Advice - Please rip this plan to shreds

WARNING - LONG POST

I am a 2009 grad from an extreme non-target who just got accepted into MIT's MFin program. This seems like a dream-come-true, and it is, and I really want to go, and probably will. My concern is that financially, it doesn't necessarily seem to make sense, so I am hoping WSO can provide some external opinions.

Background - Bad undergrad school, 3.8 GPA in finance/math, 780 GMAT, solid FT internship experience in BO, decent ECs, currently working in corp strat at F100 financial sector company in Boston (a year in right now).

In evaluating MIT as an investment, I am looking at the likely tracks with and without it. The problem is, it seems to me that if I stay in my current role for a bit longer, I would be a pretty good candidate for a top-10 (maybe not top 5) MBA program for starting in Sep 2012.

Before you yell at me for forecasting things into the future and how uncertain life is and etc., I fully agree, and will probably go to MIT even though calculations below indicate it is a losing proposition. But I would love for someone to rip my analysis to shreds so I can just go to MIT without any concerns.

With MIT - Option A (prob = 50%)
Year - Descr - Income
July 2011-June 2012 - In Program - (80K)
July 2012-June 2013 - 1st year analyst (consulting, hopefully MBB) - 105K
July 2013-June 2014 - 2nd year analyst (consulting, hopefully MBB) - 115K
July 2014-June 2015 - MBA Year 1 - (55K)
July 2015-June 2016 - MBA Year 2 - (55K)
July 2016-June 2017 - Don't know what - consulting or industry - 160K
July 2017-June 2018 - Don't know what - consulting or industry - 180K
July 2018-June 2019 - Don't know what - consulting or industry - 200K

With MIT - Option B (prob = 50%)
Year - Descr - Income
July 2011-June 2012 - In Program - (80K)
July 2012-June 2013 - 1st year analyst (IB) - 110K
July 2013-June 2014 - 2nd year analyst (IB) - 120K
July 2014-June 2015 - Pre-MBA PE (hopefully, if lucky) - 135K
July 2015-June 2016 - Pre-MBA PE - 150K
July 2016-June 2017 - MBA Year 1 - (55K)
July 2017-June 2018 - MBA Year 2 - (55K)
July 2018-June 2019 - Don't know what - PE if lucky - 200K

Average of option A and B (since equally likely at this point)
July 2011-June 2012 - (80K)
July 2012-June 2013 - 108K
July 2013-June 2014 - 118K
July 2014-June 2015 - 40K
July 2015-June 2016 - 48K
July 2016-June 2017 - 53K
July 2017-June 2018 - 63K
July 2018-June 2019 - 200K

Without MIT
Year - Descr - Income
July 2011-June 2012 - Stay where I am - 75K
July 2012-June 2013 - MBA Year 1 - (55K)
July 2013-June 2014 - MBA Year 2 - (55K)
July 2014-June 2015 - 1st year associate - IB or Consulting - 160K
July 2015-June 2016 - 2nd year associate - IB or Consulting - 180K
July 2016-June 2017 - Don't know - 200K
July 2017-June 2018 - Don't know - 220K
July 2018-June 2019 - Don't know - 240K

Income Difference - Without MIT minus With MIT - So this is the benefit of not going to MIT
July 2011-June 2012 - 155K
July 2012-June 2013 - (163K)
July 2013-June 2014 - (173K)
July 2014-June 2015 - 120K
July 2015-June 2016 - 133K
July 2016-June 2017 - 148K
July 2017-June 2018 - 158K
July 2018-June 2019 - 40K

At 10%, NPV of difference of expectation of income is $225K just during this time-frame.

However, am I wrong in my assumptions? Specifically, would I start as a 1st year analyst post-MIT? Also, would I need to go back for MBA if I come is with a MFin? Would this background make it easier for me to go from analyst to associate directly?

Outside of above analysis, there are a few intangible considerations:

  1. I want to learn, and I think that the MIT route would result in the smartest Dr Joe.
  2. I really like my job right now and am working on some very interesting stuff.
  3. The risk of not getting into a good MBA program. With MIT, I would at least have something to stand on instead of my bad undergrad. This is a big concern for me - part of me thinks that I am just incredibly lucky to get into MIT and will never have the chance to be part of such a great program. This is the primary reason why I am almost certain I will go.
  4. In the MIT --> IB --> pre-mba-PE --> MBA --> PE track, there would exist opportunities that otherwise would not, and post-mba the money would be far best in this scenario.
  5. In the track described above in (4) I would be quite old by the time I apply to MBA. Might make things difficult.

Have fun ripping this apart. Thank you in advance.

Dr Joe

 
ivoteforthatguy:
I am skeptical that you can make income projections beyond 1-2 years. At that point income depends on much more than your degree.
I realize this, but I think for the most part the projections here are within 2 years of graduating from MS or from MBA, and hence there is a decent sense of averages at those key steps. Do the numbers look about right though?
 
drexelalum11:
Run it with economic cost rather than accounting cost

The last scenario is economic cost - it represents the difference in income that I would experience as a result of attending MIT. I also tried this with an adjustment for taxes, and the results did not change much. Are you referring to something else?

 

Factoring in taxes results in the following cash flows:

Income Difference - Without MIT minus With MIT - So this is the benefit of not going to MIT Time---------------------Ignoring Taxes-------With Taxes (flat 35%) July 2011-June 2012 - 155K--------------------- 129 July 2012-June 2013 - (163K)-------------------(125) July 2013-June 2014 - (173K)-------------------(131) July 2014-June 2015 - 120K---------------------88 July 2015-June 2016 - 133K---------------------96 July 2016-June 2017 - 148K---------------------106 July 2017-June 2018 - 158K---------------------112 July 2018-June 2019 - 40K-----------------------26

Same conclusion I think.

