The Next-Gen Israeli Investors Are Reshaping the Market
Israel’s stock market is witnessing a tectonic shift. A new generation, predominantly aged 18 to 30, is stepping into the arena and redefining how the market behaves. A striking indicator: half of newly opened trading accounts are now at brokerages rather than traditional banks. This isn’t a one-off marketing stunt; it signals a broader trend as young investors gain confidence and seek different paths to growth.
Where Are the Markets Heading? Three Scenarios
Analysts outline three plausible futures for the Israeli market, each with potential gains for the country regardless of which path unfolds.
Scenario 1 — Banks Hold Ground, but with a New Taste for Competition
Banks continue to be major players, yet they face pressure to innovate. Promotions and new account incentives keep drawing the younger crowd, while traditional revenue from trading commissions remains a backdrop. The result could be a hybrid market where banks retain a large client base but lose a portion of new accounts to brokerages and digital platforms.
Scenario 2 — Brokerages Take Center Stage
Brokerage platforms expand thanks to lower fees, better user experiences, and targeted offers for young traders. The influx of new accounts from 18-30-year-olds accelerates liquidity and trading volumes, potentially compressing margins for banks and reshaping how brokers monetize trades and custody services.
Scenario 3 — Global Flows Amplify Local Gains
The strong performance of global indices, especially US equities, is drawing more Israeli investors into international markets. As young traders gain experience, they diversify into NASDAQ, S&P 500 tracking funds, and then broaden to global indices. This international tilt can bolster the domestic market when local securities track global demand, amplifying returns for savvy, long-term portfolios.
The New Investor Profile: Young, Educated, Global-minded
Research from the Israel Stock Exchange indicates that the wave of young investors is the main driver of recent shifts. The average age of first investing is about 30, but those who actively manage their portfolios tend to be younger and more confident. About 23% of active investors are aged 18-29, with a large share of the remainder aged 30-49. Most active investors hail from central Israel and hold higher education degrees, and they tend to be more secular in their financial outlook.
Markets aren’t just about numbers; behavior matters. Where once a downturn prompted alarm bells, today’s young investors are more likely to stay the course, leveraging education and online resources to ride volatility rather than panic. This attitude helps explain why brokerages report rising account openings while banks push to keep pace with friendlier policies and lower fees.
Examples of the New Entry Points
Banks have experimented with aggressive promotions to woo new money. For instance, a major bank offered two of its own shares to customers—worth about 120 shekels at the time—encouraging clients to hold them in a bank trading account. Yet data show that the average age of those choosing the stock gift skews older (46), and many younger customers prefer cash incentives or hold their investments outside the bank altogether, seeking global exposure through U.S. markets.
Another pathway is digital banks. A prominent digital lender offers young investors (18-30) zero management fees on portfolios up to 200,000 shekels, a compelling contrast to typical 0.5% annual fees charged by some banks. It also reduces trading costs to flat fees and provides favorable terms for international trading, which aligns with the growing interest in US-listed tech stocks and ETFs among the youth.
The Data Behind the Change: S-curve of Adoption and Local Outperformance
Investors have historically started with the benchmark S&P 500, but Hebrew-language market data show a rapid expansion into broader indices and local market products. In recent years, Israeli investors who began with S&P 500 exposure have cascaded into NASDAQ, global indices, and now local Tel Aviv-35 and bank/insurance trackers. Local market outperformance in the last two years supports a case for continued growth of domestic instruments alongside global diversification.
Stories from the Ground: Real People, Real Growth
Tell the tale of young professionals and students who turned to the market as a path to financial resilience. A 25-year-old from the south notes that a stock-focused, U.S.-leaning portfolio allowed him to fund a bridge between teaching and career advancement. A 27-year-old social worker in the periphery describes how grants and early investments stabilized their family finances and funded a first home. These narratives illustrate a broader trend: disciplined, informed youth investing is more common, and it’s contributing to pension-like resilience in a challenging economic landscape.
Conclusion: A Market Remade by its Youngest Participants
While banks still command a large share of trading activity, the next generation is recalibrating the market’s center of gravity. With falling barriers to entry, lower fees, and a growing appetite for U.S. and global exposure, young Israeli investors are reshaping both where and how money is invested. The result could be a more dynamic, globally connected Israeli market, with the potential upside clear across scenarios for the country’s capital markets.
