</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>,” or investment funds, that you can choose from. This is
a very large market in Israel with many investment companies offering Keranot
Hishtalmut services.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
How do I choose which company to use?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>First, you should decide on your
investment objectives and then on a target allocation. For example, you may
decide that you want to invest the money for the “medium term” and allocate 60%
to stocks and 40% to bonds. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Next, you
can then go to <a href="http://www.gemel.funder.co.il/gemelSearch.aspx">a website like this one</a> and look for all of the funds that meet your target allocation. From this long
list, you can decide on which firm to use by performing appropriate non-expert
research. For example, you could chose the one with the most colors on their
website, or the one whose name rhymes best with words that you like.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
That sounds like a lot of work. Could you just tell me which companies to look
at?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> I
could, but I wouldn’t do that because I am not a bank. If I were a bank, I
would definitely provide you with a “free” consultation in which I would
independently recommend a company for you to use based on thousands of hours of
in-depth research that I preformed in a strictly objective manner that I cannot
explain to you because it would be highly proprietary. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I would
offer you this research absolutely free, and I certainly would not be taking a
kickback from the fees that you will pay to the investment company without telling
you. I also definitely would not deny that I am taking a kickback until you
call me on it explicitly. This absolutely would not happen. However, if it did,
I most certainly would not get in your way of negotiating a more reasonable fee
with the investment company that I recommended. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I wouldn’t
do any of this because I know that if I did, you would just move your
investment to a different company.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> It
is too bad that you are not a bank. What is reasonable in terms of fees?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> The
fees are assessed as a percentage of your investment like any traditional money
management fee. It should not be higher that 1% and could be as low as 0.5% or
less if you have a large amount of money in your account.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> I
know that you are not a bank, but in your research are there some companies
that stand out in terms of performance, fees or service?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>Yes,
but I won’t write about it on my blog because that really isn’t my style. However,
you can email me and we can share stories directly.<b><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> Is
it a good idea to invest more money in a Keren Hishtalmut above the amount that
is tax free? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>No.
There is no advantage to this and you will just make your taxes more
complicated to manage. Above the amount that is above the tax free ceiling,
you will have to pay tax on the money you deposit and on any gains from these deposits
at the time of withdrawal. If you have more money to invest beyond what you are
saving in a Keren Hishtalmut, you should just invest it in a regular brokerage
account. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> I
still have more questions. Is it ok if we continue next week?</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>Absolutely.
This was only Part II. We could go on about this for weeks.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com4tag:blogger.com,1999:blog-1687943522027007206.post-18603384291961041292014-07-23T11:28:00.000+03:002014-07-23T11:28:39.080+03:00Keren Hishtalmut: Part I<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Over the
years, many an accidental reader has approached me with questions about the
Keren Hishtalmut. Like you, they are seeking a non-expert opinion on this
popular Israeli savings mechanism from someone they know they cannot trust.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here are all
the answers, formulated in Investing by Accident’s brand new easy-to-read
Q&A format.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 145.5pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
I’ve seen it written that that the Keren Hishtalmut is<a href="http://www.investingbyaccident.com/2014/01/once-upon-accident.html"> the best thing sincesliced pita</a>. Is this true? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b>
Yes.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> Personally,
I think that “best thing since sliced pita” is an awkward mixed metaphor
because there is no such thing as sliced pita. Even if there was such a thing, it
doesn’t sounds like it would be so good. If you are trying to find a clever
Israeli alternative for “best thing since sliced bread,” what do you think
about, “best thing since frozen schnitzel”? It isn’t sliced, but it is a great
invention.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 280.5pt;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 280.5pt;">
<b>A.</b> I agree. My children love the frozen schnitzel. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
Why is it so good?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>Well,
it’s schnitzel that is ready for you to eat whenever you want it. All you need
to do is heat it up.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> I
mean, why is the Keren Hishtalmut so good?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> With
a Keren Hishtalmut, you can put money in a fund that grows tax free, and after
6 years you can withdraw the money and not pay any Israeli tax on it. The
deposits and the gains are free from Israeli income tax. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> That
sounds great! What about the money that I contribute to the Keren Hishtamut after
year 6?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b>
The Keren Hishtalmut is “unlocked” after 6 years. Even money you put in in
years 7, 8 and 9 (and later) can be taken out without paying Israeli tax. However, once you
withdraw, the 6 year “locking period” will reset.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> What
about investment income that accrues in the account after 6 years? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> Same
thing. This money is free from Israeli income tax when you withdraw it from the
account any time after 6 years.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
That sounds absolutely awesome. Can I put all my money into a Keren Hishtalmut?
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>No,
of course not. There are limits.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b>
What are the limits? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A. </b>To
find the limits, you can simply read the <span dir="RTL" lang="HE" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-language: HE; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><a href="http://taxes.gov.il/IncomeTax/Documents/HovrotNikuim/2014/Nikuy_Hodshi_2014.pdf">לוח עזר לחישוב מס הכנסה ממשכורת ושכר עבודה</a></span><span dir="LTR"></span><span dir="LTR"></span><span lang="HE"><span dir="LTR"></span><span dir="LTR"></span> </span>which the Israeli Department of Taxation conveniently publishes every year, but
which is surprisingly difficult to find. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, I could
just tell you.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The limits are slightly different if your Keren Hishtalmut deductions are made through your employer or if you are making them yourself from your self-employed income. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Through your
employer, you can contribute up to 2.5% of the first 15,712 shekel of your salary per month. Your
employer can match your contribution up to three times, or up to 7.5%. This
brings the yearly limit to 10% of 15,712 shekel per month, or 18,854 shekel per year.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you are
self-employed, you can contribute up to 18,480 shekel per year into your Keren
Hishtalmut. Of this amount, only 11,880 (or, up to 4.5% of your salary, whichever is lower) can be reduced from your Israeli
income for income tax purposes. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The limits are adjusted every year, so be sure to
search the latest “<span dir="RTL" lang="HE" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">לוח</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>” every
year. Also, it should be obvious, but I love the obvious: if you don’t
make any money, then you can’t put anything into a Keren Hishtalmut.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> It
is weird to me that the limits are different by so little between contributions
made through employers versus those made by people who are self employed: 18,854 shekel versus 18,480
shekel. If they are already that close, why not just make them the same?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b>
That would make sense, but it wouldn’t give us the opportunity to find clever
uses of the Keren Hishtalmut for the self employed that we could write about on our blogs, would it?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> I guess
not… but who is asking the questions here?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b>
You are. That was an answer.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Q.</b> I
have many more questions, but we’re out of space in this blog. Would it be
alright if I continuing asking questions next week?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b><br /></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A.</b> Of
course. That’s why I called this, “Part I.”<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com7tag:blogger.com,1999:blog-1687943522027007206.post-77683630806842282952014-07-16T12:22:00.001+03:002014-07-16T12:22:36.476+03:00The Bombs Bursting in Air<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
A lot people
don’t know this, but I am actually somewhat of an expert on things that
explode. I used to sing along about them in America just before the start of
baseball games. For example, rockets have a distinctive “red glare.”</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I usually do
not write about important political issues because I am not sufficiently
non-expert. However, many Loyal Readers have been posting comments about the missile attacks. I understand this as an implied accidentally asked question, and I assume
they want to know what the internet’s foremost non-expert on investing thinks
about operation Protective Edge.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Disproportions<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I know what
the world media is thinking about operation Protective Edge because I listen to
podcasts of NBC Nightly News. The main concern is that Israel will use
disproportionate force to stop the rocket attacks. There is also a lot of focus
on Iron Dome, which is directly responsible for the disproportionate amount of
civilian causalities in this conflict. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am big fan
of Iron Dome. It was built by clever Israelis and paid for by tax paying
Americans. In others words, I pretty much created it by proxy. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, this
is a serious blog in which we discuss serious issues. There is an extraordinary
level of disproportion with Iron Dome that needs to be addressed.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Missile
Investments<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
There is no
price that we will not be willing to pay for safety. Or, more accurately, there
is. It is $50,000, which is <a href="http://www.telegraph.co.uk/news/worldnews/middleeast/israel/10960091/The-Iron-Dome-what-is-it-and-how-does-it-work.html">the cost for each Iron Dome intercept missile</a>. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 76.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 76.0pt;">
The problem is that this is in great disproportion to the cost of the missiles
that Iron Dome is intercepting. I mean <i>crazy disproportion</i>. It’s like when
one of your kids uses up all of your remaining Bounty paper towels just to dry
their hands. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 196.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 76.0pt;">
Well, maybe it is not that disproportionate. I really don’t know how
much Hamas is paying for their missiles. They are not reporting the financials
on their Twitter feed. I don’t know for sure, but my guess is that this is a
violation of the Geneva Convention’s financial reporting requirements. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 76.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 76.0pt;">
In any case, I think we can make some simplifying assumptions because
the rockets are <a href="http://www.nbcnews.com/news/world/hamas-firing-china-designed-syria-made-m-302-rockets-israel-n15246">based on Chinese designs</a>. From my experience, this means that they would cost roughly $0.99, plus some
amount more for smuggling charges. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 199.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 199.0pt;">
<b>Leveling the Playing Field<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 199.0pt;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Clearly,
this level of disproportion in missile costs is entirely unacceptable and we
need to take steps to correct it.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The most
obvious solution would be to tax the rockets that Hamas sends to Israel. This
would be a clever solution, since most of the revenue from taxes is used to pay
for defense systems. However, I am a free market capitalist who believes that
you should not raise taxes to solve a problem unless there is no alternative. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Lowering
the Cost of Iron Dome<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Perhaps the
best way to solve the disproportion would be to lower the cost of Iron Dome. I
can think of at least three ways this should be possible.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. <b>Comparison
Shopping.</b> It seems to me that $50,000 is really expensive for just an
intercept missile. Are we paying retail? I think between all of my contacts on Facebook
and LinkedIn, I should know a guy that could help us get it cheaper. If that
doesn’t work, I think we can ask our American friends to lend us some of their
Bed, Bath & Beyond coupons. If we get enough, we should be able to use them to get 20% off each missile.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. <b>Hybrid
Missiles. </b>We could use an electric engine in combination with rocket fuel
to power the missiles. The only concern would be that this would actually raise
the cost. If so, it wouldn’t be a good solution to the disproportion problem,
but we could do it anyway because we love trees. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. <b>Ukraine</b>.
