Investments are an integral component of the business strategy. Investment strategy should be developed in light of a credit union’s unique financial structure and strategic objectives.Understand how the whole financial structure works together. For example, if the lending portfolio includes a significant amount of long-term loans, investments can be purchased to offset interest rate risk while still contributing some yield. Conversely, a shorter or more variable rate loan portfolio might be complemented by some higher-yielding mortgage-backed securities (MBS) or fixed rate collateralized mortgage obligations (CMO).Most importantly, ensure management and the board have a clear and holistic understanding of the investment strategy and how it fits with the financial structure and overall strategic objectives. Get agreement as a group on investment risk appetite, stick with it, and manage to it. Document the rationale for major decisions and review the strategy regularly.Understanding the bigger picture can then make it easier for you to evaluate individual investment decisions. As you review investments with different structures and yields, the overall strategy objectives will provide clarity to the choices you make. continue reading » 1SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr
Social media and your credit union: Why and how
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