Seeing how there's so much talk recently about bonuses / comp, I'm wondering how everyone typically spends their bonus? How much do you save / invest, and how much do you actually spend right away?
If you're an associate or above, did your spending / saving / investing patterns change over time?
| +231 | Coverage Banking is Paradise | 29 | 6d |
| +144 | UBS preparing for a October Layoff Massacre | 105 | 1h |
| +116 | London Recruiting is Paradise | 46 | 5h |
| +77 | My Motivation Is At An All Time High | 13 | 3d |
| +55 | Work and Suicide | 23 | 1d |
| +49 | Is 7 years in banking enough to retire, or am I delusional? | 27 | 3h |
| +45 | Do actual investment bankers despise IB TikTokers as much as I think they do? | 28 | 1h |
| +33 | MM IB --> NYC IB? | 17 | 1d |
| +27 | Should I escape the matrix | 5 | 8h |
| +24 | Negotiating VP Sign-On Bonus (NOT Tied to Deferred Comp)? | 22 | 23h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Vanguard.com
which funds champ
The only correct but safe and boring answer
The only correct but safe and boring answer
gucci and dior for my baby
My bonus + my wife’s = Mix of investments, household capex, nanny’s salary and maybe 5k of spending money
Your wife is in IB?
His wife spends all his shit
Not IB, but she does well
It supposed to be
My bonus - my wife's
I’m not the person who posted that, but we have a nanny and I spend a lot of time with my kid, but it is extremely helpful when both parents work. I don’t work weekends and take ~5-7 pm off to be with my child before bedtime.
This one's a personal decision and there are pros and cons to both. Given your mindset, I'm guessing you grew up in a developing country?
Even if you don't have a nanny, you're not interacting with your child 100% of the time. Think there's definitely an aspect of it being healthy as well for a child to see their mom not 100% dependent on the dad, and showing that it's possible to maintain a career while also spending time with your family.
How do you go about getting the taxes right? Do you adjust the withholdings for that one-off bonus check based on some sort tax of calculator?
I use an accountant.
Please find your self a good cpa, avoid trying to go cheap on hiring one.
Max 401K
Mega backdoor Roth
Buy some luxury piece (usually a watch) and fund a trip
Rest is set aside for investments - largely an index fund (VTI) and then some for crypto, real estate and seed investments
Can you explain backdoor Roth?
Was going to type a long explanation but this should be helpful
https://www.nerdwallet.com/article/investing/mega-backdoor-roths-work
I think I will be very irresponsible when I start making bonus money
You’ll be a lot more tired than you think. And blowing it on something is mentally a bit tough when you think back at what you went through to secure it…
Idk. I work multiple jobs right now in college in addition to a max course load for the sole reason of spending the money on useless things. You may be right, and IB is surely more demanding, but I think I will make easy poor decisions like buying a $10k intl first class trip or something.
That’s depressing
Wife says Balenciaga
UPRO/TQQQ why would you buy VTI lol
SOXL is also fire
Not this shit again...
Donated it all to a Trump superpac
Real estate in metaverse
1) Max 401(k) / ROTH
2) Some physical gold / other hard assets
3) Vacation fund for the year
4) Brokerage account
Another pre-owned watch (thinking of JLC or getting 2 Omegas - Speedy and Sea)
Finish off the student loans
Max out retirement account
Save remainder for future down payment on apt somewhere semi-affordable in NYC
Just picked up the ceramic and titanium seamaster - big fan.
.
Haha I love the JLC, but hard to come by a good price. May likely lean on the Speedy and Sea combo due to market, but they will still be part of my daily rotation. The JLC would make me look a bit gauche in some situations.
And no, I wish my student loans will be forgiven
Great watches, the JLC Master Control Calendar is a grail for sure
I love my Omega Seamaster but would jump on a JLC ultrathin moonphase if I could.
i always feel like JLC's display window for day and date is too small, if you want dress watch I highly recommend Blancpain Villeret or glashütte original senator, both have a big discount second hand too
Cryptocurrencies and NFTs
Which crypto?
Spending half of mine on the hearts project nfts
One nice dinner. Maybe a present (under $3k). The rest in investments (max 401k with mega backdoor, max Roth IRA with backdoor, max HSA, rest in post-tax investment account).
Can you explain backdoor Roth / how it works / how to do it
A backdoor Roth IRA is for high income earners that aren't eligible to contribute directly. You basically contribute funds to a Traditional IRA, and then ask your broker to convert them into a Roth IRA. I have both a Traditional IRA and a Roth IRA with Schwab, so all I have to do is once a year contribute the maximum allowed amount of IRA contributions (was $6,000 in 2021 and is unchanged in 2022), then get on chat support and ask them to convert the funds to Roth, which means they just transfer the funds from the Traditional to the Roth IRA.