We can use our <a href="http://www.investingbyaccident.com/2014/05/the-situation-in-ukraine.html">clean and safe Ukrainian nuclear reactors</a> to power the intercept
missiles. I would even be willing to lend you the parts from my water heater.
Or, on second thought: would this just make them even more disproportionate?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
These ideas
seem very promising to me and are probably all that we need. However, on the
off chance that they do not lower the Iron Dome costs, it would also be
worthwhile thinking about how we can offset the costs by generating revenue.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>The Iron
Dome Franchise<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This past
Shabbat, my children and their cousins spontaneously began playing “Iron Dome.”
The way it worked is that the kids created paper airplanes which they shot at
the adults. In turn, the adults used an intercept mechanism (such as their
hands) to thwart the airplanes. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In general,
the airplanes did not hit their targets. Upon occasion when they did reach their
target, the intercept mechanisms were very good at preventing any serious damage.
Actual direct hits were very rare (Bubby: I hope your ear is feeling better),
but when they did occur, the children were extraordinarily exuberant in their
victory. I suppose the adults could have prevented more attacks by taking out
the airplane maker, but we felt we couldn’t do this because he is just a child.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In other
words, the game was very much like real life. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I made <a href="http://aliyahbyaccident.blogspot.com/">Aliyah by Accident</a>, and for me this game was pretty much one of my greatest
aliyah moments. Next time I am in America and see my friends’ children playing “Cowboys
and Indians,” I intend to point out just exactly how much this exemplifies their
extreme state of exile.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
it occurs to me that Iron Dome would make an excellent video game. We could
even have a multi-player mode so that you can actually play directly with
Hamas. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I think this
idea is so good that I am even willing to donate the following original artwork
that we could use to advertise it. It comes from my son and accurately depicts
an IDF formation around Gaza poised to protect us from Hamas missiles. If you
look closely, you can even see Israel’s famous, “King Sea.”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-HU5Z4fVQQv0/U8ZDuEoemuI/AAAAAAAAALI/7HucdE1A0QQ/s1600/Protective+Edge.JPG" imageanchor="1"><img alt="Operation Protective Edge" border="0" src="http://2.bp.blogspot.com/-HU5Z4fVQQv0/U8ZDuEoemuI/AAAAAAAAALI/7HucdE1A0QQ/s1600/Protective+Edge.JPG" height="300" title="Operation Protective Edge" width="400" /></a></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If the game
works out, we could expand the franchise into movies and television. We will
know that we really made it big when the action figures hit the shelves. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com14tag:blogger.com,1999:blog-1687943522027007206.post-78943721415714987862014-07-09T15:03:00.000+03:002014-07-09T15:03:12.713+03:00New or Used?<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Accidentally
enquiring minds want to know: is it cheaper to buy a used car than it is to buy
a new car?</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is an
easy question. It’s just like this one: is it cheaper to send your children for
a Jewish education in Israel than it is in the U.S.? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Obviously,
yes. It’s really just a matter of some trade offs.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Cost by
Cost<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
There are
essentially six costs for a car: </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<ul>
<li>Money Costs</li>
<li>Depreciation</li>
<li>Maintenance</li>
<li>Insurance</li>
<li>Gasoline</li>
<li>Registration
& “Tests”</li>
</ul>
This is
rather obvious, but I usually write about obvious things: some of these costs
change significantly between used vehicles and new vehicles and some of them do
not. Understanding how much cheaper a used car will be is simply a matter of
understanding the differences in these costs. This actually not that hard at all since many of the costs do not change
much.<br /><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I don’t even
think we will need to use the skipping tags.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Things to
Ignore<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The easiest costs
to ignore are <b>Insurance</b>, <b>Gasoline</b> and <b>Registration &
“Tests”. </b>These will not change significantly between the new and used
versions of the same car.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For the
purposes of this blog, I will also ignore <b>Money Costs</b>. This cost
includes anything you have to pay in order to borrow money to buy a vehicle (“interest”).
