My association wants to invest reserve funds in the stock market to earn a profit, rather than let them sit in a low interest savings account. Is that a good idea?
No. Both a homeowners association and a condominium association are non-profit organizations, and its funds are to be preserved. Directors should act as fiduciaries, preserving and managing funds by considering investments in the best interest of the association. Prudent investments include savings accounts, money market, and certificates of deposit (CD’s) to the extent fully insured by Federal Government, and certain bonds and notes of the state and the U.S. Government, such as treasury notes, bills, and bonds. The association board should adopt, publish, and follow an investment policy, and should err on the side of full disclosure.
