$50mm net worth

Hear a lot of HF analysts talk about $50 as their "target" or number. how achievable is this? by what age - 35, 40, 45 and what % of incoming analyst you think hit that number? 

Similarly, what do you think most people have saved by the time they hit PM promotion? My hunch is $5-10mm 

 

At the top SM funds(think viking, LP,TGM,PS) there are many analysts that are early 30s that have a net worth of 50mm or more. No clue about pod shops though 

Can you kindly fuck off with this BS? That is not and never has been the case even during the heyday of this industry.

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In order to have $50M in wealth, you'd have to consume nothing and earn approximately $100M in pre-tax income, which is about $500M in pure alpha at the fund level. Most PMs get started at ~ age 30. About 50% fail. Another 40% can grind out $5-25M of PnL/year which equals maybe $1-5M/year in pre-tax income. maybe the top 10% can have a realistic chance of succeeding to the point where they can save $50M one day. 

As a lifetime super senior analyst who has no PnL attribution, you can realistically earn ~$1M per year averaged over time. After consumption and debt, a typical junior analyst might save $500-1000k by the time he makes PM. 

I think your mentality of trying to accumulate $50M of FU money is not right. You need to realize that once you can support your annual consumption (food, rent,  beer etc.) thru a decade of unemployment, you've basically already achieved full financial freedom. Realistically if you can make it that far, you will never experience such a long period of unemployment ever. If I fail as a PM I can just get busted back to analyst and still earn $300-500k/year. If I fail somehow at that, I can become a software engineer and make $250k/year quite easily. With a measly $1M banked, I can't starve; I can afford to sacrifice $100k/year in income for lifestyle balance.

 

You achieve this by winning the race in the fallopian tubes, starting from the ballsack of your rich dad to your mom's eggs.

 

How do yall work in the hedge fund industry and not realize that your personal wealth can compound as well? If you can invest your personal wealth in the fund, often pre-fees, and they compound at 15-18% gross it’s a much different equation than the 100mn pre tax income everyone has come to. Obviously still impossible, not sure where OP and others get this idea from but 100mn pre tax is just not the right way to think about it…

 

PE comp is so back end weighted that compounding isn’t actually that big of a driver unfortunately 

 

1. being allowed to invest in the general is the perk. employees can/do pay fees like any other LP.

2. conditional upon success, your income will grow exponentially, so the return on savings only starts to matter after you stop increasing the size of your book.

3. conditional upon failure, you won't accumulate very much savings. consumption is high, you're looking at a more normal 5-10% rate of return in the stock market, and your income will only increase linearly. 

 

Savings will always compound exponentially, not sure why you think lowering the exponential factor makes it linear lol. Also, not the case on paying fees at my fund, have not heard different from others I know, but thanks for info for the future if I consider jumping ship

 

Employees do not pay fees at any fund I've ever been to. It's different at Citadel and funds like that but for every PE and single manager I've ever heard of, you don't pay fees. The question is whether or not you can get friends & family money in on a fee free basis or not or whether the perk is solely access for them. 

 

How do you work in the hedge fund industry and not realize that you pay taxes every year on your HF K-1, often in the way of short-term capital gains? I.e. the 15-18% you mention at the personal after-tax level means the fund is returning 25-35% a year. To state the obvious, this is extremely unlikely.

 

Ankit Raj? I heard his pod pulled in 500m last year or 2022

 
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Doesn’t seem that hard to do at a good SM

This is a pretty common path: 2+2 banking / MF PE, then analyst at SM when you are around 26.  First 4 years probably average 1M/yr, so now you’re 30 and this is where it really scales up. 31-33, $3-5M per year, 34 $80M inheritance when grandparents pass, 35 $8M bonus.  This should easily clear $50M all in cumulative net worth.

 

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