This will obviously vary depending on how much you need to borrow and what
interest rate you get. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also
included in Money Costs in the “lost opportunity” for any money that you spend
to buy the car. This should be calculated as the amount of investment income
you give up by spending the money rather than investing it. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am
ignoring Money Costs because they vary greatly. Also, interest rates are very low
right which means that difference in Money Costs between the new and used cars
will tend to be negligible for most people at the moment.<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The costs
that you should not ignore are those for <b>Maintenance </b>and<b> Depreciation</b>. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Maintenance
Not Like It Was<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The common wisdom
today is that “cars are more reliable than they used to be.” In fact, I found
<a href="http://www.mako.co.il/cars-magazine/used-cars/Article-c492e12f7665f31006.htm">one nice article</a><span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span> </span>about this that you could read instead of reading this blog.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Actual costs
are hard to estimate because it will depend on the particular make and model of
the car and your driving conditions. However, in order to write this blog, I
need to propose something. Here goes:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Maintenance Costs<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1-3<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
As low as possible<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4-6<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
A bit higher<o:p></o:p></div>
</td>
</tr>
<tr style="height: 2.5pt; mso-yfti-irow: 2;">
<td style="border-top: none; border: solid #BDD6EE 1.0pt; height: 2.5pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
7-9<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; height: 2.5pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Probably significantly higher<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
10+<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 2.0in;" valign="top" width="192">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Lots and lots<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This
analysis of cost is based on my experience owning the Mitsubishi Grandis, which
we bought along with everyone else in my neighborhood just over 3 years ago. During
years 1-3, our only maintenance costs where the regularly scheduled oil
changes. We did not have anything that needed to be fixed, but if we had, it
would have been covered by the warranty. Now in year 4, the only additional maintenance
costs we encountered is to replace the two front tires for 800 shekel. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Judging by
the way the Grandis drives (“still like new”) and from the problems that my
friends have had with theirs (“none”), I anticipate that the low maintenance
costs will continue for at least another 3 years.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In years
7-9, my guess is that the maintenance costs will start to rise as parts will
wear out and need to be replaced. Beyond year 10, I cannot imagine that the
costs will not rise sharply. At this point, it will definitely be time to sell
the Grandis to a large family living in a settlement. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Everything
else being equal, it would make sense to have the car for just the first few
years when maintenance costs are low. Which brings us to…<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Depreciation</b><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The major
difference in cost between a new car and used car is the amount of value you
lose in the depreciation of the vehicle. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The lease on
my company car ends this October, and I have already started to accidently
research a replacement in the “supermini” category. To give you a sense of the
size of a supermini, think “Matchbox” but with a working engine.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To get a
sense of the cost of depreciation, I used the price list on yad2 to track the value
of the Toyota Yaris with an automatic transmission in the basic trim level:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Year<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>List Price<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Depreciation<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<i>New<o:p></o:p></i></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
101,700.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
---<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
72,900.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
28%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
70,900.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
30%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
67,300.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
63,400.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
38%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
5<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
54,600.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
46%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
47,900.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
53%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
7<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
44,200.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
57%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
8<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
41,500.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
59%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
38,700.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
62%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
10<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
34,200.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
66%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
11<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
30,700.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
70%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
12<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
28,575.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
72%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
13<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
24,900.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
76%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
14<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
22,800.00 <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
78%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Perhaps more
interesting is to look at the depreciation cost several years at a time:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Year<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
<b>Total Depreciation<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1-3<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
34,400.00<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4-6<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
19,400.00<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
7-9<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.5pt;" valign="top" width="138">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
9,200.00<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I find this interesting
because what it says is that the premium to own the car in years 1-3 of years
4-6 is only 15,000 shekel. That is a chunk of money, but not entirely unreasonable
when you consider that the used car will come with somewhat higher maintenance
costs and has the risk that previous owner did not care for it as well as he should
have. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, perhaps
stated more simply: you could absolutely make the case that 15,000 shekel is
money well spent not to have to talk to an Israeli used car dealer.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 2.75in;">
<b> <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
There would
be no fault in buying a new car like this. However, before you do, you should
consider that not all cars depreciate the same way and there may be a good
bargain out there if you keep looking.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Bargain Hunting<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It seems to
me that there would be a good bargain in the used car market if you can find a
car that is both highly reliable and has higher
than average depreciation. Fortunately, this appears to be much more
than just theoretical thanks to Israel’s #1 car seller: Hyundai.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Hyundai cars
are very reliable and sold extensively to rental and leasing companies which
has the accidental result of flooding the used car market with discarded almost
new vehicles.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the
supermini category, here is the depreciation on the Hyundai i20:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Year<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>List Price<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Depreciation<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<i>New<o:p></o:p></i></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
97,800.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
---<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
77,800.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
20%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
71,000.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
27%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
60,100.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
39%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
53,600.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
45%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 44.75pt;" valign="top" width="60">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
5<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
48,500.00<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
50%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This car
already depreciates more than the Toyota Yaris, but the bargain comes in once
you factor that the asking price for used cars that are sold by rental and
leasing companies starts automatically at 15% below list price. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I don’t know
how much further you can negotiate from there, but it seems to me if a rental
or leasing company has a lot full of leftover Hyundais, you would be in a very
good position to negotiate. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The
potential bargain is magnificent:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-table-layout-alt: fixed; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Discount from List<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
<b>Price<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
0%<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
60,100.00<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
15%<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
51,085.00<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
20%<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
48,080.00<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
25%<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
45,075.00<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
At a 20%
discount to the list price, you would getting a 3 year old Hyundai i20 <b><i><u>at
less than 50%</u> </i></b>of the new car price. I’m not an expert, but it seems
to me that you are receiving way more than 50% of the value of the car. If this
exists, it would be a very good deal.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>My Car
Algorithm<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Buying a new
car can be perfectly reasonable. If that is the direction you plan to take, I suggest looking for a car with
historically low depreciation. On the other hand, there could be an opportunity
to save a lot of money in the used car market if conditions are right. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br />
The way I shop for a car is to first find the car (or cars) that I would be
willing to buy new. Then, I look to see if there are any good opportunities to buy
it (or one of them) used. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
How much you
need to save to make it worthwhile to buy the used car is a matter of personal
preference (and I suppose, your level of wealth). I personally will be looking to get a 45% discount from the list price of the new car in order to purchase the 3
year old version instead. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com9tag:blogger.com,1999:blog-1687943522027007206.post-50585121886975846112014-07-02T13:40:00.001+03:002014-07-02T13:40:08.598+03:00Company Car Leases<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Last week, I
published an accidental <a href="http://www.investingbyaccident.com/2014/06/hybrid-investments.html">exposé about hybrid cars</a>.
Since then, I received many accidental questions relating to company car
leases. I paraphrase:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
“Should
I work in hi-tech and take a company leased car?”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
These are
really two separate questions. Regarding the first, you should work in hi-tech
if all of the following apply to you:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. You like
money.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. You enjoy
creating things that will benefit a large number of people.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. You like
helping friends and family by purchasing popular productivity software using
your employee discount.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You may want
to work in hi-tech, but may not have what it takes. An easy way to test whether
you will succeed is simply to watch several episodes of the Big Bang Theory. If
you don’t know why people think it is funny, send me your resume right away.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Once you’re
hired, you’ll have the option of taking the company leased car. You can then decide
whether this makes financial sense. You can do this either the hard way, or the
easy way. I assume that you like to do things the hard way because why else do
you order meat by number from a Russian speaking butcher?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
On the
off-chance that you generally prefer to do things the easy way and you happen
to buy meat only by accident, feel free to use Investing by Accident’s
not-quite-patentable skipping tags.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Lemons to
Lemons<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To
understand if a company lease is a good deal, you must be careful to compare
lemons to lemons. A company lease of a new car is an alternative to purchasing
the same new car. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I often see
people compare the company lease to purchasing a used car, and then decide that
the lease is too expensive. This may be the case, but no one accidentally asked
me about used cars. The question here is whether it is cheaper to lease a new
car with your company or buy the same car? <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The simple
answer is that the lease will tend to be financial reasonable if all of these
things are true: <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. The lease
includes everything (the car, insurance, maintenance, gasoline) and has unlimited
mileage (or at least, a very generous mileage allowance) <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. You drive
<i>a lot<o:p></o:p></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i><br /></i></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. You think
it is reasonable to pay a small premium to never have to worry about anything
relating to your car<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If all of
these apply to you, it is likely worthwhile to lease rather than buy. Enjoy
your barbeque!<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[Begin
Skipping]</i><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Alert
readers may have noticed that a key component to determining whether leasing is
financially worthwhile is whether or not you drive “a lot.” To determine how
much of “a lot” is a lot, you would simply need to do the following:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. Identify
the net effect to your salary with the car and without the car. Multiply this
number by 36 to arrive at the total cost of leasing the car.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. Calculate
the cost of buying and owning the same car for the same period of time.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. Compare
the results of #1 and #2 to determine the premium (or savings) of leasing
versus buying.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I assume
that since you did not skip, you are interested in a sample illustration of
these steps.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Step #1: The
Cost of the Lease<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The easiest
way to compute the net effect to your salary with or without the car is to ask
your payroll controller for the number. He or she can simply put this into the
payroll system and tell you. However, that would be like buying meat from the
frozen section. It may work just as well, but it is nowhere near as fun.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To compute
the net effect to your salary, you can start with what would happen if you did
not take the car. In many cases, your hi-tech employer will give you a car
allowance instead. In that case, take the allowance and deduct the taxes you
will need to pay. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You can find
the incremental tax rate <a href="http://taxes.gov.il/IncomeTax/Documents/HovrotNikuim/2014/nikuy_hodshi_2014.pdf">here</a>,
or you can use this table which I have conveniently copied and pasted for you:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Monthly Income<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Tax Rate<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
0-5,280<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
10%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
5,281-9,010<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
14%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9,011-14,000<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
21%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
14,001-20,000<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
31%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
21,001-41,830<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
41,831 and up<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
48%<span dir="RTL" lang="HE" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For example,
since you are working in hi-tech, your calculation may look like this:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1152;">
<tbody>
<tr>
<td style="border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Payment in Lieu of Car<o:p></o:p></div>
</td>
<td style="border-left: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>3,500<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Rate<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Payment<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1,190<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Net Income<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,310<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In this
calculation, I assume that if you take the car allowance, your employer treats
it as a reimbursement only and does not also pay benefits or bonuses on top of
this amount. If your employer considers it as income and does pay bonuses and
benefits on top of this amount, you’ll need to adjust accordingly. I would show
you how, but I don’t have enough skipping tags for that. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Next,
compute how much money it will cost you to take the car. In this case, you will
need to pay tax on the tax value (<span dir="RTL" lang="HE" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-language: HE; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">שווי מס</span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span><span dir="LTR"></span>) of the car. You can find the exact value by
using <a href="https://www.misim.gov.il/mm_usecar10/UseCarScreen.aspx">this website</a>,
or you can just use 2.48% of the list price of the car.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For example, assuming you are considering leasing
a car like the Toyota Corolla, your calculation would look like this:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1152;">
<tbody>
<tr>
<td style="border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
List Price of Car<o:p></o:p></div>
</td>
<td style="border-left: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
130,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Value (2.48%)<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,224<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Rate<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Payment<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1,096<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The net monthly
cost in this example is difference between receiving 2,310 shekel or paying
1,096 shekel; or 3,406 shekel. Multiply by 36 to arrive at the full cost of the
lease: 122,616 shekel.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In this
example, I have assumed that you mostly do not understand the Big Bang Theory.
