investing

That question is best addressed by a financial advisor and you should be doing your own research on the risks so you can have a thoughtful conversation with him or her. The main thing to remember about reserves is to protect the principal while earning interest - that should be your primary issue when considering where to put the money.

The usual recommendations that I've seen are to invest in things that guarantee a return of principal. This means fixed income investments that have either FDIC or NCUA insurance (NCUA is the equivalent for credit unions) or government bonds that are held to maturity.

Note that corporate bonds are not insured by the federal government, unless you're talking about Ginnie Mae" securities. In fact, they're considered to be riskier investments, and some fall into the "junk bond" category. The only protection is the solvency of the issuing corporation, and investors need to be skilled at assessing that.

Even if you ignore the board's fiduciary duty, consider what would happen if the board did invest in something that loses money and then needs a special assessment to pay for some reserve spending. The community would likely hold a recall election to get rid of the current board, and the new board would promptly sell the losing investment at just the wrong time. Any funds that need to be available on a particular time schedule should not be invested in assets whose value changes regularly.

The markets make monkeys out of professional investors and the overly confident.

I agree. If other corporations - even other non-profits such as charities that can accept donations - were forced to live under the same constraints as HOAs, they wouldn't survive long. Along with the (IMHO unrealistic) assumption that your average volunteer homeowners are capable of running a large corporation that is hobbled in many ways, these are my two main complaints about community associations in general.

In many ways condo associations have it worse since their demographics lean toward owners with short time horizons: namely, first time buyers and retirees on their eventual way to continuing care facilities. These folks truly don't care what will happen in 15 years. In addition, a greater percentage of the community is common elements that must be maintained by the association, whereas large portions of the typical single-family home HOA are owned by individuals who maintain their own property.

The best that the HOA board can do is to keep up with their reserve studies so that they have a good idea of when and how much money will be needed, and then tie their investment decisions to that. We asked our last reserve study company to provide the results in a spreadsheet, and we added a few columns to track our reserve funds along with spending projections. CD ladders are often used by community associations (as well as older individual investors who don't have the time to wait out stock market gyrations).

If your funds are with a credit union, funds are insured by the NCUA. it is a independent agency
created by the US government tho not federally insured. NCUA insures up to $250,000.00

I would divide it between two different banks because of the 250 threshold.