There are no official standards for how hoa’s must invest reserve funds. California Civil Code does state “The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account…” It is the boards fiduciary duty to act in good faith and in the best interest of the association when investing reserve funds. HOA’s should invest in low risk investment vehicles such as certificates of deposit or treasury bills. Associations should never make risky investments. It’s important to use your reserve study to estimate when large expenses will occur. This will help determine if a 1 year or 5 year CD is the best option. If you plan for large expenses you should have a laddered portfolio. Keep in mind that FDIC insurance has a limit of $250,000 so you may want to use a variety of banks and or CD’s. Always be sure to follow the associations governing documents (CC&R’s) and to keep your reserve study up to date and current.