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Earning the Same Currency You are Spending

Sigma Investment Counselors

July 2, 2021

With the number of employees working remotely, it is almost inevitable that some are not only out of the office, but may also be out of the country.  If you aren’t working in your home country, by choice or at the behest of your employer, there may be cost-of-living issues if you can’t match the currency you are earning with the currency that you are spending, particularly for such everyday expenses as lodging, food, transportation, and so forth.  This is not a major issue if you are earning U.S. dollars and living in Europe, or visa-versa.  But, it can be a huge problem if your earnings are in a non-convertible currency, such as in parts of Eastern Europe, and your living costs are in a different country’s currency.

International travelers have to be aware of currency issues in determining what kind of cash to carry as they go from country to country.  If you can pay with a credit card, no problem, but this not always an option for every expense.

Investors should consider the implications of investing internationally.  If you live in the U.S., and substantially all of your expenses are dollar denominated, you may want to take that into consideration when managing your portfolio.

In the context of the foregoing, is cryptocurrency actually a currency?  Generally speaking, getting paid in crypto would not only be a problem relating to the wide fluctuations in value, there is also the everyday question of paying bills, or just stopping for a beverage.  In addition to the issue of practicality, there is also the problem of transaction costs.  Is Tesla’s off and on offer to sell cars for Bitcoin practical, or is it a publicity stunt and/or a form of advertising?

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

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