Sometimes, the best lessons in life are learned informally, in random remarks made in odd settings. For example, after my (soon to be) wife and I became engaged, I met her paternal grandmother.
After looking me up and down—the same way a leopard decides which gazelle has a limp—she turned to my wife and asked, seriously:
“Okay, so what’s your Plan B?”
It’s a poignant question that also applies to business plans. My credit union’s business plan calls for a rough balance between increased deposits and increased lending. But for some reason, members haven’t bought into the latter part as much, resulting in an increasing imbalance.
With my Plan A looking as sturdy as a pup tent, it’s time for Plan B: investments.
But which ones? Federal Deposit Insurance Corp. (FDIC) certificates? Loan participations? Justin Bieber-autographed memorabilia?
Here are some of the more popular investments, along with their risks and rewards:
All these investments force credit unions to make distinct decisions about risk and return.
If you’re willing to accept possible default or lack of liquidity, a reasonable return isn’t difficult to find. If your No. 1 mandated goal is safety, however, it might be time to stuff the mattress.
And find a Plan C.
JAMES COLLINS is president/CEO at O Bee CU, Tumwater, Wash. Contact him at 360-943-0740.