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KEN SCHACHTER
Special to The Jewish News
0
.
ne of the symbols in
the synagogue most as-
sociated with the High
Holy Days, along with
the shofar and the
prayer book, is the ubiquitous Israel
Bonds pledge card that worshippers
find at their seats. Indeed, American
Jews, from Rodeo Drive to Walnut,
Lake Road, have heard High Holy
Day appeals from synagogue pulpits
this year, and many — in seeming de-
fiance of Adam Smith's principles of
self-interest — are investing.
This year's High Holy Day appeal
generated $1,544,250 in Israel bond
purchases from 15 participating con-
gregations in metropolitan Detroit,
according to Hershell Wais, director
of Israel Bonds of Michigan. State-
wide figures have not been tabulated.
The 1988 figure is up from last
year, when $1,317,000 worth of Israel
bonds were purchased as a result of
the High Holy Day appeal. State-
wide, Michigan residents purchased
$20.3 million in Israel bonds in 1987,
Wais said.
First offered 37 years ago, Israel
Bonds continue as a financial anoma-
ly. It merely takes a glance through
the newspaper to see the maze of
higher yielding alternatives, like cer-
tificates of deposit, Bonds and
Treasury bills.
Part investment, part charity,
part statement of solidarity, Israel
Bonds are unique among financial
instruments.
"Certainly you can do better with
other financial investments?' Rabbi
Morton Gordon acknowledged.
"Whatever interest you're sacrificing
in the bond is considered a contribu-
tion to the State of Israel?' said the
spiritual leader of Temple Tovah in
Little Neck, New York. "A couple of
points — that's the least that a Jew
can do in America?'
26
FRIDAY, SEPTEMBER 30, 1988
The level of sacrifice is dictated by
the size of investment, with small in-
vestors shouldering a large share of
the load. Those who buy $250 cer-
tificates, for example, get no interest
at all. A $500 bond with a 15-year
maturity yields 4 percent simple in-
terest annually.
One Wall Street analyst, who ask-
ed not to be named, said, "Four per-
cent for 15 years is the pits;' he
declared. "To give you an idea of how
crummy it is, a three-month T-bill
yields 7.5 percent. For 15 years, you
could get about 9 percent. You only
have to go out three years to get 8.5
percent?'
At the $5,000 level, Israel Bond
buyers can get a variable-rate bond
whose rate is set midway between 5
percent and the prime rate. The prime
is set by commercial banks and
reflects the rate that they extend to
favored customers. In other words, if
the prime is 10 percent, the bond will
pay 7.5 percent.. The "floor" rate is 5
percent, even if the prime falls below
that mark. The bond must be held for
12 years before redemption, unless it's
used in an employee benefit plan, in
which case it can be pulled in three
years.
Here, too, the analyst dismissed
the return as unimpressive. "If
anybody wants to buy these things,
they'd be buying for reasons of senti-
ment," he said.
Even an investment professional
inside Israel Bonds conceded that
while bonds provide an "inexpensive
way to participate" in the Israel ex-
perience, alternative investments
often pay more. Still sentiment can go
a long way. Thus far $9 billion have
poured into Israeli coffers through
bond sales. Purchases now are runn-
ing at a rate of $600 million a year.
The money is spent on projects such
as the national water carrier, the
Hadera power station and roads in
the Negev.
In the beginning, the Israel Bonds
professional said, "we sold mostly to
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AS FISCAL AGENT
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