 

I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

 
Best Response
what2do:
I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

agreed, don't base your decision on cash flows

 
what2do:
I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

Thanks for your input. I agree with your overall sentiment, and will almost certainly attend the program in spite of the analysis above due to many of the same reasons that you mentioned..

 
Dr Joe:

Thanks for your input. I agree with your overall sentiment, and will almost certainly attend the program in spite of the analysis above due to many of the same reasons that you mentioned..

I think this is a good choice. Knowing you, I am sure you will thrive in the environment at MIT. As what2do said, the intangibles are far too great to pass up on this chance.

 
what2do:
I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

I agree with this post whole-heartedly. MIT is a brand you just can't deny. This type of program could open doors at hedge funds, MS/GS, MBB, whatever. That top work experience can then help you get into either PE, H/S/W, or both ( I assume you just recently took the GMAT and you have it for 5 years). Your GPA/GMAT is sick and with top work experience and MIT on the resume you would be a strong candidate. You need to knock over this big heavy domino now so that all the other things are easier to knock over in the future.

Also, unrelated to the actual question you asked, let me remind you that you should network your ass off starting now. Start by looking for guys in places you want to work who did the MSF program and ask their opinions on it. Gain rapport with them, and then have them on speed dial when its time to look for a job.

Here is a linkedin search for people with the MIT MSF: http://tinyurl.com/6yvgyhs

 
Military_MBA_Banker][quote=what2do:
I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

I agree with this post whole-heartedly. MIT is a brand you just can't deny. This type of program could open doors at hedge funds, MS/GS, MBB, whatever. That top work experience can then help you get into either PE, H/S/W, or both ( I assume you just recently took the GMAT and you have it for 5 years). Your GPA/GMAT is sick and with top work experience and MIT on the resume you would be a strong candidate. You need to knock over this big heavy domino now so that all the other things are easier to knock over in the future.

Also, unrelated to the actual question you asked, let me remind you that you should network your ass off starting now. Start by looking for guys in places you want to work who did the MSF program and ask their opinions on it. Gain rapport with them, and then have them on speed dial when its time to look for a job.

Here is a linkedin search for people with the MIT MSF: http://tinyurl.com/6yvgyhs[/quote]

Thanks for your comment, I appreciate the help. I plan on starting my networking efforts ASAP as well.

One thing that I am looking into is getting an internship before I start the program, since the program is 1-year and does not have an internship component. Any thoughts/advice on how to do so? Is this common? I am thinking the right way to go about this would be reaching out to Sloan alums, as well as to just about anyone in a position to hire an intern. I would also think that boutiques would be best, since this would need to be an unusual internship - lasting from asap until end of June. Will make sure to mention I am OK with not being paid.

Does that sound about right? JC, I believe you are trying to do something similar with PE in NY, how are you doing in your search? Any tips?

Might as well put it out there on here - if anyone wants an unpaid intern in the Boston area in IB, AM, HF, PE or consulting please contact me.

 
what2do:
I think you should look at it a little differently - rather than projecting out the costs (and I think given your ambitious future, you won't be living paycheck to paycheck), I think you should look at what will make you happier TODAY.

this is (literally) a once in a lifetime opportunity to go get your Mfin from MIT - you won't be doing this after your MBA at all...this will probably open up MANY doors for you (not only for a job, but from a network perspective as well), and you might be able to jump into something like quant analyst work (if that is what you are into). This is an opportunity to get a target school on your resume TODAY rather than 3 years down the road.

Just something to take into account.

Regardless, sounds like you'll have great options either way, so congrats!

I completely agree with this train of thought

 
drexelalum11:
I assumed taxes would have a more pronounced effect. I met net in COL as well though (which should be lower as a student than as a banker)

I also expected taxes to have a larger, possibly directional impact, since tuition is after-tax. I don't expect my COL to change significantly under any of these scenarios, so I don't think that would be relevant. If anything, as a banker I would have less time to spend money...

But do the numbers overall look realistic? I was really hoping my projections were crazy, and the result directionally wrong.

 

I should add another factor. I know that in the long term, I will not be living paycheck to paycheck. I am not necessarily looking to achieve BSD status as soon as possible, and I would like to not worry about cash flows for now - I know I will do fine eventually. However, a serious consideration for me is reaching the 200K (post MBA) mark as soon as possible. This will allow my parents to retire, and is pretty much my main goal over the next 10 years. Although I suppose I will reach this goal over 10 years one way or another, but sooner is of course better.

If not for this goal, this discussion would not need to take place - screw cash, lets go learn and have fun.

 

Vero velit sunt voluptas ab doloremque quae pariatur. Aut ipsam officia nihil sed nobis quaerat velit. Sit quas et sint beatae aspernatur sed eum.

Et et magnam voluptas non cum omnis consequatur. Omnis occaecati quae et illum.

Dignissimos deserunt similique rerum libero dolores perferendis. Accusantium ipsam quaerat consectetur dicta facilis. Debitis natus explicabo debitis autem maxime. Illo iste iusto qui ipsam reiciendis.

http://ayainsight.co/ Curating the best advice and making it actionable.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (85) $262
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (65) $168
  • 1st Year Analyst (198) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”