If you don’t understand it at all, you may find yourself in the 48% tax
bracket. That case, the total cost of the lease will actually go down slightly to
116,172. (Isn’t cool how the lease becomes cheaper as you make more money?)<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I also
assumed that your alternatives are either to take the money or the car. In
practice, you may have an option to take some of the money and a less expensive
car; or, you may be able to pay extra to get a more expensive car. If that is
your case, you will need to adjust accordingly.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You also may
have the option to take the company lease car and pay for it entirely yourself.
In that case, the calculation is somewhat different. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For example,
let’s say you have an option to lease the Toyota Corolla, but you will need to
pay 4,500 shekel for it. This means that instead of keeping 4,500 shekel, you
will give it up (pre-tax) and instead pay the tax on the vehicle. In this
example, the cost of the lease is calculated as follows:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1152;">
<tbody>
<tr>
<td style="border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Income You Forfeit<o:p></o:p></div>
</td>
<td style="border-left: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,500<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Rate<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Net Income Forfeited<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>3,107<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
List Price of Car<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
130,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Value (2.48%)<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,224<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Tax Rate<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
34%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 121.25pt;" valign="top" width="162">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Tax Payment<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>1,096<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br />
In this case, the cost of the lease is the difference between keeping 3,107
shekel versus paying 1,096; or, 4,066 shekel. Over 36 months, the cost of this
lease is 146,376.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Even the lowest
calculation in our example – 116,172 shekel – is a very large number of shekels.
Could it be that buying the car would be even more expensive?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Maybe. If
you drive <i>a lot.</i><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Step #2: The
Cost of the New Car<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To compute
the cost of the new car during the same period you need to add up all of the
costs, including: </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<ul>
<li>Depreciation</li>
<li>Maintenance</li>
<li>Registration
& Tests</li>
<li>Insurance</li>
<li>Financing Costs</li>
<li>Gasoline</li>
</ul>
This could
be quite daunting, but since you made it this far, I’ll give you some easy
estimates to use:<br /><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Item<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Cost For 3 Years<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Depreciation <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
About 35%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Maintenance<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
About 3,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Registration & Tests<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
About 3,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Insurance<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
About 15,000<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For financing
costs, it depends whether you have the money to buy the car or intend to borrow
money for it. If you are borrowing, the dealership will be more than happy to
tell you what the total interest payments are. For the purposes of this blog, I
will choose to be American and assume that you will buy the car on 0%
financing. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If so, the cost
for the Corolla so far is:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Item<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Cost <o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Depreciation <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
45,500<o:p></o:p></div>
</td>
</tr>
<tr style="height: 2.5pt; mso-yfti-irow: 1;">
<td style="border-top: none; border: solid #BDD6EE 1.0pt; height: 2.5pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Maintenance<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; height: 2.5pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Registration & Tests<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Insurance<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
15,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 112.25pt;" valign="top" width="150">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Total<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 99.0pt;" valign="top" width="132">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>66,500<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
For
gasoline, you need to compute the cost based on the number of kilometers that
you drive. Let’s watch what happens to the cost of the Corolla based on the
amount that you drive. As you recall from last week’s exposé, the Corolla gets about
17 km/liter. At 8 shekel per liter, here are your costs:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 71.75pt;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Km/Year<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>10,000<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>20,000<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>30,000<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 71.75pt;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Base Cost<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
66,500<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
66,500<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
66,500<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 71.75pt;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Gas Cost <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
14,117<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
28,235<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
42,353<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 71.75pt;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Total<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>80,617<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>94,735<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>108,853<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As you
should expect because I told you so, the more you drive (and the more gas inefficient
your car), the more economical sense it will be to lease. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Still,
leasing will require a premium over buying. It seems to me that you will in
general need to drive 25,000 km/year or more in order to make the premium “reasonable.”
