Reserve account earning interest

Started by WilliamS27 • 7 replies • 438 views

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WilliamS27 (Tennessee)
Posts: 1

Posted:

I am treasurer of an HOA and we are currently getting .015% interest on our reserve account. I've been trying to find an alternative to this ridiculously low interest rate and I'm having trouble. There are lots of on-line savings accounts, FDIC insured that are offering 3-4%, but the banks do not offer anything for a small business. Anyone know where I can turn ?

MaxB4
Posts: 3,513

Posted:

Credit Unions.

I just got an HOA 4.40% interest on a 12-month CD.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I agree with Max.

Ask the credit union if they will do a business account and go from there.

LetA (Nevada)
Posts: 2,679

Posted:

I Too agree. go to your nearest credit union and get a 12 month CD they are almost nearly 4.5%.
First I would go over your Reserve Study and invest an amount that won't put your reserves in a pinch.
From there When the CD matures, you can roll the CD over or withdraw all or a portion of the interest.

JackR9 (New Hampshire)
Posts: 8

Posted:

Check out local savings accounts, search BANKRATE.COM You want liquidy, being able to get your money quickly if need be. CD's might work, if you only sock away a portion that you believe you won't have to touch for awhile.

MarkM19 (Texas)
Posts: 1,459

Posted:

Jack,
I always suggest to boards I have been on to Ladder CDs so that all your funds do not renew annually. Maybe start out with a few 6 months apart and as funds are available purchase the next CD in the middle of the existing CDs. Remember your job as the treasurer is not to invest and take any risks. You are a Fiduciary, and your job is to make sure the funds are FDIC insured and the best, safest investments are made. Rates are on the rise and may continue in the next couple of years.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By JackR9 on 02/22/2023 5:55 PM
Check out local savings accounts, search BANKRATE.COM You want liquidy, being able to get your money quickly if need be. CD's might work, if you only sock away a portion that you believe you won't have to touch for awhile.

Rates are different for personal and commercial. Bankrate will show you personal CD rates.

CathyA3 (Ohio)
Posts: 6,299

Posted:

In addition to the credit unions, you may want to look at some of the brokerage firms. They typically offer money market accounts, CDs, and bonds (which are also suitable investments if held to maturity).

Also, you can increase the yield on your reserves by tying up your money longer. If you've kept up with your reserve studies and have a good idea of when money will be needed, you can do something like a CD ladder with maturity dates paralleling the times you'll need to spend funds. When we did our last study, I asked the company to provide the data in a spreadsheet, to which I had a few columns where we could track our reserve funds and projected earnings.

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