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Plans With Your Bonus?
 

Devils Advocate's picture
IB
 
Points)
 on 8/10/12 at 12:30pm
plan bonus.jpg

Generally, analysts are unhappy with their numbers...definitely down from last year but curious what you guys are planning to do with your bonus?

Personally, I'll probably buy a nice watch, have a wild Labor Day weekend, and throw the rest into savings and investments.

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IlliniProgrammer's picture

Dividend stocks and bank

ST
(Almost Human, 9,244
 
Points)
 on 8/5/12 at 11:48am

Dividend stocks and bank deposits. And maybe a bottle of Brut to celebrate.

Work hard, play hard.

MoneyKingdom's picture

I usually buy a bunch of

IB
(Gorilla, 626
 
Points)
 on 8/5/12 at 11:49am

I usually buy a bunch of unnecessary shit and take random weekend vacations after my bonus.

Devils Advocate's picture

IlliniProgrammer: Dividend

IB
 
Points)
 on 8/5/12 at 11:55am
IlliniProgrammer:

Dividend stocks and bank deposits. And maybe a bottle of Brut to celebrate.

Any stocks you'd recommend?

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SirTradesaLot's picture

Devils

 
Points)
 on 8/5/12 at 12:01pm
Devils Advocate:
IlliniProgrammer:

Dividend stocks and bank deposits. And maybe a bottle of Brut to celebrate.

Any stocks you'd recommend?

DVY,SPLV, RSP

Turbo leverage for capital explosion -- BD Capital

My WSO Blog

SirBarney's picture

IlliniProgrammer: Dividend

O
(Gorilla, 505
 
Points)
 on 8/5/12 at 12:04pm
IlliniProgrammer:

Dividend stocks and bank deposits. And maybe a bottle of Brut to celebrate.

Haha Brut, almost forgot about it, such a classic.

But really, I'll probably increase my wardrobe a bit then save the rest. Nothing I'm really pining for.

rickyross's picture

Is it me or are bankers less

IB
(Gorilla, 544
 
Points)
 on 8/5/12 at 12:14pm

Is it me or are bankers less creative than they used to be?

That said: bank deposits, maybe some fixed income (though I don't think I have quite enough to buy in sufficient scale), large cap dividend stocks, and some new pants since I wore through most of my other ones sitting at my desk for 80+ hours a week for the last year working for bread crumbs...

People tend to think life is a race with other people. They don't realize that every moment they spend sprinting towards the finish line is a moment they lose permanently, and a moment closer to their death.

MoneyKingdom's picture

Here's the thing most people

IB
(Gorilla, 626
 
Points)
 on 8/5/12 at 12:19pm

Here's the thing most people don't understand. My first year as an Analyst, I barely broke even. 70K is barely enough to break even. My bonus was 45K at the time, of which I got around 18K in cash after 401K, taxes, etc. That was enough for a couple quick 3 day vacations, 2 new suits, and some bottle service. Not the "big balling" style that most of the college kids here think. It's not until last year that I finally was able to save and invest some of my bonus.

IlliniProgrammer's picture

Devils

ST
(Almost Human, 9,244
 
Points)
 on 8/5/12 at 12:25pm
Devils Advocate:
IlliniProgrammer:

Dividend stocks and bank deposits. And maybe a bottle of Brut to celebrate.

Any stocks you'd recommend?

Hmm. I'm no longer working right now. I guess I can make stock recommendations.

Disclaimer: I am not acting in any capacity as an investment professional and you should not rely on this free advice the same way you would a professional's paid advice.

Great Britain's stock market acts like it's in a recession right now, but you've got some stocks there that have broad international and US exposure that are pretty darned cheap.

Ideas:

Vodaphone, NYSE:VOD (owns half of Verizon Wireless). 6% dividend. ~10x PE

National Grid, NYSE: NGG (Utilities, 40% of revenues come from the US). 6% dividend. ~11x PE

Unilever, NYSE:UL (Owns Bertolli, Tresseme, Knorr's). 4% dividend. ~ 15x PE

All have reasonable balance sheets, IIRC.

Disclosure: I own UL and NGG; they make up 5% of my portfolio.