In the case of the Corolla for someone in the 48% tax bracket, it is very
reasonable at 30,000 km:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1152;">
<tbody>
<tr>
<td style="border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Cost To Lease<o:p></o:p></div>
</td>
<td style="border-left: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: .75in;" valign="top" width="72">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
116,172<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Cost to Buy<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: .75in;" valign="top" width="72">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
108,853<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Difference <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: .75in;" valign="top" width="72">
<div align="right" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: right;">
7,319<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Considering
that at this rate of driving, the additional mileage will further depreciate
the value of the car, this premium is quite reasonable. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<i>[End
Skipping]</i><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Lease or
Buy?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you
strictly compare company leasing to buying a new car, leasing will tend to be
economically reasonable if you drive a lot (25,000 km/year or more), and will become
increasingly reasonable the more gas inefficient the car and the higher your
tax bracket. There can be exceptions and you can read the section that
you skipped as a guide to computing the costs for your particular situation.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Of course, the
general rule that leasing can be “economically reasonable” also means that buying
is actually cheaper in most cases. This begs the question that no one has yet
accidentally asked: would it be even cheaper to buy a used car?</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com4tag:blogger.com,1999:blog-1687943522027007206.post-83338562983121588302014-06-25T13:48:00.000+03:002014-06-25T13:48:22.561+03:00Hybrid Investments<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I have
fielded several accidental questions recently about cars. I don’t know why
people are asking me. I think cars are terrible investments. They are expensive and lose value constantly.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
My
philosophy with cars is similar to my philosophy with Israeli bank accounts: try
to have the absolute minimum that you need for the lowest price that you can
find. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Ideally, you
should have no bank accounts and no cars.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Hybrid or
Regular?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
When I am in
the market to purchase a car, I always want to buy a hybrid. Maybe it’s because
I am somewhat of a hybrid myself. On the one hand, I sprout wisdom like a cedar
of Lebanon. On the other hand, I read leftover People magazines that my wife
hasn’t yet passed on to the next reader in the ex-pat Sisterhood of the Travelling
Magazines. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also, I
really want to save money on gasoline. The trouble is that saving money on
gasoline with hybrids seems to be very expensive.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 283.0pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Hybrid
Economics <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The most
popular hybrid is the Toyota Prius. I want to buy one because I want to save
the environment, but I can never justify the purchase. The best comparison
vehicle to the Prius would be the Corolla. It is also made by Toyota and is similar
in size and popularity. Here are the economics:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 284.5pt;">
<o:p></o:p></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Car<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.5in;" valign="top" width="144">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>List Price<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Prius<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.5in;" valign="top" width="144">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
155,000 NIS<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Corolla<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.5in;" valign="top" width="144">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
129,990 NIS<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 94.25pt;" valign="top" width="126">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Difference<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.5in;" valign="top" width="144">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>25,010 NIS<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The Prius
demands a premium of 25,000 shekel, but offers superior gas mileage: 25
km/liter versus 17 km/liter for the Corolla. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is the
payback for gas at 8 shekel per liter:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 62.75pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>10,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>15,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>20,000 km<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 62.75pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Prius<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,200<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,800<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6,400<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 62.75pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Corolla<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,706<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
7,059<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9,412<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 62.75pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Savings<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1,056<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,259<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,012<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 62.75pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Payback <o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>16 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>11 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>8 Years<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In other
words, this is a very expensive way to save money on gasoline.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>A Call
for Hybrids<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I thought
that perhaps the Prius is an exception and other hybrid vehicles make more economic
sense. I ran the numbers with the Prius+ versus the Toyota Verso, but I found
the payback to be about the same.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
At first, the
hybrid version of the Toyota Yaris seemed like a good possibility. It is 12,800
shekel more expensive than the non-hybrid version but gets 27 km/liter versus
18.9 km/liter for the gas. Here is the payback:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>10,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>15,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>20,000 km<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Yaris Hybrid<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,042<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,561<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6,084<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Yaris <o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,571<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6,851<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9,143<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Savings<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1,529<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,250<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,059<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Payback <o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>8 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>5 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>4 Years<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you drive
a lot, this level of savings looks like it could theoretically makes sense. The
trouble is that people report on blogs that you can trust (just like this one) that
they cannot even get close to the reported gas mileage for the hybrid. Adjusting
for a more realistic gas mileage of around 22 km/liter, the payback may never
materialize.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But, I am crazy
and kept looking until I found the hybrid Toyota Auris. It costs only 5,910
shekel more than the gas version of the same car and claims gas mileage of 26.3
km/liter versus 17.5 for the gas version. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Here is the
payback:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>10,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>15,000 km<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>20,000 km<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Auris Hybrid<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,042<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,563<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6,084<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Auris<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,571<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6,857<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9,143<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Savings<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
1,529<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,294<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,059<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.25pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Payback <o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>4 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 67.5pt;" valign="top" width="90">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>3 Years<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 63.0pt;" valign="top" width="84">
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>2 Years<o:p></o:p></b></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, whether
you can actually get 26.3 km/liter is questionable. According to most opinions,
you only get the posted gas mileage for hybrids if you drive long distances at less
than 30 mph. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In other
words, a hybrid is a good buy if you drive a cab in New York City. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>If so,
why are people buying hybrids?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To figure this
out, I asked at least two of them. Here is what they told me:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
“I had one before and I liked it so I got
another one. Why? Is there something cheaper?”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
“I like trees.”<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
These answers make me think that people are not
buying hybrids to save money on gasoline. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Frius<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I ran the hybrid calculations by my Friend. He
is an engineer and understands “energy” which makes him an expert on this
topic. He told me that it is highly doubtful that a hybrid will save you money
as the technology is very expensive, both initially and to maintain over time.
In fact, he doubts that even the Auris hybrid will have an overall lower cost
of ownership as compared to the gas version.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
My Friend suggested that this is an excellent
opportunity to open a new consulting business, which can turn any gasoline
powered car into a hybrid. We can call our new business, Frius. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Frius will offer a personalized energy saving consultation
service, or the <b>Frius Orderly Energy Lifetime Deployment Usage Program</b> (“FUEL UP”). You will pay us just 25,000 shekel, and we will come to your home
and perform a comprehensive energy audit.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You can
trust us, just like you trust all auditors, because we will be independent and
objective. At the end of your audit, we will present you with a customized plan
on how you can save more trees. All you will need to do is click “I Accept” at
the bottom of the form. By doing so, you have saved trees.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To
demonstrate your commitment to our energy program, we will provide you with
bumper stickers that read, “Approved to FUEL UP!” which you can place on all of
your cars, effectively converting them to hybrid vehicles.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Call now and
we will give you a special discount of 20% off your audit.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com6tag:blogger.com,1999:blog-1687943522027007206.post-62017472544988211362014-06-18T11:30:00.000+03:002014-06-18T11:30:01.157+03:00My 5th Grade IPO<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This past
Friday, I visited my daughter’s class as part a lecture series on financial
matters delivered each week by a parent volunteer. As a foremost self-published
commentator on financial matters, it was only natural that I would volunteer.
As a non-expert, it only made sense that I would discuss the topic of the Tel
Aviv Stock Exchange (“the bursa”).</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I’m not sure
where we are going wrong with our education system, but it apparently happens
sometime after the 5th grade.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Brainstorming</b><o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To describe
the purpose of a stock exchange, I asked the class to come up with an idea for
a business. Most of the girls did not have one, but many did. Most of the ideas
were for hi-tech start-ups. I take this as evidence that girls are definitely interested
in business and engineering as professions. In fact, one girl said that she
wants to make a start-up and doesn’t care what it does as long as it makes
“billions of dollars.” <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It was also
very heartwarming to hear from two girls in the class who are planning to
create a company that will help sick people. They have given this a lot of
thought; but unfortunately, I did not catch all of the details. From what I could
understand, a key part of their strategy involves something to do with making
sweaters.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
we spent the session brainstorming about our start-up and how to raise money
for it. These girls thought of everything, which makes me wonder at exactly
what point in their lives people stop thinking. I’ve run similar brainstorming
sessions with adults and can barely get half as many good ideas. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
We decided
that our start-up is going to make shoes that help people jump really high AND
run really fast. We thought of everything you need, both the obvious (springs,
factories, machinery), as well some of the less obvious, including: a good
design team for both the shoes and for our corporate logo.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>IPOs<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
We discussed
how to raise money to get our company started, which led us to the discussion
of how we could sell shares of the company on the stock exchange.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Now, this is
a fairly complicated concept and I wasn’t sure how it would go over. Actually,
several of the girls made it quite clear that it really doesn’t make sense to
own a “part” of a company. Which part, exactly, do you own?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, as
we elaborated on how once you own a “part” of a company, you also get “part” of
the profit that the company makes, things really clicked. They were especially
interested to know which companies I personally owned, and I promised to send
them a link to the <a href="http://www.investingbyaccident.com/2014/04/i-pray-you-pray-we-all-pray-for-i-pray.html">I-PRAY index</a>. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The
conversation around buying and selling stock became quite intricate, and we
discussed how the price will go up and down when more or less people want to
buy shares in the company. Here are two actual questions raised by the 5th graders:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<ul>
<li><span style="text-indent: -0.25in;">Once you have shares,
anyone can buy them. This is just like the Chinese who bought Tnuva. Why did
they do that?</span></li>
<li><span style="text-indent: -0.25in;">The amount of money that
you get back from owning Bezeq doesn’t sounds worthwhile. Why don’t you sell
it?</span></li>
</ul>
These are very
good questions, and you may be wondering about the answers. I certainly am. Unfortunately,
they were asked on purpose which makes it impossible for me to answer them.<br />
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
this is your fair warning. If you see a 5th grade girl in Modiin,
she probably knows more about the stock exchange than you do.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com6tag:blogger.com,1999:blog-1687943522027007206.post-35626869360212783452014-06-11T13:32:00.001+03:002014-06-11T13:32:21.993+03:00Real Estate on Purpose<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Two weeks
ago, I published a groundbreaking blog entitled <a href="http://www.investingbyaccident.com/2014/05/real-accidental-estate.html">Real Accidental Estate</a>.
