Garrard County weighs its options for investing county farm profits

July 02, 2004|EMILY BURTON

LANCASTER - Garrard County magistrates are carefully considering every avenue of investment for their profits from the county farm sale in May. Part of the $481,000 is expected to arrive before their next meeting and will be put in an interest-drawing temporary account pending the final vote.

Magistrates heard proposals Thursday from two investment organizations, Hilliard Lyons and Edward Jones. Both organizations had different recommendations for the county's investments.

Edward Jones representative Bob Williams recommended the court invest $250,000 in mutual fund bonds and the remainder in long-term bonds.

"I think it's a good idea, splitting them up like that," said Judge-Executive E.J. Hasty.

"The bond gives [the portfolio] stability, the mutual fund gives it growth," Williams explained. However, per a state law limiting the percentage a local government can invest in a single item, the Department of Local Government in Frankfort would have to approve the investment. The mutual fund portfolio must be determined to be diverse enough to prevent a widespread loss of the principle investment should the fund fail.


But investing is a two-way street, said Williams. Mutual funds are riskier than certificates of deposit, but the potential for growth is much greater, as well as the funds' flexibility. There would be no penalties for early withdrawal in the mutual fund, as opposed to C.D.'s.

Hilliard Lyons representative John Marsee offered the court another option. Marsee suggested the court invest 70 percent in short-term bonds, such as one to five years in length, and the remaining in long-term bonds. One major benefit to the plan would be the diminished risk involved in bond investments, as opposed to mutual funds.

However, said Williams, both options have some risk involved. No investment is absolutely risk-free.

"The bond market is just like the stock market, they both fluctuate," said Williams.

But, added Marsee, when bonds mature, the principle investment is guaranteed to be returned.

Either way, the two options are better than locking the funds away in a C.D., said County Attorney Jeff Moss.

"It would appear that each are going to lead to better returns than you would get out of a regular C.D.," said Moss.

After a detailed debate between the two representatives, the magistrates postponed their decision. They decided to discuss and determine their course of action at the next Fiscal Court meeting July 12.

Central Kentucky News Articles