If you drive a lot, or if you don't own oil stocks, eNi's (NYSE: E) E&P has been firing on all eight cylinders recently. They found an elephant of a natural gas field off the coast of Mozambique about a year ago and they've been ramping up production big time. But they're also HQ'd in Italy. That mean they're relatively cheap, but it also means they're going to be trading off of the news out of Europe for the next few years. They're also subject to tax hikes on their North Sea production and in general Continental European companies aren't run quite as well as their American or British counterparts. (Although I do like ENI's management a lot more than BP). Eni's dividend works out to 2.08 Euros per ADR (with 20% Italian withholding), so that's around 5.5-6% right now. Disclosure: About 4% of my portfolio is in ENI.

Ideas for the US:

Intel (INTC): 3.7% dividend. ~10x PE. (The "utility stock" of the tech sector. If you want to do something in tech, you're going to need processing power in addition to electricity, thus driving demand for Intel's chips.)

Chevron (CVX) 3.4% dividend. ~8x PE. Probably the world's best-run major oil company.

Hasbro (HAS) 4% dividend. 13x PE. IMHO more defensive than investors give it credit for. Monopoly became big during the Great Depression.

Nucor (NUE) 3.7% dividend. Cyclical stock but benefits from long-term secular trend of manufacturing coming back to the US. Arguably the most efficient producer of steel in the world when it comes to labor and resource consumption. China won't know what hit them if their labor costs escalate for a few more years.

Disclosure: I own Chevron and Intel. (Intel is a small position, Chevron is about 5% of my portfolio)

My suggestion is to go for the moderate discounts in the UK right now, pick up firms that are almost as well-run as those in the US for a 20-25% discount, and avoid the most annoying parts of the drama in Europe. The UK will come out of the recession, they're a stable nuclear power in case of continued geopolitical insecurity, and they've had a longer capitalist tradition than the US has had.

You say you're patient now, but this European stuff could drag on for three more years. And cheap could get cheaper. And you will want to shoot yourself sometimes when ENI or Total drops 5% in a day because some stupid politician says something about a Eurozone economy that a global oil producer with 70% of its assets outside of Europe has nothing to do with. France is having a bad day! Let's discount Total's Libyan and Nigerian oil production by 3%!!! And the dividend isn't always the best consolation when Total has an earnings miss like most European companies almost always do.

The nice thing with the US dividend payers is that the upshot of 30% payout ratios rather than 60% payout ratios is that you get a 5-10% dividend hike every year.

Best of luck.

Work hard, play hard.

IlliniProgrammer's picture

MoneyKingdom: Here's the

ST
(Almost Human, 9,244
 
Points)
 on 8/5/12 at 1:00pm
MoneyKingdom:

Here's the thing most people don't understand. My first year as an Analyst, I barely broke even. 70K is barely enough to break even. My bonus was 45K at the time, of which I got around 18K in cash after 401K, taxes, etc. That was enough for a couple quick 3 day vacations, 2 new suits, and some bottle service. Not the "big balling" style that most of the college kids here think. It's not until last year that I finally was able to save and invest some of my bonus.

$70K is plenty to break even if you are splitting a fifth floor two bedroom walkup on 11th ave. or Avenue A and don't eat out too much. $3800/month paycheck, $1500/month rent, $500/month into the 401k, $1800/month for living expenses.

That bonus should be going strictly into either a 401k if you have contributions left over or a brokerage account. And at a 4.5% dividend yield, every $26K you sock away is $100/month, inflation adjusted, of extra breathing room into your budget.

Every $7 (ok, $8-9 with tip) beer you drink costs you $0.30 in dividends next year. If you can develop an engineer's liver and quit at four rather than six twice a week, you're going to do your liver a huge favor and collect $60/year more in dividends next year.

Every $100/month too much you spend on rent this year costs you $54 next year. And every year thereafter.

And if you compound the savings, the cost starts to get really ugly. Even after factoring out inflation from equity returns, a Ferrari at retirement costs not that much more than what a rusty honda costs today.

It's very difficult to be disciplined and say "I'm going to do this. I'm going to earn $X this year." It's much easier, especially just coming out of college, possibly growing up middle-class to be disciplined and say, "I'm not going to spend this. I can't afford it." Freedom is the right to say "No", and you're a more free person pursuing spending discipline than earnings discipline.

When you do spend money, spend it on experiences where you can say, "I'm really glad I did that when I was 25. It was worth it."