In this posting, I proved beyond any doubt that I have no idea why real estate prices
are the way they are. My case was so convincing because it used extensive conjecture
about how much my apartment in Modiin would rent for.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This blog
left us with two unanswered questions. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>#1: Are
there real estate investments in Israel which do not appear to be over-priced?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To answer
this question, I conducted a man-on-the-street interview one day during lunch at work. My
conclusion is that the answer to this question is: maybe.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
One friend
at work told me about beach front property that he bought in Haifa in which the
rental yield is 10%. He thinks the reason the properties are undervalued is
that the maintenance fees are fantastically high (10 shekel per square meter!)
which makes only the smallest apartments affordable. Because they are so small,
people tend not to want to buy them for fear that they will outgrow them quickly. However, they are willing to rent them for
a few years at a time.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Investment opportunities
may very well be out there. If you think you found one, please let me know. I
would be happy to provide you an accidental analysis and write about you on my
blog. Contact me by posting in the comments or directly by emailing me: donny ‘at’
investingbyaccident ‘dot’ com.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However,
more importantly, the blog raised this question:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>#2: So
what? Shouldn’t I just buy real estate anyway?<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This is
actually quite an insightful question, and the answer depends on how much money
you have and how much you already have invested in real estate.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 204.5pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
One of my
highly intelligent friends is making aliyah <s>this</s> next summer and astutely
observed that his second highest financial risk with aliyah is that he will not
be able to afford a home if real estate prices continue to increase at the rates
we have seen in recent years (10%+). <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Actually, he
is <i>very</i> highly intelligent. I know this because he is the same friend
who is <a href="http://www.investingbyaccident.com/2014/01/kesef-bkesef-alternatives-part-ii.html">hedging his currency risk before aliyah</a> to mitigate his greatest
financial risk.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
He is
looking to buy an apartment in Israel as soon as he sells his house in Canada (“Not
America”). However, because prices are so high, he cannot afford to buy an apartment
he wants to live in. His highly intelligent solution is to buy an apartment solely
as an investment while he rents an apartment to live in.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This
approach is highly intelligent and applies to you if you don’t already own
property in Israel but want to live here. Had I been highly intelligent when I
made aliyah, I would have much more money right now.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; tab-stops: 113.5pt 371.5pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Allocation,
Allocation, Allocation<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you
already own property, it may still be a good idea to invest in real estate even
at these prices. Or, it may be a very bad idea. I think it depends on how much
money you have and how much you want to allocate to real estate.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
We did not
address real estate in the <a href="http://www.investingbyaccident.com/2014/03/the-order-of-allocation.html">Order of Allocation</a>, but the basic
principles apply. You do not want to have all of your money in any single type
of investment. This may be more obvious when you think about “bonds” and “stocks”,
but it is equally true when you think about other types of investments,
including real estate. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Although I believe
that the real estate market is overvalued, I also believe that I have no idea when
(or even if) it will decline. As a result, the best approach is to allocate a
portion of your assets to real estate. In the current environment, it would
seem prudent to adjust the allocation in consideration of the market appearing
to be somewhat overvalued, but I would not drastically alter it.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I think that
allocating between 15% and 25% of all of your assets is a highly reasonable
target. After writing this last sentence, I computed how much of my assets are
allocated in real estate. It came out to about 50%, which could only mean one thing. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You
should do what I say and not what I do.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or maybe, it
means that home prices have become so expensive that many of us are already over-invested
in real estate. If that has also happened to you, now would
not be the best time to buy more real estate.</div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com10tag:blogger.com,1999:blog-1687943522027007206.post-50098396817369853282014-06-03T08:31:00.002+03:002014-06-03T08:31:11.557+03:00 לא יתקיים מסחרMarkets are closed today and tomorrow for <a href="http://jewishvaluescenter.org/jvoblog/shavuot-time-to-check-in">Shavuot</a>. Obviously, I cannot possibly write a blog without the inspiration of the live ticker of the Tel Aviv Stock Exchange floating on the bottom of my screen.<br />
<br />
Enjoy the cheesecake!Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com6tag:blogger.com,1999:blog-1687943522027007206.post-11990366719441700062014-05-28T12:00:00.000+03:002014-05-28T12:00:02.607+03:00Real Accidental Estate<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
At Investing
by Accident, if you comment, I will publish. In that spirit, here is the most recent
Accidently Asked Question:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Where
in Israel do you think home and land prices are rising the fastest to “flip”
houses or purchase for rental income? Are homes more profitable across the line
east of Modiin?<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Before
answering these questions, I must confess that I may not be qualified to write
about this topic because I am somewhat of an expert. Here are my actual qualifications:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
1. I bought
a co-op apartment in Riverdale in 2002 and sold it at the height of the market
in 2007. You may be interested in the sale prices, but unfortunately for you, I
am Israeli and will absolutely not tell you. However, we can discuss personal
details about family planning as much as you like.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Actually, I
am also American. I bought it for $270,000 and sold it for $450,000. Wow!<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
2. I own an
apartment in Modiin which makes me a real estate investor by accident.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
3. This is
not actually a qualification, just an important life note: never buy an
apartment. I learned this the hard way by owning the co-op. Your neighbors will
make too much noise, you will have to pay for fixing the building as it falls
apart, and the people who run the building are insane. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I never learn
a lesson, which is I bought another apartment. Thankfully, this time around
it’s working out much better. My neighbors are wonderful and the building is
brand new and fairly well built. Still, you can’t have everything. The person running
the building is insane. I suppose we deserve that much. After all, we elected
him by accident.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Real
Estate by Accident<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Investing in
real estate is fairly straightforward. Basically, you buy a property (“real
estate”), often by borrowing a large amount of money to do so (“leverage”). You
rent out the property (“operating income”) and use the money to pay your
expenses like borrowing costs and maintenance (“carrying costs”). Whatever is
left, you put in your pocket (“$”). Finally, when the time is right, you sell
the property for a lot more than you bought it for (“$$”). <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As you can
see, real estate is an attractive investment because you not only make money
from the rental income (“yield”), you also make money from the capital
appreciation of the property (“$$$”). <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Rental Yields<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I am a big
fan of looking at rental yields when considering if real estate is a good value.
I decided to sell our apartment in Riverdale when I noticed that rental yields
were declining. At the time, I understood this as a sign that more and more
investors were starting to speculate in the market. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
From the
time we bought until the time we sold, here is what the calculations looked
like:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>2007 (Sold)<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>2002 (Bought)<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Home Price<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$450,000<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$270,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Rental Gross<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$3,500<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$2,500<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Rental Net<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$2,400<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$1,600<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Rental Net / Year<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$28,800<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
$19,200<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Yield<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6.4%<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.25in;" valign="top" width="120"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
7.1%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In the case
of co-ops, the owner pays the monthly maintenance charges. After excluding this
from the calculation, I observed a declining yield, 7.1% to 6.4%, which I took
as an indication of increased speculation in <span dir="RTL"></span><span dir="RTL"></span><span dir="RTL" lang="AR-SA" style="font-family: "Arial","sans-serif"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: Arial; mso-bidi-theme-font: minor-bidi; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span dir="RTL"></span><span dir="RTL"></span></span>the market. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The lower
the yield from rental income, the less money there is to pay for the carrying
costs of the property. Investors should only be willing to give up this income if
they think that the property will appreciate significantly. Their thinking is
that they will be able to make enough money when they sell that it doesn’t
matter if they don’t receive significant income while they hold the property.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Admittedly, even
in 2002, the rental yields were already borderline from this perspective.
Rental yields should really be 8% or higher for the investment to be considered
sound. Otherwise, there tends to be little excess from the rental income after
paying off mortgages, maintenance and other expenses from owning the apartment.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Yields in
Modiin<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I ran the
same calculation on my apartment today, and here is what I am seeing:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 85.5pt;" valign="top" width="114"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>2014<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Home Price<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 85.5pt;" valign="top" width="114"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,500,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Rental<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 85.5pt;" valign="top" width="114"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
8,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Rental / Year<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 85.5pt;" valign="top" width="114"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
96,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 103.25pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
Yield<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 85.5pt;" valign="top" width="114"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3.8%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Basically,
this is insane.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
To
illustrate how insane this is, just consider: if you borrowed 70% of the value
of the apartment, a 30-year fixed mortgage at 5% would cost you 8,700 shekel
per month. This is more than the rent!<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Why would
any investor buy at these prices? I am not entirely sure, but I can think of
three ways it possibly could make sense.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Way #1:
Property Values Continue to Rise<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
The most obvious
way to understand this situation is that investors think that the rate of
appreciation that we have seen in recent years will continue for years to come.
