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Post by livinginmedellin on Dec 31, 2016 18:09:55 GMT -5
This Friday the National Government issued the decree that sets the 7 percent increase in the minimum wage for Colombians. In 2017 the base monthly salary will be 737,717 COP, which means an increase of 48,261 COP. The transportation subsidy was 83,140 pesos, for the 1.7 million Colombians who earn the minimum. The announcement was made by the Labor Minister, Clara López, who led the negotiation rounds that sought an agreement between employers and employees. The decree that officializes the increase will remain firm in the coming hours, by the ministries of finance and labor, and was issued after no agreement was reached in the seven meetings of consultation between government, businessmen and workers. This Friday, even, there were several telephone calls to try to close a negotiation. In addition to the 1.7 million workers, 1.2 million retirees were in the news, most of them from the average premium scheme who earn a minimum pension. Despite the willingness of the parties to maintain the agreement, the fact is that the negotiation that began on December 5 was impacted by another eagerness that the Government had: the approval of the tax reform, by Congress. Business who started offering a 6.5 percent adjustment finished at 7 percent; For their part, unions initially claimed 14 percent, but reduced their aspiration to 8.5 percent. See (in Spanish): www.elcolombiano.com/negocios/economia/salario-minimo-2017-en-colombia-BN5681232The 7% increase matched the increase last year.
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Deleted
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Post by Deleted on Dec 31, 2016 19:33:59 GMT -5
Can not see how the Colombian pension system can sustain raising pensions equal to actual inflation every year This is an issue for expat retirees on a U.S. pension SS--for though the dollar is strong--after 2 years with the USA SS system-- the raise in 2 years was 3/10 of one percent--
Even if the dollar holds--in the past 2 years an ex-pat has already lost 14% buying power in Colombia--
Ex-pats need to think about how to stay ahead of the game--when the dollar comes down--and will eventually --ouch!!!!!!!
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Post by Deleted on Jan 1, 2017 8:09:36 GMT -5
Waterloo, sometimes it is better to just live for today. Looking forward to my 3/10 of 1 % increase in my next SS check so I can pay the increase in Medicare premiums.
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Post by coolcoil on Jan 1, 2017 8:53:39 GMT -5
Even if the dollar holds--in the past 2 years an ex-pat has already lost 14% buying power in Colombia-- Ex-pats need to think about how to stay ahead of the game--when the dollar comes down--and will eventually --ouch!!!!!!! Well, actually over the last two years the dollar has strengthened. I believe you are thinking back to the peak of about 3,400 that happened about 13 months ago. See the two year price history chart here: finance.yahoo.com/quote/COP%3DX?p=COP%3DXBut your general point is spot on. As the peso began to rise, I tried to keep thinking about my budget in terms of a price of 2,000. Now, though, I find that I am more and more in the habit of think of 3,000 as normal, and I'm afraid that kind of thinking is going to bite me in the ass one day. Just the other week my wife and I were talking about a high-end private school for our kids, and it seemed like something we could do. Then I thought, "What if the peso goes back to 2,000?" It didn't seem like such an obvious decision after that. Of course newcomers in the past year would be even more likely to fall into that trap.
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Post by livinginmedellin on Jan 1, 2017 9:29:30 GMT -5
Even if the dollar holds--in the past 2 years an ex-pat has already lost 14% buying power in Colombia-- Ex-pats need to think about how to stay ahead of the game--when the dollar comes down--and will eventually --ouch!!!!!!! Well, actually over the last two years the dollar has strengthened. I believe you are thinking back to the peak of about 3,400 that happened about 13 months ago. See the two year price history chart here: finance.yahoo.com/quote/COP%3DX?p=COP%3DXBut your general point is spot on. As the peso began to rise, I tried to keep thinking about my budget in terms of a price of 2,000. Now, though, I find that I am more and more in the habit of think of 3,000 as normal, and I'm afraid that kind of thinking is going to bite me in the ass one day. Just the other week my wife and I were talking about a high-end private school for our kids, and it seemed like something we could do. Then I thought, "What if the peso goes back to 2,000?" It didn't seem like such an obvious decision after that. Of course newcomers in the past year would be even more likely to fall into that trap. Actually the all time high exchange rate of over 3,400 COP to the USD was back in mid February - so this was a little over 10 months ago. See: www.xe.com/currencycharts/?from=USD&to=COP&view=1YCDTs can pay 7% and even over 8% in Colombia - I have a couple. Also it is possible for expats to exchange more money when the exchange rate is higher as it fluctuates during the year. My average exchange rate over the past year was about 3,280 as I monitor the exchange rate and I exchanged the most last year when it was over 3,400 and over 3,300. I put much of this in CDTs. When you factor in the current exchange rate of about 3,000 and the interest rate on CDTs this can be an effective hedge against inflation in Colombia. Inflation in Colombia in 2015 was 6.77 and for 2016 it has been projected that it may end up at around 6% or even below 6%, we'll see.
