Policy 13
/Investment of reserves
The Board of Directors shall have the power to invest and reinvest association funds and to take all actions necessary and proper in connection therewith.
Goals and Objectives:
The association’s capital replacement reserve assets shall be invested to achieve the following objectives.
Promote and ensure the preservation of the reserve fund’s principal.
Structure maturities to ensure availability of assets.
Mitigate the effects of interest rate volatility upon reserve assets.
Achieve long-term investment performance that exceeds inflation.
Investment Strategy:
Select and stagger investments so that they mature in one-month to seven years.
Reserve account investments will typically benefit from long-term rates, which are often higher than short-term rates, while maintaining ready availability of funds and cash flow.
The association may veer from this strategy when reserving a portion for a specific expense or more favorable interest rates. The General Manager and Treasurer will review the most recent reserve study to match the effective maturities of investments to the dates of the expenses.
Effective maturity may be sooner than stated maturity.
Selection Criteria:
Investments will be selected with an emphasis on these characteristics: preservation of capital; quality; effective maturity; net after-tax return. All investments will be fully Federally insured (by FDIC, SIPC, or NUCA, etc.). The General Manager and Treasurer will review account statements on a monthly basis to ensure that aggregate balances at each financial institution do not exceed the maximum insurance limit ($250,000 as of 2023).
The approved investments for such funds are:
Money Market Funds (insured by FDIC, NCUA, or SIPC)
Certificates of Deposit (insured by FDIC, NCUA, or SIPC)
Effective 18 September 2005, revised 17 December 2023.
Approved by the Board of Directors in regular session 18 September 2005, John W. Mulhern, President.
