| How
To...
1. Appoint a committee to study the advisability of preparing
investment ground rules.
The guiding principals should
include the "Prudent-man" theory,
For any investment to be of
significant value the Local must "Due diligence",
All investment business dealings
should be conducted "at arms length".
2. The principal reason for investing is the use of the Local’s
surplus.
- The Local’s excess funds are
not expected to be used to meet current obligations in the
very near future,
- The amount of the investment
should not be needed by the Local in the next two to three
years,
- Normally, the commitment of
these funds into any security should not be entailed for more
than three years.
3. The interest earned, by these investments should be rolled
into current income, although this additional income could be
rolled into the principal.
4. The type of investments that make up the investment
portfolio should represent a cross-section of the financial
market. It may include some of the following:
- Certificates of deposit
(primary & secondary markets)
- US Government backed
securities
(certificates & notes)
- US Government backed housing
notes
- Stock – employer based
- High quality mutual funds
5. A composite of the Local’s portfolio may be reflected with
a breakdown such as:
- 10% - Cash
- 30% - Certificates of
deposit
- 30% - Government securities
& GNMA
- 20% - Mutual Funds
- 10% - Employer based Stock
& other
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