What Should You Do With Your Money During Wartime?

The Israeli reality teaches us that wars are not confined to borders alone. They also reach our bank accounts, investment portfolios, and, perhaps most of all, our sense of financial security.
Should you exit the Capital Market? Should you convert your money into U.S. dollars? Or perhaps remain completely indifferent?

As always, it is better to rely on data rather than emotions. Let’s take a look at what happened during previous military operations and what we can learn from them today.

In retrospect, nearly every security conflict led to short-term declines in the capital markets. However, in most cases, the market recovered quickly and went on to record solid gains. During Operation Protective Edge (July-August 2014),
The TA-35 Index declined by around 3.5% during the operation. Within three months after its conclusion, the index had risen by more than 6%.
During Operation Guardian of the Walls (May 2021), the TA-35 Index declined by around 2.8%. Yet two months after the operation, the index recorded gains of over 10%.

We all still remember the Iron Swords War (October 2023) period well. During the first two weeks, the TA-35 Index declined by around 6% as the U.S. dollar strengthened. What many people forget is that within two months, the market returned to its previous level and continued rising. By the end of 2024, the Israeli stock exchange (TASE) ranked at the top of global return tables.
Since the outbreak of the war with Iran, the Israeli stock market has risen by more than 2%.

The common thread is clear: The Israeli public has internalized the fact that while wars may disrupt markets in the short term, over time markets tend to recover, and often rise even higher.
Those who panic and sell often miss the recovery. Those who stay the course and adhere to the strategy they originally defined are more likely to benefit.
Moreover, if the current conflict concludes with the removal of the Iranian threat, which for decades has undermined Israel’s security reality, it could pave the way for many years of relative security.
This, in turn, may lead to additional peace agreements with Arab countries, economic growth, improved corporate profitability in the Israeli market, and the return of foreign investors.
If these developments materialize, the Israeli economy could experience significant and sustained growth.

Five recommendations: What should you do with your money during wartime?

Review your diversification

Ensure you are not overly exposed to a single sector (for example, real estate or Israeli shares alone). Geographic and sector diversification is especially important in times like these.
Opportunities often present themselves during downturns or ahead of meaningful growth
Those who acted wisely in March 2020 (at the onset of COVID-19) or in October 2023 ultimately benefited. If you have patience and available capital, market declines can represent a thoughtful entry point, not an exit.

When It Comes to Your Pension – Hands Off!

The long term is your ally. Changing your pension investment track or withdrawing pension funds out of fear can reduce your future pension benefits by tens of percent. Time takes its course.
The Bottom Line: Wars create economic, security-related and emotional noise. But as Israeli history has shown, most investors who ultimately benefited were those who stayed the course or knew how to identify opportunities before they became obvious, taking cover at the first sign of danger.

If there is one important rule, it is this:
In wartime, you do not manage your money like a soldier. You manage it like a commander. You think ahead. You remain calm. You look beyond the immediate horizon and plan for the future.

This article is not a substitute for personalized professional advice.

Nadav Tesler