Community ClicksProfit sharing
I live in the United States, and my sister lives in Canada. Last year I needed to borrow $5,000, and she was kind enough to send me the money. At the time, the two countries’ currencies were nearly at par, so she was out only about 5,020 Canadian dollars. I am now in better shape, but the Canadian dollar is not: it has fallen.
To repay her 5,020 Canadian dollars will cost me only $4,267. Assuming the exchange rates hold, may I “make” $733, or should she be the “winner” in our inadvertent currency speculation? By the way, she’s an accountant, so it’s not like she’s not going to notice.
— David Foster,
Charleston, S.C.
Had this been a more formal transaction, a bank loan for example, your mutual obligations, including the currency in which the loan was to be repaid, would have been stated explicitly. It is understandable that in a casual loan, tendered not in pursuit of profit but out of sisterly affection, such details might be overlooked. Because family feeling was a prime motive in your sister’s lending you the money, it should be a key consideration in your repaying it. Which is to say, you requested, and she came through with, $5,000; you should repay $5,000.
You should not seek to make a buck from someone who waived her chance to do so — it is noteworthy that she charged you no interest — and acted, as you acknowledge, out of kindness.
You should show similar benevolence and let her put an unexpected $733 in her purse. It’s a fine thing when kindness begets kindness. At a minimum, you could split the difference.
I suspect that if you discuss this windfall with her, she would accept a solution in which you each come out ahead by some $366. But leave the decision to her.
If she balks at this idea, then give her the full profit: She has earned it by being openhearted and openhanded, and you end up no worse than you began. Better, even: She kept you out of debtors’ prison. Do we still have that here? Is our penal system as sub-Canadian as our prereform health care system?
Incidentally, as of this writing, on May 5, the two currencies had moved closer to par. To repay her 5,020 Canadian dollars would cost you about $4,877. Why not just toss in the extra $123 and send her $5,000? At this exchange rate, there’s little reason not to be good. Consider it an investment in a good seat for this fall’s Thanksgiving dinner.
No friends in banking
My friend has a bank account but keeps some money in mine. I think he sees it as insurance, something “stored away” in case he hits a lean patch. I would like to invest part of it, something I’m experienced at. Should I tell him? Should I share any profits? I will of course return all his savings if he asks, win or lose. Since I alone would take a risk, may I alone reap the gains?
— Name Withheld,
London
This is going to end in tears. Or jail. Or weeping at the ATM in the visiting room at jail. You should not be running a private bank for your friend.
He should reclaim his money and put it into an actual bank or, if he wants it sequestered where he can’t blow it on liquor and cupcakes in a moment of giddiness, into something more secure, longer term and less accessible — a C.D., perhaps, or a steel box buried in the backyard. Really deep.
If you do continue this fiscally perverse relationship, you must be transparent. It is not me but your friend to whom you should pose this question.
If he is OK with your seeing other people — sorry, using his money for your gain — then so be it.
If he is satisfied that your playing around with his money will not threaten your ability to repay him, then who am I to complain? But you may not do this on the sly. He reasonably believes that his money is snugly tucked away.
If you’re going to alter that arrangement, he has a right to know. What’s more, if his financial institution — i.e., you — plans to invest his money in riskier ways, it is appropriate for him to share in any rewards: He who supplies the capital usually does.
