Bonus spending done right
What's the right way to spend your bonus as an analyst 2? How responsible do you need to be at this stage given the salary is expected to grow exponentially?
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enjoy life cuz u never know when it all ends
Since you used the word "responsible", I'd live by the adage burn the salary bank the bonus. Especially right now with headcount reductions possibly imminent, having that extra cushion never hurts. Doesn't mean you have to save it permanently. Just "defer" spending it for 6-8 months and see how things are. If you've been eyeing something during all of that time, I'd say pull the trigger on it. I would certainly still be responsible as being an analyst 2 isn't necessarily a landmark stage vs reaching associate 1.
what if ur bonus is 0 this year
TQQQ and UPRO
Dog shit advice. Leveraged ETFs should only be used for day trading, not buy and hold. Once you dive into the math you see losses compound faster than gains
If you’re in a flat or down market…
Common misperception you have. It's called daily reset. It works both ways both downwards and upwards. This why the returns are far more than 3x the underlying index. Unless, you expect a down market for a lot longer (typical retail consensus opinion) the gains will far exceed the risk of products like options.
Invest in real estate
There's no right or wrong, it all depends on your preferences. Below are some arguments that I usually think about. Personally, I don't really have any expensive habits so I just buy whatever I want and still end up saving a very large portion of my income.
Arguments for spending:
• Your income will increase exponentially if you stay in banking / PE, so you will not be dependent on the money
• You are still in your best years. I would rather spend money when I'm 25 than when I'm 50.
• You are working a lot, so you should treat yourself with something nice
Arguments against spending:
• Given that you are still young, a certain amount saved now will compound and be worth much more than the same amount saved in the future. As such, one could argue that it's more important to save a lot when you're young so the savings can compound. Meanwhile, how much you save when you're older won't matter as much as any savings will be very small compared to the returns on your investments.
• Current job market isn't exactly the best in IB. If you get laid off, that bonus could make a big difference.
• Idk what your career plans are, but if you decide to leave banking for a lower wage job such as corp dev, saving that amount again will take quite some time.
• Depends on what you buy, but you won't have the time to enjoy some things given the amount of hours you put in
Rolex
The right way for you will always be your way.
Seems like you already have an idea on how you’d like to treat yourself with that bonus but are facing some sort of dilemma in the likes of « this is what I want but is it what I need », did I get that right?
Maybe it’s best to save it just in case for a rainy day, or maybe it’s better to enjoy it now however way you want to because you never know what tomorrow is made of but, in the end, it’s your decision to take. That’s the beauty of life and freedom - you own your successes but also your mistakes with no regrets because it was always your and yours only decision to take.
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