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Post by coolcoil on Jan 1, 2017 11:23:09 GMT -5
]Actually the all time high exchange rate of over 3,400 COP to the USD was back in mid February - so this was a little over 10 months ago. See: www.xe.com/currencycharts/?from=USD&to=COP&view=1YCDTs can pay 7% and even over 8% in Colombia - I have a couple. Also it is possible for expats to exchange more money when the exchange rate is higher as it fluctuates during the year. My average exchange rate over the past year was about 3,280 as I monitor the exchange rate and I exchanged the most last year when it was over 3,400 and over 3,300. I put much of this in CDTs. When you factor in the current exchange rate of about 3,000 and the interest rate on CDTs this can be an effective hedge against inflation in Colombia. Inflation in Colombia in 2015 was 6.77 and for 2016 it has been projected that it may end up at around 6% or even below 6%, we'll see. I'm curious - what is your rate of return on these CD's after tax? I was thinking of doing the same, but I'm concerned that between income taxes and the 4 per 1,000 tax my return is going to be much lower. I'm a little leery because of a negative experience we had a number of years ago, where my wife took out a 6-month CD and after the 4 per 1,000 tax her return was almost nothing. Do you know if you have to pay the 4 per 1,000 tax if you roll over the CD?
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Post by livinginmedellin on Jan 1, 2017 11:35:43 GMT -5
]Actually the all time high exchange rate of over 3,400 COP to the USD was back in mid February - so this was a little over 10 months ago. See: www.xe.com/currencycharts/?from=USD&to=COP&view=1YCDTs can pay 7% and even over 8% in Colombia - I have a couple. Also it is possible for expats to exchange more money when the exchange rate is higher as it fluctuates during the year. My average exchange rate over the past year was about 3,280 as I monitor the exchange rate and I exchanged the most last year when it was over 3,400 and over 3,300. I put much of this in CDTs. When you factor in the current exchange rate of about 3,000 and the interest rate on CDTs this can be an effective hedge against inflation in Colombia. Inflation in Colombia in 2015 was 6.77 and for 2016 it has been projected that it may end up at around 6% or even below 6%, we'll see. I'm curious - what is your rate of return on these CD's after tax? I was thinking of doing the same, but I'm concerned that between income taxes and the 4 per 1,000 tax my return is going to be much lower. I'm a little leery because of a negative experience we had a number of years ago, where my wife took out a 6-month CD and after the 4 per 1,000 tax her return was almost nothing. Do you know if you have to pay the 4 per 1,000 tax if you roll over the CD? Both of my CDTs are over 1 year so I haven't rolled them over yet. I'll find out then if I get hit by the 0.4% tax (4 per 1,000) in Colombia when I roll them over or withdraw the money. Both are earning over 7.5% but I'll have to pay US income tax on the interest (no income tax in Colombia on this interest per my Colombian accountant). I'm in the 25% filing jointly tax bracket in the US - so I'm earning nearly 6% after income taxes, which is a hell of a lot better than any CD you can find in the US. But the big benefit is that the money was moved when the exchange rate was much higher than now - the interest is a bonus.
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Post by Deleted on Jan 1, 2017 11:42:35 GMT -5
The CDTs help me keep pace with inflation (in Colombia, that is). I bought several CDTs 5 years back when the exchange rate was slightly below 2,000. As the dollar strengthened, I actually lost money, (even with a 6.95% annual return), when I use the USD as a basis for calculating return. For someone who still has one foot in the US, this may be a problem. But someone like me, who lives here for good, it's not that big a deal, because my cost of living is about 30% of what it would be in the US (at the current exchange rates).
Taxes are deducted, and reported to DIAN when a CDT is cashed in. This is called retencion, and included on the receipt when you collect the cash. The interest income is reported on your declaration along with a credit for the retencion.
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Post by caliconnection on Jan 1, 2017 19:10:14 GMT -5
Well, actually over the last two years the dollar has strengthened. I believe you are thinking back to the peak of about 3,400 that happened about 13 months ago. See the two year price history chart here: finance.yahoo.com/quote/COP%3DX?p=COP%3DXBut your general point is spot on. As the peso began to rise, I tried to keep thinking about my budget in terms of a price of 2,000. Now, though, I find that I am more and more in the habit of think of 3,000 as normal, and I'm afraid that kind of thinking is going to bite me in the ass one day. Just the other week my wife and I were talking about a high-end private school for our kids, and it seemed like something we could do. Then I thought, "What if the peso goes back to 2,000?" It didn't seem like such an obvious decision after that. Of course newcomers in the past year would be even more likely to fall into that trap. Actually the all time high exchange rate of over 3,400 COP to the USD was back in mid February - so this was a little over 10 months ago. See: www.xe.com/currencycharts/?from=USD&to=COP&view=1YCDTs can pay 7% and even over 8% in Colombia - I have a couple. Also it is possible for expats to exchange more money when the exchange rate is higher as it fluctuates during the year. My average exchange rate over the past year was about 3,280 as I monitor the exchange rate and I exchanged the most last year when it was over 3,400 and over 3,300. I put much of this in CDTs. When you factor in the current exchange rate of about 3,000 and the interest rate on CDTs this can be an effective hedge against inflation in Colombia. Inflation in Colombia in 2015 was 6.77 and for 2016 it has been projected that it may end up at around 6% or even below 6%, we'll see. This is a good argument for ex-pats to bring their money into Colombia and purchase CDT's. Your rate of return from your home country might not match this and you could be lagging inflation. Over a 10 year period this could be substantial.
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