Best Time to Have Money
Thinking about my Associates and VPs slaving away their twenties and early 30s. Truly don't understand why these guys work so hard for possibly 10 days of vacation per year, to maybe make MD and pay $60k in private school tuition for 16 years of their kid's lives. They may have a beach house in S Hampton that they see 6 weekends per year...Came to the conclusion that the best time to have money is 18-30. Basically coming from money is the only way to truly enjoy being rich.
Any money after 30 just doesn't seem worth it. Capital is freedom, until you have a demanding job, family, and health ailments. Maybe I'm jaded curious to hear how this industry has changed perspectives on wealth.
Yeah, many economists actually agree with this statement. But I disagree on having to be born rich. Basically, you should stop trying to save so hard when you’re in your 20s. Some economists even say you should go into debt when you’re young (not talking about student loans either).
It’s called consumption smoothing. We make all this money when we’re older and experienced, but we’re too tied down with kids or are not healthy enough to enjoy it. So we should spend more when we’re young, knowing that we’ll make up the difference when we’re older, making bank, and too tired to go surfing in Indonesia for a week.
I personally have started spending my entire base salary + budgeting an extra $2k per month from my bonus to make sure I’m fully balling.
$24k (after tax) of additional consumption can drastically improve your life in your 20s… but will he a rounding error when that first big carry check hits.
I read this concept in Die with Zero and throughout the book I could just never really agree with it. I understand it in theory but practically speaking, spending my future money right now would be mentally very tough. So many what ifs like change of heart on high finance careers, layoffs, etc can dramatically change your future earnings to where my first carry check 15+ years from now isn’t exactly something I want to base my lifestyle today on.
The average person may start off making 40k out of school and progresses to 150k in their 30s or 40s and that’s a pretty reliable path that I understand applying this concept to. However, making 200k first year in IB and having that comp double every 2-3 years and sticking on that golden path for the long haul is so much less likely.
There’s a balance to it. Depending on how much of the $24k I spend, I’m still saving $60k-$84k this year (out of $275k total comp). Obviously I could be saving more. But who cares, $60k is fine. I’ll probably get promoted soon and be in the 3 or 400s
I think it’s also important to find a role that you can handle indefinitely. I’m not doing IB anymore, my job is hard, but not grueling (weekends/ many weeknights free unless really grinding to get to IC). IB sucks, and I would not count on making $800k as a VP.
Another thing I’ve done… go into excel and map out your net worth assuming you exit to corp dev and earn modest, but solid pay continuing into your 50s. Use whatever data you can find to accurately map it out, and use realistic assumptions for savings, return on savings, etc.
Now go edit 2024’s budget in your model and reduce your savings for that year by $24k, 50k, whatever. How much did your retirement net worth move?
Yeah those 3 things basically. I don’t have a fancy, car, watch or apartment (A+ location, but small studio at $3k/month). I try to spend on memorable experiences rather than material things that I’ll forget about in a few years
Very much disagree with this, it’s like you “kids” in your early 20s don’t realize there is a life after 30. I would say a few things:
1) I wouldn’t have made responsible decisions with a lot of money at 18-25 or so. I think money would have probably been a curse and not a blessing. I don’t know what you think “enjoying” being rich is, but most of the things that bring you happiness you can do for a lot less than you think
2) there is plenty of life after 30 and plenty to enjoy. Heck, I’m almost 40 and in the best shape of my life, and outside of things I just find stupid now (mostly the whole clubbing scene) I do a lot of the same stuff I did when younger (travel a bunch, go to concerts/sporting events, etc)
3) you present it as you will always be working forever and shitty hours. Yes, I wouldn’t want to work crappy hours at 40 for the MD pay, I agree with that, but there are many other paths in life than just that.
When you get to 30 you’ll realize (if you take care of yourself) that you feel the same as you did at 25. I waited to have kids until mid 30’s (and didn’t really make “big” money until early 30s), but even now, we travel a bunch with the family. Go get to see the world, enjoy life, etc. Now I went into HF route so my work life balance is much better than the MD path.
Refreshing to see this post in contrast with some of the general nihilistic undertones on the forum. Early 30s here and loving it.
Plus people are implying that once you hit 45 your body literally can't handle any travel because you're too frail and injured. I know people in their 80s who still go on international trips regularly. Plus, when I'm older I'm going to be doing the same things when I travel as what I do now, do sightseeing, go to museums, attend musical performances, etc. nothing particularly straining.
Completely agree, I travel internationally about once a month and, as mentioned, I’m almost 40. When you start making money the travel is easy; business class, nice hotels, go sightseeing, private tours if needed, and can travel with parents/nanny/etc so get to spend time with kids and have adult time too. Money doesn’t buy happiness but it gives you a lot of freedom, especially when talking about having a family.
Absolutely, honestly better than I did at times when I was in my 20’s, partially because of the amount of time I have to dedicate to my health (even with a family).
I workout about 90 mins a day (I’m arrogant but I’d challenge most 20 year olds in sports), I am able to have dedicated time for my health (including sport massages, etc) and I have been able to use time to work on my mental side too (time to take classes on subjects that interest me). I also think that when you have time to unplug and get involved in things outside of work (physically and mentally) you increase your productivity (learn new things but also more energized for your work). Additionally, the stress is also much lower as I feel financial secure and am not rushing to meet deadlines.
I can’t stress enough how great this age is if you take care of yourself, but that is usually at odds with IB. Having money, time, and feeling great physically and mentally feels nice.
I don't know if some people that say things like OP do not have parents or something, but personally, a big reason I think money is important is so you can easily take care of your parents.
