Why an inner suburbs small apartment considered a risky investment
The banks see small apartments as a higher risk because usually very small apartments are harder to sell, especially during a falling market when there is an oversupply of these apartments. The price of small apartments will also fall a lot quicker in a falling market. Regarding yield vs capital growth - the emphasis here is manly on high yielding properties in small country towns with small populations. How many properties can you buy with cash? Properties with good growth will enable you to build equity quicker and enable you to build a larger portfolio. In my opinion you need a combination of good yield and reasonable growth, because without yield you cannot replace your earned income with passive income, but without growth you can't expand your portfolio. So a combination of good yield with reasonable growth will give the best outcome.
So your accountant certainly knows much more than I do about Israeli tax law and its interactions with US tax law, which is zero.  I'm going to look at this problem from the investment perspective which I hope to convince you is the most important place to start. Then you can adjust for interactions between the Isreali and US tax codes. Even if the tax breaks are exceptional, it would be hard to recommend buying real estate as an investment in the 7-10 year time frame.  Especially if this real estate is in the US.  Open/Closing fees, mortgage fees, risk of property devaluation, bad-renters, acts of god, insurance costs and tax complications make short to medium term investments in real estate a particularly risky way to invest.  Buying a local apartment and renting is somewhat more reasonable as you don't have to worry about the currency conversion and you can do a lot more research in your local environment and keep a closer eye on the property, it is  still this a pretty concentrated risk. Saving and investing using tax-advantaged accounts is generally considered a great way to build toward a down payment in the medium term.  A mixture of mostly local bonds with some local and foreign stocks and more and more cash as it gets close to purchase time is generally what is recommended when saving for a home.  This mixture is relatively safe and will tend to grow steadily without the concentrated risk of a real estate investment.  PFIC rules are complicated and certainly worth taking some time to understand, but owning real estate especially in a foreign country seems much more complicated and certainly riskier. There may be some rule that makes investing in REITs much better than normal stocks in these particular accounts though I would be surprised if that were the case.  It is generally not true for people under just he US tax code. So while option (1) may not be the absolute best from a tax perspective it would certainly be my guess as the most likely to succeed. I think of these things in terms of risk.  Investing in individual stocks is risky, and investing in brand new individual stocks is riskier still. However, the payoff can be quite high.  The fact that you work at the company increases your exposure. If the company goes under, then not only have you lost your investment, but you've lost your job and income as well.  It really depends on how much of your total portfolio this investment represents. Consider the following: If you can say yes to all or most of these, then a small investment in your company is fine. If you end up losing your investment, you'll still be okay.  I think it can help a company when the employees have a little skin in the game. I hope it pays out big for you. Equal weighted indexes are not theoretically meant to be less volatile or less risky; they're just a different way to weigh stocks in an index. If you had a problem that hurt small caps more than large caps, an equal weighted index will be hurt more than a market-cap weighted one.  On the other hand, if you consider that second rung companies have come up to replace the top layer, it makes sense to weigh them on par.  History changes on a per-country basis - in India, for instance, the market's so small at the lower-cap end that big money chases only the large caps, which go up more in a liquidity driven move. But in a more secular period (like the last 18 months) we see that smaller caps have outperformed. It is not so useful because you are applying it to large capital. Think about Theory of Investment Value. It says that you must find undervalued stocks with whatever ratios and metrics. Now think about the reality of a company. For example, if you are waiting KO (The Coca-Cola Company) to be undervalued for buying it, it might be a bad idea because KO is already an international well known company and KO sells its product almost everywhere...so there are not too many opportunities for growth. Even if KO ratios and metrics says it's a good time to buy because it's undervalued, people might not invest on it because KO doesn't have the same potential to grow as 10 years ago. The best chance to grow is demographics. You are better off either buying ETFs monthly for many years (10 minimum) OR find small-cap and mid-cap companies that have the potential to grow plus their ratios indicate they might be undervalued. If you want your investment to work remember this: stock price growth is nothing more than You might ask yourself. What is your investment profile? Agressive? Speculative? Income? Dividends? Capital preservation? If you want something not too risky: ETFs. And not waste too much time. If you want to get more returns, you have to take more risks: find small-cap and mid-companies that are worth. I hope I helped you! Before investing, absolutely follow the advice in mbhunter's answer. There is no safe investment (unless you count your mattress, and even there you could find moths, theives, or simple inflation taking a chunk out of your change).  There is only maximizing your reward for a given level of risk - and there is always risk. This question should be enshrined somewhere on the Q&A site for its comprehensive list of sources for information on asset allocation.  The tag is also going to have tons of good information for you. To answer your question on what slice of the pie is devoted to what, you can check out some common portfolios given by U. S. experts for U. S. investors - these should be convertible into Australian funds. Another portfolio that is, like all those above, loosely based on Modern Portfolio Theory for maximizing reward for a given level of risk is the Gone Fishin' Portfolio. A common denominator amongst these portfolios is that they emphasize index funds over mutual funds for their long-term performance and preference lazy management (yearly rebalancing is a common suggestion as the maximum level of involvement) over active management.  You can see more Lazy Portfolios. Besides the long-term concern about which is cheaper, which has already been addressed by other answers, consider your risk exposure. Owning property has financial risks associated with it, just like owning stocks or bonds. The risk-related downsides of owning a home as an asset include: The risk-related upsides of owning a home as an asset include: Taking on some risk can save you (or earn you) money in the long run (that's why people buy risky stocks, after all) but consider how well you're equipped to handle that risk before you rush out to buy on a naive analysis of what's cheaper. I researched quite a bit around this topic, and it seems that this is indeed false. Long ter asset growth does not converge to the compound interest rate of expected return. While it is true that standard deviations of annualized return decrease over time, because the asset value itself changes over time, the standard deviations of the total return actually increases.      Thus, it is wrong to say that you can take increased risk because you have a longer time horizon.  Source Probably means cutting the travel short. A small business owner employing specialist staff needs to identify and plan for this risk.   The plan might be to personally cover for the staff until a replacement is found.   Ideally in this situation the business will be able to support the salary of two staff in the role, even if one is part time or an apprentice/trainee. This is the approach our business takes with key staff.