To illustrate, here is how the property will increase in value if the rate of
increase continues to be about 10% year-over-year:<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Home Price<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2014<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,500,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2015<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2,750,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2016<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,025,000<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2017<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,327,500<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2018<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3,660,250<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2019<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 76.5pt;" valign="top" width="102"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4,026,275<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In this
forecast, after you sell the property in 2019, you would have made 1.5 million
shekel. Considering that you only invested 750,000 shekel (30% of the 2.5
million), you actually have a total return of 200% on your investment! <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Even after
taking into consideration closing costs on both sides of the sale, and even
assuming that you lost 1,000 shekel per month on the difference between the
rental income and your carrying costs, you still made a tremendous amount of
money.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You really
have to be quite insane to think that prices will appreciate this much, but
this level of insanity has happened before (“America”) and could be happening
again. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Alternatively,
it could be that something else is going on.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Way #2:
Rents are Going Up<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Investors may
be thinking that rental prices will be increasing sharply in the years to come.
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This may
have some actual basis from what seems to be happening in my neighborhood right
now. The demand for rentals is way out of pace with the available supply. I hear
story after story of people who just give up and look in a different
neighborhood because they simply cannot find any apartments available for rent.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If so, we
may just see a sharp rise in rental prices in the next couple of years. Here is
what the yield will look like on the 2.5 million shekel apartment with 10%
increases in rent year-over-year.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table border="1" cellpadding="0" cellspacing="0" class="MsoTable15Grid1LightAccent1" style="border-collapse: collapse; border: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;">
<tbody>
<tr>
<td style="border-bottom: solid #9CC2E5 1.5pt; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Rent<o:p></o:p></b></div>
</td>
<td style="border-bottom: solid #9CC2E5 1.5pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-alt: solid #9CC2E5 1.5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 153; mso-border-bottom-themetint: 153; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Yield<o:p></o:p></b></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2014<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
8,000<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
3.8%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2015<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
8,800<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4.2%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2016<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
9,680<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
4.6%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2017<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
10,648<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
5.1%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2018<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
11,712<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
5.6%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2019<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
12,884<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6.2%<o:p></o:p></div>
</td>
</tr>
<tr>
<td style="border-top: none; border: solid #BDD6EE 1.0pt; mso-border-alt: solid #BDD6EE .5pt; mso-border-themecolor: accent1; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 49.25pt;" valign="top" width="66"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
2020<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 1.0in;" valign="top" width="96"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
14,172<o:p></o:p></div>
</td>
<td style="border-bottom: solid #BDD6EE 1.0pt; border-left: none; border-right: solid #BDD6EE 1.0pt; border-top: none; mso-border-alt: solid #BDD6EE .5pt; mso-border-bottom-themecolor: accent1; mso-border-bottom-themetint: 102; mso-border-left-alt: solid #BDD6EE .5pt; mso-border-left-themecolor: accent1; mso-border-left-themetint: 102; mso-border-right-themecolor: accent1; mso-border-right-themetint: 102; mso-border-themecolor: accent1; mso-border-themetint: 102; mso-border-top-alt: solid #BDD6EE .5pt; mso-border-top-themecolor: accent1; mso-border-top-themetint: 102; padding: 0in 5.4pt 0in 5.4pt; width: 81.0pt;" valign="top" width="108"><div class="MsoNormal" style="margin-bottom: 0.0001pt;">
6.8%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Also here,
you have to be somewhat insane to think that people will be willing to pay over
14,000 shekel per month to live in a 5 room apartment. Although Modiin is the
best place in the world to live, unless incomes rise sharply, it is hard to see
how anyone could afford this. <o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
It could be
that investors are anticipating some amount of increase in both real estate prices
and rents in a combination that somehow makes sense. </div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Or, it could be something
else is going on.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Way #3:
Something Else is Going On<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Perhaps
this has nothing to do with investors at all. Actually, the fact that there are
so few rentals available may indicate that most of the homes in the area are
occupied by owners. If that is the case, people may be buying homes less for an
investment and more to simply live in them.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
This could
explain the prices we are seeing, as people will tend to spend as much as they
can afford to get the home that they want. In the past 5 years, we have been in
a period of extremely low interest rates which has enabled people to borrow much
more than if rates were at more normal levels.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If this is the
primary driver of prices, we should expect them to remain high (and climb
higher) as long as borrowing costs remain low, demand remains strong and supply
is constrained. In practical terms in my neighborhood, it would mean that these
prices are not moving as long as people want to live here, no one wants to move
and the Bank of Israel keeps interest rates low.<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you are
investor, your risk is that any of these things could change. The rental yield
is very low, which means your investment succeeding depends on rents rising,
real estate prices increasing, or both. You would basically be betting that none
of these factors will change. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>An
Accidental Answer<o:p></o:p></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If you are
planning to invest in real estate in Israel purely as an investment, I think
you should look carefully at the rental yields and find an area where the numbers
make sense. I don’t know where this is, but it is not in Modiin.</div>
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<br /></div>
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</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
However, if
are planning to invest in real estate because you need a place to live, that is
entirely a different matter. In fact, it deserves its own treatment in next
week’s blog.<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com10tag:blogger.com,1999:blog-1687943522027007206.post-41707905034783923052014-05-21T10:19:00.000+03:002014-05-21T10:19:25.199+03:00The Situation in Ukraine<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Many of my
loyal readers – and especially those named, “Anonymous” – have asked me to
analyze the financial impact of the situation in Ukraine. This is no longer a
topic that we can ignore.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>Ukraine
by Accident<o:p></o:p></b></div>
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<br /></div>
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You can go anywhere
on the internet to learn about the situation in Ukraine, but only at Investing
by Accident can you get this accidental summary:<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .4in; margin-right: .6in; margin-top: 0in;">
Years
of corruption and unrest led to a rebellion (“coup”) which was followed by an
intense dispute about the succession of Crimea from Ukraine and its accession
to Russia (“Putin”). Let’s just say, turmoil (“situation”).<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Actually,
now that I reread this summary, maybe you should go to the internet and find a
geo-political non-expert to explain the situation to you. I stopped listening
to the news many years ago when the Department of Homeland Security began
making it depressing (“fuchsia”). Since then, I’ve been getting all of my news
from my wife’s status updates. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
As far as I
know, the most significant thing that has happened in the past several months
is that many, many people agree that <a href="http://aliyahbyaccident.blogspot.co.il/2014/05/facebook-is-for-snarkers-or-get-off-my.html">I am a second rate husband</a>.
