I work with a large pension plan (over $3 billion in assets). Our Co-op has four reserve funds (or self escrows) totaling $800k separating the funds by purpose: capital, mortgage reserve, annual insurance reserve and annual water/sewer reserve. We earned 80k in investment income last year on a base of $600k or so. We hope to add $900k into the reserve fund this year due to the sale of treasury stock. I don't like a static investment policy as the market is not static.

Right now we are invested in FDIC insured CD's which are timed to release funds on occasion or when the need for the reserve/self escrow fund occurs. For example, we ladder our mortgage reserve fund to have a quarter of the reserve reset annually (become liquid) once a quarter just in case we ever have to use it. We also have the annual water/sewer reserve mature in June each year. We also have a line of credit to tap just in case – not used in three years.

Last year, we put everything in a Vanguard Long Term US Treasury Bond fund and watched with joy when the FED lowered interest rates. Then we moved everything into CD's to maintain principal in anticipation of the FED raising rates in the future. My point is that investments do great if dynamically managed in this way - you just have to have someone watch them for you.

Others may have different ideas too.