Muni Bonds As An Investment

In an often unpredictable financial world, solid financial and investment advice is key to helping investors like you survive and thrive. Active investors understand the world of financial investing is filled with a myriad of risks, which is why good financial and investment advice can be so valuable to investors large and small. One type of investment that continues to be recommended for risk averse and tax savvy investors are municipal bonds understands what’s important to municipal bond investors and offers valuable information and insight to help municipal bond investors make the best investment decisions possible.

With the current uncertain financial state of Puerto Rico making headlines around the world, many are in search of advice that can help them navigate the troubled waters of Puerto Rico’s financial woes. With the current government of Puerto Rico unable to make good on debts owed, including debts to bond investors, financial and investment advice regarding Puerto Rico municipal bonds has been largely negative, with most advisors agreeing that investors unwilling to take a loss should have gotten out while they could have. If you continue to hold Puerto Rico municipal bonds, you’re taking a big gamble on the future financial health of the island territory. If the US government allows Puerto Rico to restructure their general obligation bond debt, many advisors believe that municipal bond investors are not likely to get back more than a fraction of their original investment. While the best advice for risk averse investors holding Puerto Rico municipal bonds might be to get out while they can, investors are cautioned against attaching this sentiment to every municipal bond on the market.

Municipal bonds as we know them today have existed in the United States since the 1800s – the first municipal bond having been issued by the City of New York. A municipal bond, in very simple terms, is a type of loan in which the borrower is a government body and the lender / investor is a private citizen or entity. In exchange for capital from bond investors, the borrowing government promises to repay investors with interest. The most popular type of municipal bond is a general obligation bond – which is backed and guaranteed by the full faith and credit of the issuer. Part of the reason why general obligation municipal bonds are recommended by advisors giving financial and investment advice to risk averse investors is because municipal bond issuers can usually generate revenue to repay bond debts in the form of taxes from citizens. These investments essentially become backed by the taxpayers in the jurisdiction that issued the bond, and as long as citizens are paying taxes, there is low risk of losing money on a municipal bond.

For the latest financial and investment advice affecting the municipal bond market, and for continued coverage of the municipal bond market in Puerto Rico, continue to follow

Leave a Reply

Your email address will not be published. Required fields are marked *