My grandma has dementia and we can afford more care for her at home, so she doesn't have to waste away at some institution... Sounds like a pretty good use of money to me.
I think you accidentally answered your own question and it's not the answer you were looking for. The best time to have money is when you have a family to take care of. Before family, money is just a nice fun to have thing and an ego thing. When you have a family, it is a NEED TO HAVE thing. So, yes, the best time to have money is probably after you have kids.
Imagine a scenario where you drive a Porsche when you're 25 but can't afford to send your kid to college later....yeah 25 is not the best time to have money.
I am indeed well over 30. What I'm saying to you is you will have to account to yourself later why you did what you did in your 20s. Often with the money ends up coming responsibility, not freedom. Actually having no money can offer a lot more freedom, since you don't have to worry about losing money. What you're worried about with no money, is that you won't have enough later. The talk of traveling doesn't really do much for me, I've traveled my share and it was actually more fun with no money. Working like crazy so some day you can take a luxury tour somewhere, that isn't what I'm about. In fact actually using money in a fun way is more complicated than you might think when it's a lot of money.
But that said frittering away your time at the bar and arriving at 35-40 with nothing to show doesn't sound great to me, and there are many of these people around, and they start to act nuts. The other thing I've learned is that there are actually a lot of ways to make a lot of money that don't involve working so hard in your 20s. And there are plenty of people that don't make quite so much money, but they don't really care. So if you really don't think it's right for you it might actually not be.
In an indefinite world, according to Thiel...
Process trumps substance: when people lack concrete plans to carry out, they use formal rules to assemble a portfolio of various options. This describes Americans today. In middle school, we’re encouraged to start hoarding "extracurricular activities." In high school, ambitious students compete even harder to appear omnicompetent. By the time a student gets to college, he’s spent a decade curating a bewilderingly diverse résumé to prepare for a completely unknowable future. Come what may, he’s ready—for nothing in particular. ...
Instead of working for years to build a new product, indefinite optimists rearrange already-invented ones. Bankers make money by rearranging the capital structures of already existing companies. Lawyers resolve disputes over old things or help other people structure their affairs. And private equity investors and management consultants don’t start new businesses; they squeeze extra efficiency from old ones with incessant procedural optimizations. It’s no surprise that these fields all attract disproportionate numbers of high-achieving Ivy League optionality chasers; what could be a more appropriate reward for two decades of résumé-building than a seemingly elite, process-oriented career that promises to "keep options open"? ...
While a definitely optimistic future would need engineers to design underwater cities and settlements in space, an indefinitely optimistic future calls for more bankers and lawyers. Finance epitomizes indefinite thinking because it’s the only way to make money when you have no idea how to create wealth. If they don’t go to law school, bright college graduates head to Wall Street precisely because they have no real plan for their careers. And once they arrive at Goldman, they find that even inside finance, everything is indefinite. It’s still optimistic—you wouldn’t play in the markets if you expected to lose—but the fundamental tenet is that the market is random; you can’t know anything specific or substantive; diversification becomes supremely important.
In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.
Every other week there is some whiny post like this from some kid with zero life or work experience.
Is having money when you’re young cool? Yes, thanks captain obvious.
But this bizarre take that when you’re older and have a wife and kids your life is just a grind…wtf are you talking about? If getting married and having kids only sucked, guess what? No one would do it. Have you ever considered that some segment of the older male population wants that? That finds enjoyment of chilling with their wife and kids rather than “balling out”. I honestly don’t even know what that means anymore. Spending money lavishly on what exactly?
And here’s a secret for someone as immature as you.
When you get older and have money, there will be no one forcing you to get married and have kids. There are plenty of men out there who stay single forever. It’s hilarious to me that you just assume marriage and kids are a forgone conclusion for you and life ends with a private school payment.
I wonder if I was as dumb and arrogant in my early twenties.
Probably.
I worked my ass off pretty much all of my 20s on the sell-side going through the same motions as the OP. Why work so damn hard?
Fast forward today, mid 30s now, I'm so glad I did. I still have a demanding life and job, yes, but it's more enjoyable at a more senior level. Pay is better, work life is better. You can navigate work politics better. I'm happily married. I can comfortably pay for my kid's private tuition and own multiple homes. We did two big fancy vacations in Europe last year. In fact, giving my kid the top tier education at an early age that I did not have growing up in a poor, developing country is one of the biggest joys of my life. It makes 'slaving away' all worth it.
Could I have maybe enjoyed my 20s, the 'best years of my life' by quitting banking earlier? Maybe. But as an ultra type A person, I am not built this way - some people are born with higher drive and worth ethic, looking at a longer term perspective. Also, imagine if I started my career out of school making six-figures only to take a 50% paycut so early... IMO it's better to take such steep cut later in your career than early in your 20s, when you probably should be working your ass off. I look at my friends who did stricly 9-5 in their entire 20s, who are mid 30s now and just now starting to break six figures in salary, have no real assets other than cash, not satisfied with their career trajectory etc.
TDLR: there's no short cut to life and you really do get what you put in. BUT, this is all relative and experiences will differ person-by-person.
Ever heard of compounding?
Everyone on this thread is assuming the next 40+ years of market returns will be the same as the previous 40 years. Not saying that this leads to any one exact conclusion on OPs question, but the idea that each dollar one invests in their 20s will be 10x+ or whatever when their in their 40s because that's what happened in the past is naive. Maybe if more people take a successful active investing or "market timing" approach then this doesn't matter.
Either way, nothing in the future is guaranteed and I believe people are going to be in for a big surprise to see how the next decades unfold economically. Suppose that's a discussion for another thread. Guess we'll have bigger problems to worry about then but I would just tell people to enjoy themselves now while they can...