So you should aim to live on $3000-3500/month your first year. It requires some discipline- like eating at home or Seamless most nights, but it's doable.

//end IP's thrift philosophy lecture.

Work hard, play hard.

newfirstyear's picture

^^love this guy. I saved 50K

ER
 
Points)
 on 8/5/12 at 1:02pm

^^love this guy.

I saved 50K my first year. Spent $10K on myself and put the rest in high dividend stocks, lots of AGNC (15% dividend what!)

BlackHat's picture

That kind of frugality would

HF
 
Points)
 on 8/5/12 at 1:09pm

That kind of frugality would make my head explode faster than my dignity... I'm sure there's a happy medium in there somewhere guys.

I hate victims who respect their executioners

Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital

IlliniProgrammer's picture

BlackHat: That kind of

ST
(Almost Human, 9,244
 
Points)
 on 8/5/12 at 1:29pm
BlackHat:

That kind of frugality would make my head explode faster than my dignity... I'm sure there's a happy medium in there somewhere guys.

The unexamined financial life tends to end up bankrupt if you're not careful.

We got into this industry to make money. Would be sad to pull all of those crazy hours not keeping any.

My calculus is that between NYC's high cost of living, the fact that it will probably be *harder* to earn $1 in the future than it is today, and what 6% CPI-adjusted returns can compound to for someone in their 20s, it makes sense to avoid as many unnecessary expenses as one reasonably can.

The one exception is experiences that are harder to have when you're 60.

Work hard, play hard.

newfirstyear's picture

IlliniProgrammer: BlackHat:

ER
 
Points)
 on 8/5/12 at 1:36pm
IlliniProgrammer:
BlackHat:

That kind of frugality would make my head explode faster than my dignity... I'm sure there's a happy medium in there somewhere guys.

The unexamined financial life tends to end up bankrupt if you're not careful.

We got into this industry to make money. Would be sad to pull all of those crazy hours not keeping any.

My calculus is that between NYC's high cost of living, the fact that it will probably be *harder* to earn $1 in the future than it is today, and what 6% CPI-adjusted returns can compound to for someone in their 20s, it makes sense to avoid as many unnecessary expenses as one reasonably can.

The one exception is experiences that are harder to have when you're 60.

Out of curiosity, which would you rather do:

1) IB Analyst in NYC making $120K
2) IB Analyst in Dallas/Atlanta/Charlotte etc for $80K

APAE's picture

IlliniProgrammer: The one

(Neanderthal, 3,660
 
Points)
 on 8/5/12 at 1:37pm
IlliniProgrammer:

The one exception is experiences that are harder to have when you're 60.

So .... women?

A lot of people do certain things to add days to their life. I do things to add life to my days.

BlackHat's picture

APAE: IlliniProgrammer: The

HF
 
Points)
 on 8/5/12 at 1:42pm
APAE:
IlliniProgrammer:

The one exception is experiences that are harder to have when you're 60.

So .... women?

Those are expensive.

I hate victims who respect their executioners

Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital

IlliniProgrammer's picture

newfirstyear: IlliniProgram

ST
(Almost Human, 9,244
 
Points)
 on 8/5/12 at 1:50pm

Work hard, play hard.

Cries's picture

In Charlotte, my total comp

IB
 
Points)
 on 8/5/12 at 2:00pm
BlackHat's picture

Cries: My live-in gf helps

HF
 
Points)
 on 8/5/12 at 2:10pm

I hate victims who respect their executioners

Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital

Cries's picture

BlackHat: Cries: My live-in

IB
 
Points)
 on 8/5/12 at 3:37pm
tempaccount's picture

Great Britain's stock market

HF
(Baboon, 106
 
Points)
 on 8/5/12 at 4:03pm
ElSmokeoMucho's picture

God Illini sounds like the

 
Points)
 on 8/5/12 at 9:15pm
happypantsmcgee's picture

Spend the salary save the

O
(Almost Human, 9,621
 
Points)
 on 8/5/12 at 9:36pm

If I had asked people what they wanted, they would have said faster horses - Henry Ford

