With traditional reserve investments such as money markets and one-year C/D’s yielding almost no return and with inflation still chugging along, many Boards are considering riskier investments to capture a higher yield. Is the economy strengthening? Are we on the brink of disaster? Or does the truth lie somewhere in between these two extremes?

Strategies to Maximize Association Reserve Funds

Do not put your reserve funds at risk but employ several cost-effective techniques for asset management.

  1. Go longer term on your C/Ds. A five-year C/D rate can equate to the inflation rate.
  2. Consider C/D’s from federal credit unions. These C/D typically pays a much higher return than bank C/Ds.
  3. Consider a capital reserve initiation payment. State law allows Boards to establish such a payment. If you already have one, raise it a few more dollars.
  4. Consider direct investments in U.S. Treasury bonds to cut out the middleman and thereby increasing your return.
  5. Stay away from any type of bond fund as their values have no way to go but down.

In summary, to offset low-interest rates on HOA reserve funds, utilize all means of boosting your reserve before even considering investments that risk your principal. Remember, this money is not yours.

We have found that the Pentagon Federal Credit Union is a company offering some of the best rates. You do not need to be a government employee to join.

Determine how much savings from a deposit.

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