Cohousing-L Mailing List: Re: Investing Cohousing Funds

[Mac Thomson (macthomson]

> A few things I am curious about regarding Heartwood Cohousing's investment 
> strategy:
> 
> (1) How do you decide how much to invest in each asset class and for how long 
> that money will be invested?
> 
> (2) Who is responsible for making buy and sell decisions? What are this 
> person's qualifications? Perhaps you hire an outside firm to manage your 
> investment portfolio?
> 
> (3) Do you re-balance your portfolio on a regular basis? In other words, do 
> you keep it at 25/50/25 (cash/bonds/stocks)? If so, when you sell, do you pay 
> the resulting taxes out of your operating account or your reserve account?
> 
> (4) Did the whole community consent to your investment strategy? Or was it 
> left to the Board or Finance committee to make the decision for the 
> community? If Board/Finance decided, what happens when membership in those 
> groups changes and the new people have different ideas about an investment 
> strategy? If the community made the decision, what happens if/when a 
> risk-averse new member expresses a strong objection to the existing strategy?
> 
> (5) How did you decide on the Vanguard family of funds? Great family, low 
> expense ratios, etc., but were there folks in your community who pushed for 
> socially responsible investing, and if so, how did you sort that out?


Our Finance team and Steering team agree on a basic asset allocation strategy, 
which is consistent with the responsibilities and authorities given to us in 
our Teams agreement (https://www.heartwoodcohousing.com/teams.html 
<https://www.heartwoodcohousing.com/teams.html>). Our basic asset allocation 
strategy has been based quite a bit on my recommendations. I’m a former CPA and 
have studied personal investing. I buy into the idea that the market is smarter 
than any individual investor so the best strategy is to invest in well 
diversified, low cost index funds.

Many of the books and articles I’ve read specifically recommend Vanguard index 
funds. I also oversee investments for several other entities besides our HOA 
and use Vanguard for all of them. Sticking with Vanguard is familiar and 
relatively easy for me.

After the Finance team and Steering team have decided the overall asset 
allocation (25% cash, 50% bonds, 25% stocks & real estate), the Finance team 
(me) chooses the specific investment vehicles. For cash, that’s our checking 
account and a Vanguard MMF. For bonds, that's a Vanguard bond index fund. For 
stocks & real estate, that's three Vanguard stock & real estate index funds.

Each quarter, I report to the community on our quarterly financial results, 
which includes our investment results. At that time, if our asset allocation 
has strayed from 25/50/25, I rebalance.

We haven’t had anyone object to our investing, even when things have gone 
south, because on the whole I think they realize that we are way ahead 
financially by sticking with a long term, conservative investment strategy. We 
have had one member specifically request socially responsible investing and we 
have done that at times. When that happens, I ask them to recommend specific 
Vanguard index funds. I’m not willing to spend lots of extra time managing 
investments with various brokerage firms.

The situation is not perfect, in that the member who specifically requests 
socially responsible investing would like to see us invested differently, but 
what part of cohousing is perfect? Each team manages their area of 
responsibility and inevitably makes decisions that someone is not happy with. 
The challenge is to accept that we each have our own opinion about how things 
should be done, but that others are going to sometimes do them differently.

Cheers,
Mac

-- 
Mac Thomson

Heartwood Cohousing
Southwest Colorado
http://www.heartwoodcohousing.com


"In my world, nothing ever goes wrong."
        - Wayne Dyer
**********************************************************

> On Dec 15, 2021, at 8:58 AM, Neil Planchon <neil [at] swansway.com> wrote:
> 
> kayebpdx [at] gmail.com <mailto:kayebpdx [at] gmail.com> is the author of the 
> message below.  It was posted by Neil of the Cohousing-L management team 
> <cohousing-l-owner [at] cohousing.org <mailto:cohousing-l-owner [at] 
> cohousing.org>>
> 
> Reason: quoted text was deleted and subject line restored
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> Digest subscribers, please delete most of quoted digest and restore subject 
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> http://justcomm.org/jc-faq.htm#Q6.5 <http://justcomm.org/jc-faq.htm#Q6.5>
> 
> --------------------  FORWARDED MESSAGE FOLLOWS --------------------
> 
> 
> A few things I am curious about regarding Heartwood Cohousing's investment 
> strategy:
> 
> (1) How do you decide how much to invest in each asset class and for how long 
> that money will be invested?
> 
> (2) Who is responsible for making buy and sell decisions? What are this 
> person's qualifications? Perhaps you hire an outside firm to manage your 
> investment portfolio?
> 
> (3) Do you re-balance your portfolio on a regular basis? In other words, do 
> you keep it at 25/50/25 (cash/bonds/stocks)? If so, when you sell, do you pay 
> the resulting taxes out of your operating account or your reserve account?
> 
> (4) Did the whole community consent to your investment strategy? Or was it 
> left to the Board or Finance committee to make the decision for the 
> community? If Board/Finance decided, what happens when membership in those 
> groups changes and the new people have different ideas about an investment 
> strategy? If the community made the decision, what happens if/when a 
> risk-averse new member expresses a strong objection to the existing strategy?
> 
> (5) How did you decide on the Vanguard family of funds? Great family, low 
> expense ratios, etc., but were there folks in your community who pushed for 
> socially responsible investing, and if so, how did you sort that out?
> 
> It's interesting to hear about different approaches cohousing communities are 
> taking when it comes to investing reserve funds. Would love to hear more!
> 
> Kaye Blesener,
> Treasurer, Columbia Ecovillage
> Portland, OR
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