SirTradesaLot's picture

ElSmokeoMucho: God Illini

 
Points)
 on 8/5/12 at 10:30pm

Turbo leverage for capital explosion -- BD Capital

My WSO Blog

SirBarney's picture

SirPoopsaLot: ElSmokeoMucho

O
(Gorilla, 505
 
Points)
 on 8/5/12 at 10:36pm
TheKing's picture

Illini is the most on point

O
 
Points)
 on 8/6/12 at 8:17am

Check out my WSO Blog

West Coast rainmaker's picture

Saving mine. Investing is

ER
(Neanderthal, 2,072
 
Points)
 on 8/6/12 at 8:30am
cheme-ib's picture

TheKing: Illini, if you wrote

CO
 
Points)
 on 8/6/12 at 9:16am

"So who lost the hundy?"

Knowledge Kick's picture

ElSmokeoMucho: God Illini

 
Points)
 on 8/6/12 at 9:26am

http://DollarDrip.com Username: Knowledge Kick

Senvik's picture

ElSmokeoMucho: God Illini

 
Points)
 on 8/6/12 at 10:24am

"You stop being an asshole when it sucks to be you." - IlliniProgrammer

Devils Advocate's picture

SirPoopsaLot: Devils

IB
 
Points)
 on 8/6/12 at 10:33am

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neilol's picture

Back on topic: Pay off credit

IB
(Orangutan, 251
 
Points)
 on 8/6/12 at 11:05am
bearing's picture

Ménage tois in Cancun (never

ER
(Neanderthal, 2,082
 
Points)
 on 8/6/12 at 7:25pm
kamster's picture

100% invested; maybe take

ST
 
Points)
 on 8/6/12 at 9:11pm
MoneyKingdom's picture

I'm honestly starting to

IB
(Gorilla, 626
 
Points)
 on 8/6/12 at 10:39pm
ewlang's picture

would love to see a yearly

IB
(Baboon, 174
 
Points)
 on 8/7/12 at 11:46am
seville's picture

neilol: Back on topic: Pay

 
Points)
 on 8/7/12 at 3:59pm
Gray Fox's picture

I'm kind of in the camp that

HF
 
Points)
 on 8/7/12 at 6:53pm
IlliniProgrammer's picture

ElSmokeoMucho: God Illini

ST
(Almost Human, 9,244
 
Points)
 on 8/8/12 at 3:29pm

Work hard, play hard.

IlliniProgrammer's picture

Devils

ST
(Almost Human, 9,244
 
Points)
 on 8/8/12 at 3:46pm

Work hard, play hard.

PetEng's picture

Can't hate on Illini. I

O
(Gorilla, 747
 
Points)
 on 8/8/12 at 5:03pm
APAE's picture

IlliniProgrammer: ElSmokeoM

(Neanderthal, 3,660
 
Points)
 on 8/8/12 at 6:27pm

A lot of people do certain things to add days to their life. I do things to add life to my days.

IlliniProgrammer's picture

It's "One Oak"? The last

ST
(Almost Human, 9,244
 
Points)
 on 8/8/12 at 10:07pm

Work hard, play hard.

IlliniProgrammer's picture

PetEng: Can't hate on Illini.

ST
(Almost Human, 9,244
 
Points)
 on 8/8/12 at 11:24pm

Work hard, play hard.

ElSmokeoMucho's picture

IlliniProgrammer: ESM has

 
Points)
 on 8/9/12 at 7:55am
SirTradesaLot's picture

ElSmokeoMucho: IlliniProgra

 
Points)
 on 8/9/12 at 8:51am

Turbo leverage for capital explosion -- BD Capital

My WSO Blog

IlliniProgrammer's picture

LOL, desperate troll gets

ST
(Almost Human, 9,244
 
Points)
 on 8/9/12 at 12:05pm

Work hard, play hard.

Ben Shalom Bernanke's picture

travel

AM
(King Kong, 1,423
 
Points)
 on 8/10/12 at 4:10pm
Space_monkey's picture

Two words - New Orleans.

IB
(Chimp, 4
 
Points)
 on 8/10/12 at 5:35pm
Kenny Powers's picture

Cries: BlackHat: Cries: M

O
 
Points)
 on 8/10/12 at 7:29pm

pick em, lick em, stick em

Bondarb's picture

I am going to have to back

HF
(Neanderthal, 2,283
 
Points)
 on 8/10/12 at 7:44pm

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