[committee] Protecting the rainy day fund

Bob Adamson bob at ucc.gu.uwa.edu.au
Wed Oct 13 21:15:14 WST 2010


Hi,

On Wed, 13 Oct 2010, Scott Young wrote:
<snip>
> It sounds like you're talking about different things here. I'm not
> sure what the committee /could/ do if interest rates were to drop
> significantly. The rates are generally comparable between different
> banks, so what are we going to do -- seek out a higher return by
> putting our money in a riskier investment?
....
> Reinvesting part of the interest according to the CPI seems like a
> good idea. Then again, so does reinvesting all of it and withdrawing
> spending money if and when it's needed. The club seems to have
> adequate cashflow as it is.
</snip>

If you have another look at the term deposit rates, you will notice that 
there are *special* rates for certain time periods. Committee needs to be 
able to select the periods that will give the best interest rates and will 
pay out at times they deem suitable. This shouldn't really require a 
General Meeting as long as we've defined minimum reinvestment rates 
somewhere.

As for choosing a riskier investment, the draft constitution specifies in 
section 14.3.1 that the club can only invest in securities in which trust 
monies may lawfully be invested. I can't seem to find a list of what those 
securities are, but I sure would like to know. I would have a guess, but 
then DJA will get on my tail about conjecturing :P

I don't think reinvesting all of the money is a good idea. For starters, 
it removes any incentive for a committee to pay attention to it and manage 
it well. Furthermore, I have a pretty good idea how hard it is in UCC to 
spend large chunks of money - this isn't necessarily a bad thing, but it's 
a lot easier to do things in small amounts with greater regularity.

2c, Bob


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