Hi,
I need help/advise from financial gurus on this board. My husband is being offered to receive his salary in USD instead of CAD. Till last year when CAD and USD were at par we never bothered to look into this, though suggested many co-workers to receive salary in USD. It’s a tricky situation, given the current scenario we are not sure what the fate of USD is going to be (if inflation comes in US, USD will take a big hit).
What you'll suggest to accept the change of salary currency or wait? It’s a 20% difference and pinches to see some fellows who get in USD enjoying the benefits of a low CAD.
I'm utterly confused, any suggestions.
Jona
Where do you live?
Is the amount of USD and CAD the same or does the company automatically do the conversion?
You are right that the fate of USD is hard to predict.
They are in a huge mess down there, and there's no telling whether USD will stay as strong as it has been in the past.
That said, there is no guarantee that CAD will always stay lower than USD, or won't.
Tough decision, I agree.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
I would have taken it but that's me !!
Prateek,
We live in SAmerica; the amount of salary is same just pick the currency. Picking USD means an automatic 20% raise. The other point is that we earn in CAD and spend in USD here (which pinches more). The trouble is once chosen we can't revert back to CAD and USD fate is unknown, hence the dilemma.
Jona
Location: God's own country
Posted on: 27-01-09 11:15:19
Quote:
Originally posted by jonav
Picking USD means an automatic 20% raise. The other point is that we earn in CAD and spend in USD here (which pinches more). The trouble is once chosen we can't revert back to CAD and USD fate is unknown, hence the dilemma.
Jona
Jona,
This is a no brainer. Just pick USD. Canadian Dollar can NEVER reach par until the Summer of 2010 when Oil prices are expected to be above $100 a barrel. You would be knowning that the Cdn. Economy is tired to the US economy and we prosper based on US sucess. Only a year or so after the US pulls out of a recession would Canadian Commodities have a peak value. So you have lots of time for that.
The last CDn dollar run was based on record oil prices and record commodity prices due to china preparing for the olympics. So it is safe to say that atleast until the summer of 2010 we canot even think of the US $ and CAD $ being at par. My personal guess is that it never will.
I am sure that you will have other plans by the summer of 2010 and hence take up the offer ASAP.
I am actually amazed as to how a responsible company can do a mistake like this and take a hit on the bottom line.
Hope this helps
Peace by TK
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I am a Gents and not a Ladies.
Quote:Given the above factors, I would choose USD.
Originally posted by jonav
We live in SAmerica; the amount of salary is same just pick the currency. Picking USD means an automatic 20% raise. The other point is that we earn in CAD and spend in USD here (which pinches more).
Quote:It's true that USD may fluctuate around for some time and it's conceivable that USD/CAD may be at par again.
The trouble is once chosen we can't revert back to CAD and USD fate is unknown, hence the dilemma
However, you won't lose in this deal until CAD becomes fairly stronger than USD.
And if you are worried about USD tanking completely and becoming worthless like the Russian Rouble or the Asian currency crises from decades ago, while it's possible, it's unlikely.
If that does happen, we'll have worse problems in the world.
Now, if you want to get fancy and hedge your USD exposure, the easiest way to hedge an asset in a currency is to take on a liability in the same currency.
Take out a loan in USD for example and use it to invest in Canada (mutual funds, stocks, ETF, savings, whatever).
Refer the following for other, more advanced strategies. Depends on how far you want to go with the hedging and how fancy you want to get -
http://members.shaw.ca/RetailInvestor/hedge.html
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by tamilkuravan
I am actually amazed as to how a responsible company can do a mistake like this and take a hit on the bottom line.
Hope this helps
Peace by TK
Thanks TK, your advice does help. I didn't understand your last line, does it mean why the co. agreed to pay in USD? If yes then they do it cause their earnings are in USD and expenditure in CAD (they too benefit 20%) for employees outside Canada, currency of salary is of employees choice but even then some choose CAD and some USD.
Prateek thanks for your post too, I'll forward the link to my hubby who can analyze it much better than me.
Thanks again.................Jona
