Coolant use? - 850GLT

[Herve]

Hi,
New Volvo owner here- me, not the car- '95 GLT wagon (85K, one-owner, alll service via reputable dealer, etc). I've had the car for about 2 weeks, and in that time the coolant reservoir level has twice decreased to the point where the level warning light is on. I've heard rumor of defective reservoir caps as a very likely culprit. Everything else appears as it should be - no obvious leaks, running temp well within normal range, no condensation at tail pipe, etc.

Also, what's the word on coolant? In typical fashion, manual warns of need to use Volvo coolant only. My sense is that a Xerex/distilled water mix should be fine. Any thoughts on these issues greatly appreciated.

TIA,
Herve