To all my readers, check with your investment adviser or your retirement administrator to make sure that you do not have any Puerto Rico Municipal Bonds in your portfolio.
Sometimes your portfolio administrator may invest into these offshore products as a strategy in order to get a bigger return on your money. This strategy of looking for higher returns (averaging over 10%) on your investment can work if you pick the right investment, but it’s still too risky for the regular investor.
I don’t know what your risk tolerance for investing may be, but if you are looking to preserve your capital and you can’t afford to take a hit in your portfolio, this type of investment is not for you.
I recently saw a special where a representative from the Puerto Rico Finance Department said that they are having just a few cash flow problems with their municipal bonds, but this delay should go away shortly. I don’t believe this statement about their temporary money problems. I have learned from my many years of working in the financial industry that this is the start of a much larger financial problem for them.
I want each of you to check with the person or the financial institution that handles your retirement investments as soon as possible to make sure that they did not put you into that investment product.I’m sending out this alert because there are too many of you who don’t know whether they did or not, as you don’t look at the quarterly investment statements that are sent to you from the financial firm that is holding your valuable assets. You need to look at these statements for your own protection.
The problem with Puerto Rico bonds is that since they are not a state like New Jersey or New York, I’m not sure whether Congress is allowed to legally bail them out like they did a couple of years ago for U.S. major banks during the banking crisis. Plus, Puerto Rico is a commonwealth and do not pay the same amount of taxes that the other states do. Consequently, if they go bankrupt on any of their municipal bonds, your loss will be unrecoverable if there is no bailout.
If I were you, I would want to know for sure that my portfolio is safe and secure. So without any further delay, go ahead and make the call. I hope that you are not in any of the Puerto Rico Municipal Bonds. But if you discover that you are, GIVE YOUR INVESTMENT ADVISER HELL!
If you have any questions, send me a note and I’ll follow-up.