Financial - Investing Reserve Funds

Started by AdrianC • 7 replies • 2418 views

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AdrianC (California)
Posts: 36

Posted:

After some ups and downs, a new management company and a realistic budget, we have managed to start accumulating some reserve funds.
We now want to split our investments among various banks/deposit holders.

Does anyone know of financial firms who will accept and place money in certificates of deposit with various banks, so that we only deal with the chosen company?

Thanks for the help.

HaroldS (Arizona)
Posts: 906

Posted:

Have you tried a low cost brokerage firm? Mine has placed me in banks all over the country, but right now I don't want to tie up my funds in CDs, and they themselves are paying the best rate for day to day interest. Be aware long term CDs are paying less than short term ones. Harold

SwanB (Washington)
Posts: 199

Posted:

Adrian: Your best bet is to shop around for an investment company as they are a dime a dozen and each one has a different investment stategy and a whole set of fees. You need to do your homework and ask yourselves a set of questions before you go there though: What kind of fees are you willing to pay for someone else to manage your money?
Are you able and/or willing to have your money tied up or do you need the money available and how available?...to what extent? What annual fees are attached to each investment you are looking into?
Lastly, why not do the footwork yourselves and save yourself the cost of the fees for an investment firm?

RogerB (Colorado)
Posts: 5,067

Posted:

Adrian, what is your logic for wanting to split investments among various banks/deposit holders? This creates additional time and expenses which are not offset by increased yield.

AdrianC (California)
Posts: 36

Posted:

Thanks for the support.

Our management company has suggested that we limit our deposits with any institution to the $100 000 that is FDIC insured.
To comply with the new Patriot Act laws, we would deal with one firm for ID purposes - thus one set of signatures & paperwork.

We are doing our homework on CD rates, probably with a maximum term of 1 year, and would stagger the term or rollover to give us access to a reasonable amount in any three month period.

Any comments and suggestions would be welcomed.

JohnM3 (Florida)
Posts: 288

Posted:

Adrian what I did was simple operateing account is in a bank that offers lock box service period. Reserve funds( Savings accounts) are put in to a FCU and we get 30-60-90 day revolveing cds. They are safe as roses make sure the FCU is geographically close to operateing account for ease of moveing money at end of month board meeting I always make a motion to move left over monies from operateing to reserve to allow us to get maxium interest possible . Try to geta fcu that allows 4 to 10 checks a month in case you goof in moving money . You will get the hang of it soon enough.
I use Banco Popular ( Cause they do HOA loans and they go lock boxes ) a close by FCU is my reserves.
All money is moved in check forrm only and is signed by President and Treas as per our docs.

JohnM3 (Florida)
Posts: 288

Posted:

1 more thing on your budget get your mc to Use TOPS Software and stay on top of them like a hawk to make sure the right monies are charged to the right account and after the 3 year you will have a very accurate picture of your budget process. The first year it took us 4 days to do the budget after the 3 year on TOPS it now takes me 2 hours and I am done for the year. Its a-w-e-s-o-m-e big time great financial tool. But watch the girls doing the inputs try to get internet access via you hoa web site to ride herd on it if you are tough for 2 to 3 years they get the message you are very serious and trhey will be carefull with your accounts. I know as thats how I got a handle on it. Learned from a CAI book on being a treas

DavidH3 (Florida)
Posts: 5

Posted:

Adrian
You should consider looking into a service called CDARs (www.cdars.com). This service allows you to deal with one bank who can allocate your money into CDs though other banks. The CDs are held by the Bank of New York and are all FDIC insured, provided you don't exceed the 100k limit in any one particular bank. The rates are comparable to what you could get by bank hopping, although they are a little less. The difference being what the banks charge to provide the service. It appears to be 25 to 30 basis points on short term CDs (i.e 5.25% as opposed to 5.5%) That can be a small price to pay as there is only one set of paperwork and you can choose which bank or banks not to invest in cds, but dont get to pick which ones TO invest in as that is chosen for you at the best rate.

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