WHEN YOUR HOA Invest Its Reserves?

Investments should be produced with the correct authority, caution, and help. Your homeowner’s association (HOA) has diligently been adding to its reserves account and now would like to invest that money to possibly grow it even more. Like a nonprofit, your HOA has the capacity to generate profits on your reserves. The answer depends on several factors.

The regulating documents of your HOA include rules and policies about your reserves and may include an investment policy. Often, this vocabulary is hazy if included in any way. As a member of the panel, you’ve been appointed to control your HOA’s reserves and to respond in the needs of your community’s homeowners.

Because of the many HOAs will only choose investments that protect the principal of their reserve accounts, such as certificates of deposit (CDs) or some other interest-bearing account. In case your board chooses to go this route, your reserves likely gained grow as much as they could in riskier investments, but you’ll have the security of saving your primary with the reward of earning a few extra dollars. Those on your board came from a number of backgrounds, which may or might not include a strong understanding of financial markets and investments.

Never fear-you don’t have to look it alone. You can hire an investment consultant familiar with HOAs to help, which may be important if your HOA has large reserves especially. But remember, even though you hire an investment advisor, it is still your fiduciary responsibility to keep tabs on all actions made by that advisor. However your panel chooses to invest its HOA reserves, it’s important that you’ve completely investigated all investment options. After all, you’re trading with other people’s money-including yours. This article consists of general information. Individual financial situations are unique; please, consult your financial advisor or tax lawyer before utilizing any of the given information contained in this article. Should You Hire An HOA Management Firm? What is an HOA or Homeowner Association? Why Have a specialist Reserve Study? THE FANTASTIC Debate: Should We Reserve for Siding?

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