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Are You Putting the Right Amount in Your Reserve Fund?

These funds exist to keep associations afloat during lean times

Winter is coming. It’s not just a popular Game of Thrones motto; it’s a reminder that bad things could crop up at any moment, so one must be prepared. As the first day of winter approaches, it’s a good time to look at how associations can best prepare for financial downturns. Often, that’s through a reserve fund. But how much does an association need? A recent seminar at Raffa Wealth Management set out to answer that question.

“When it comes to reserves, how much is enough?” asked Raffa’s Chief Investment Officer Mark Murphy, CFA. “Is it six months, 12 months, a percentage of budget? Well, there is no magic number.”

Murphy said determining reserve fund targets is unique to each association, with several items factoring in.

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