But I am ok with this because it means that expectations should be lower.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>“Global
Economic Impact”<o:p></o:p></b></div>
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<br /></div>
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You should
care about the situation in Ukraine not only for the obvious reason that it
impacts many human lives, but also because of the “Global Economic Impact.” By
this, I mean of course, the impact that the situation will have on the
accidental Israeli investor. <br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></div>
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To
understand this important ramification, I turned to <a href="http://israel.mfa.gov.ua/en/ukraine-il/trade">the website for the Ukrainian embassy in Israel</a> where I found this actual list of what is imported
to Israel from Ukraine:</div>
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</div>
<ul>
<li>grain
(50.6%)</li>
<li>non-precious
metal (18.2%)</li>
<li>aircraft
(6.9%)</li>
<li>food
industry byproducts (5.8%)</li>
<li>oil seeds and
oleaginous fruits (3.3%)</li>
<li>fats and
oils of animal or vegetable origin (1.5%)</li>
<li>electrical
machinery (1.2%)</li>
<li>nuclear
reactors, boilers, machinery (1.1%)</li>
</ul>
This list
raises three important questions:<div>
<br /><div>
1. <i>What
about the other 11.4%?</i><br /><br /><div>
2. <i>Would you
fly in a Ukrainian-made aircraft?</i> I’m not saying that I wouldn’t. It just
seems like something we should talk about.<br /><i><br /></i></div>
<div>
3. <i>What
about the dogs?</i> </div>
<div>
<br /></div>
<div>
My Friend told me that his daughter’s day care teacher has
a side-business importing Ukrainian-bred dogs. Or, at least he thinks that she
is Ukrainian. She may just be Russian. He is an American child of the ‘80s and
really can’t tell the difference. To him, the entire region just looks like a
chapter of Animal Farm. </div>
<div>
<br /></div>
<div>
Oh, yeah…
and I almost forgot:<b><i> Nuclear Reactors!?</i></b></div>
<div>
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<b><i>
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--></i></b><o:p></o:p></div>
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First of
all, if you are trading nuclear reactors, is that really something that you
want to write about on your website? I guess the answer is “yes” because I am
writing about it on my website. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
But, more
importantly: how exactly are “boilers” and “nuclear reactors” in the same
category?<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Does this
mean that I could have installed a safe and clean Ukrainian-made
nuclear-powered hot water heater when I built my apartment? This seems to me
like a terrible missed opportunity. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>About
Grain<o:p></o:p></b></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Nuclear
reactors and second rate husbands aside, my biggest concern here is grain. I
did some more non-expert research on this topic and I discovered the disturbing
reality that Israel is dependent on imports for its grain supply. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Most of Israel’s
grain comes from the “Black Sea Region,” but fortunately, Israel has taken
steps to diversify. I know this because <a href="http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Tel%20Aviv_Israel_2-13-2014.pdf">the USDA is carefully watching Israeli grain production</a> in order to predict how much grain Israel will buy from the
United States. I’m not sure what is more incredible about this: the fact that
someone is actually doing this analysis, or the fact that I find it by
searching on the internet.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
In any case,
the important point here is that I should still be able to get my Friday <i>rugalech</i> even if grain exports from the Black Sea Region are disrupted.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b>An
Accidental Call to Action<o:p></o:p></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
If foreign
dependency on grain were just a national security issue, you would not need a
non-expert like me to discuss it. </div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
You need me because this is also a messianic
problem. I made my own list of the goods that Israel should be producing in
surplus based on Deuteronomy <span style="font-family: Arial, sans-serif;">8:8</span>, and it goes like this:</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
</div>
<ul>
<li>wheat</li>
<li>barley</li>
<li>wine</li>
<li>figs</li>
<li>pomegranates</li>
<li>olive oil</li>
<li>date honey</li>
</ul>
Using
careful conjecture based on what I am able to find on sale in the supermarket and/or
pick directly from the trees in public parks, I believe we have achieved the
required level of surplus for all items except for grain.<br />
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<br /></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
Readers, we
need to find a way to grow grain in the desert. Stop messing around finding
ways to make the plastic bags even thinner and start working on a real problem.
If it would help, you can borrow some of my nuclear-powered hot water.</div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
</div>
</div>
</div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com15tag:blogger.com,1999:blog-1687943522027007206.post-73326840807100007242014-05-14T11:55:00.000+03:002014-05-14T11:55:10.139+03:00Investing by Accident at the Movies<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<o:p></o:p></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
I was recently in America on business, and I had the opportunity to
screen several movies during the long flights. I am an intellectually
sophisticated elite, so I was naturally attracted to films which would broaden my
perspective on life. Several of these films stood out as pertinent to my field
of non-expertise (“investing”); so naturally, I thought I would share my reviews
with you.</div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<b>Movies by Accident<o:p></o:p></b></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
One great film for the investment-minded is <b>Moneyball</b> in which
Brad Pitt shows that people are really stupid and that geeks will always do a
better job. In this case, the geek is Jonah Hill who brings business analytics
to baseball. In retrospect, it is quite surprising how long it took for this
shift to happen. For years, we have seen that geeks with a computer can figure
out much better how to invest your money than the sleek businessman with a
touching sales pitch. <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
Another good movie that I watched by accident was <b>Jack
Ryan: Shadow Recruit</b> in which a young Captain Kirk goes to work for the
CIA. He discovers a sinister plot to destroy the U.S. economy by selling off
treasury bonds and the only way to keep everyone safe is to drive an exploding
truck off a bridge in New York City. If you have no idea how that makes any sense,
you are not alone. Kevin Costner doesn’t understand it either and <i>he is in
the movie</i>. The lesson here is clear: do not buy treasury bonds.<o:p></o:p></div>
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<br /></div>
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The major downside of this movie is that Keira
Knightly doesn’t appear anywhere near as much as she should; and also, that she
talks funny with an American accent. I recommend that we do this movie over
again in England with more Keira and less Kirk. We can keep Kevin Costner, but
I don’t see any reason why he needs the stray dog. Also, what have movies come
to if the scariest plot we can think of revolves around selling treasury bonds?
<o:p></o:p></div>
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<br /></div>
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Finally, if you have way too much time until the plane
lands, you may want to see <b>The Wolf of Wall Street</b>. This is an
incredible film with an absolutely stunning performance by Leonardo DiCaprio
who teams up with Jonah Hill to teach us that we should never buy any financial
products if someone wants to sell them to us. Although, to be honest, we pretty
much knew this already.<o:p></o:p></div>
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<br /></div>
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The only reason to avoid this film is that it is severely
challenged in the “family friendly” category. Unless, you are looking for an
exploration of some of the essential characteristics of human males that
eventually lead to families. In that case, this film is extraordinarily
friendly. <o:p></o:p></div>
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<br /></div>
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<b>Donny Ryan: The Modiin Identity<o:p></o:p></b></div>
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<br /></div>
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All this movie watching made me realize that I may be
missing the mark by just writing a blog and that I need a movie to really reach
people. That is why I started writing my own script for a movie that I call <i>Donny
Ryan: The Modiin Identity</i>. It is a semi-fictional semi-auto biographical
action-thriller that goes like this:<o:p></o:p></div>
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<br /></div>
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The movie opens with our hero, Donny Ryan, at an
ordinary desk job where we see his Outlook calendar full of meetings. We then
see our hero going home from work only to meet his Friend on the train,
completely by accident. They engage in a humorous discourse about how Israelis
always eat ice cream while waiting for a train. To illustrate the point, the
Friend picks up a discarded ice cream wrapper, but inside he finds secret
codes. Using free Wi-Fi on the train, our hero and his Friend use the codes to break
in to an international super computer system. <o:p></o:p></div>
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<br /></div>
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Like all super computer systems in movies, it has a
really nice user interface which he can control easily with gestures without
every encountering a bug. In there, they turn off the air conditioning on the train which
is too cold and also find an algorithm that can predict where the next major archeological
find will take place. Using the GPS on a touch enabled device provided by a
large technology company that paid us for product placement, the dynamic team tracks
down the exact location which turns out to be in the center of Modiin. This is
very convenient because they are on the train anyway.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
Except that when breaking into the super computer
system, our heroes accidently triggered a failsafe that was programmed years
ago by an off-the-books secret government agency that had been training a pack
of wolves to attack their enemies by first pretending to be adorable puppy dogs.
The wolves are unleashed, and our heroes have no choice but to start a
dangerous high speed chase using a company-leased car that is full of groceries
in those wonderful reusable shopping bags that will be provided by any supermarket
chain that will pay us for product placement. They drive the car straight into
the Mediterranean Sea to save themselves and the world before time runs out.</div>
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<br /></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
<span style="background-color: transparent;">I think the
plot has a lot of potential. I even included a prominent semi-comedic supporting
role so that Jonah Hill can have a part. Right now the script is family friendly,
but if necessary, we could have all of the female characters take off their
clothes at various points in the film if that would help it sell better. </span></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
<span style="background-color: transparent;"><br /></span></div>
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<span style="background-color: transparent;">Contact
me if you want to option it.</span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<o:p></o:p></div>
Donnyhttp://www.blogger.com/profile/00393238234242790016noreply@blogger.com12