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8.1% Inflation at 39 Year High – A Looming threat to Condo Reserves

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High Inflation may result in 1-3 years, updated Condominium Reserve Fund Studies may reveal a potential 26% surprise increase, in addition to the anticipated 9%. Without action, Condominium Boards and Unit-Holders could face a total 35% increase in Reserve Fund contributions. Effective management of Reserve Funds is crucial for Condominium Corporations. While investments in Federal or Provincial CDIC/DICO insured GICs are an option, funds often earn minimal interest in bank accounts. Condominiums may miss out on 1.20% to 2.00% by not seeking the best CDIC/DICO rates, equivalent to 5-10% of Condominium fees.

Interest Rate Increase

8.1% High Inflation

High Inflation, when Condominium Reserve Fund Studies get updated in 1-3 years, with the current inflation environment, there could be a 26% surprise awaiting; and, that’s in addition to the likely 9% increase already contemplated. Yes a 35% increase could be awaiting Condominium Boards and Unit-Holders if no action is taken, and that’s just for Reserve Fund contributions.

Inflation’s Impact on Reserve Funds

Managing Reserve Funds is one of the central responsibilities of Condominium Corporations. Condominiums can invest in Federal or Provincial CDIC/DICO insured GICs, but far too often funds are left in a bank account, earning essentially zero interest. When Condominiums do invest in GICs they typically leave 1.20% to 2.00% on the table by not seeking out the best CDIC/DICO insured rates or terms, which typically translates to 5-10% of Condominium fees. Lastly – CDIC and DICO insurances have their limits, currently $100,000 and $250,000 per Corporation at each individual Financial Institution. Although the failure of a financial institution currently seems remote, it is a factor to consider. 

Shopping for CDIC/DICO Insured Reserve Fund Investments

Opening accounts and having relationships with many financial institutions is next to impossible for a Condominium Corporation. If only there was a way to easily have access to multiple Financial Institutions at the tip of your finger – wait for it – that’s where a Registered Deposit Broker specializing in the Condominium market comes into play. A Registered Deposit Broker who specializes in Condominiums can look at the reserves on hand, the Reserve Fund Study, planned expenditures, and the interest rate outlook, and build a CDIC/DICO insured GIC portfolio that maximizes returns, insured amounts and insure liquidity for planned expenditures, all at the same time – typically for no cost or commitment. By onboarding with a Registered Deposit Broker, you get access to all Financial Institutions they work with, often at better than posted rates.


Your Condominium is a profit machine for your current financial institution. Where else are there hundreds of thousands, perhaps millions, of dollars essentially locked into their bank accounts or GICs? With current inflation it has never been more important to take proactive steps to manage reserve funds. Condo Boards are not alone, seek out the assistance of Property Managers and other professionals, including speaking to a Registered Deposit Broker specializing in the Condominium Market.

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