You shouldn't have any funds sitting in Traditional IRAs prior to doing this because you can get taxed based on the pro rata rule. The above is the only Traditional IRA account I have, and it is always zero except for the few days between my contributing the $6,000 and Schwab transferring it.
Excuse my ignorance but why would someone need a back door to their 401k? There’s no income limit.
Normal employee contributions cap out at $20,500 in 2022. You can get extra funds in by contributing after-tax funds (not Roth) and converting them to Roth up until the total contributions are $61,000 for 2022. So in 2022 you can get up to $67,000 into retirement accounts: $61,000 in 401k and $6,000 in Roth IRA.
Invest in index funds
Crypto and stocks. You’re in finance, you should be able to invest for yourself.
Which crypto?
Whichever you believe in long term. Personally I am mostly in BTC, ONE, ETH, SOL, LINK, FTM. But not investment advice.
I'll start investing in venture-stage companies once I get a solid pool of capital going. VC has been getting extremely crowded, but there are opportunities if you know the right places to look. You see lots of startups and their investors getting shafted once they go public. That doesn't mean you have to as well. Most VCs want to stay on the cap table until a solid exit opportunity like an IPO or a takeover occurs. This also sends the message to other potential investors that the company is on a good trajectory. However, as an individual investor that's putting in $20k-50k max, you won't be scrutinized as much if you exit through a secondary offering.
Is there any backdoor to this without being an accredited investor? Ive been pretty interested in this too and heard of Sweater but not sure how that pans out exactly and they seem to have a large waitlist
I think one way you can become eligible is if you pass certain Series tests to become a registered broker or investment advisor. Another way would be to ask your parents to start a $1M trust fund for you, although not many people may have that privilege.
From what I've heard, it's up to the private company to make sure that its investors are accredited, and there isn't a formal process to certify you as being one. I honestly don't know how strict companies are in checking this, so there may be certain loopholes you can take advantage of.
One thing I would ask you would be why you are interested in private investing. Unless you have a ton of capital to burn or have awesome connections with founders, the deal flow quality will likely be subpar. You may be better off investing in mutual funds and ETFs.
SPY
My personal waterfall for all money for myself and fiancée (not just bonus):
Wold consider myself an index investor. Basically all investments are in some form of index fund.
After that if I feel like screwing around I’ll dump a couple hundred bucks in crypto or Fundrise (ereit) each month.
This is my baseline financial plan. Splurges include a few nice weekend getaways each year and usually 1 really nice vacation. Personally don’t have many material desires. Not “FIRE” guy but trying build my personal balance sheet ASAP to maximize the effects of compounding in my favor.
Aside from the under allocation to crypto this is pretty good.
Bonus from Y1: Paid off student loans.
Bonus from Y2: bought an impractical and fun car.
Bonus from Y3: Will probably do something boring af like invest into roth and echo one of the many other comments on this thread.
My advice would be to pay off your debt, but once you are debt free, do something fun. If you ball out regularly, yeah maybe save the majority of your bonus. However, I feel like many WSO users save their money and probably have a larger nest egg than I do, so dont forget about having fun too.
I had a near death experience and now I dont think twice about spending money on things (read: mostly experiences) I know will make me happy (ski trips with the boys, a week on an island with the gf, etc.). Life is too short to have the biggest bank balance and the least interesting experiences.
How much interest are you paying on your debt ?
For me it’s 1.4%. By investing in an index fund assuming 7% return its a 5.6% spread. NOT PAYING OFF MY DEBTS is a no brained imo
So I was a bit naïve when I set up my student loans and I was accruing interest before I realized it so by the time I started diligently paying down my interest it was closer to 10%. Long story short the first few payments only ate at the interest and it took a while before I was making a dent in the principal.
Your position is vastly different, and +1 SB for clarifying. In your case, I would continue to make the minimum payments and invest as long as you are hitting your expected returns. I am no financial advisor and the majority of users on WSO are probably better at budgeting / financial planning than I am so take my $.02 with a grain of salt.
got my girlfriend new tits
Username checks out
I am so surprised at people saying pay off your debt. Hello. If you put $100k today in an index fund, 33 years from now you’ll be a millionaire assuming standard market returns. And that’s assuming pretty bad returns already.
please talk about absolute real returns, a million-dollar today won't be as good as a million dollar in 30 years
Lol, thanks. Similarly, 100k in debt today won’t be as much as 100k in debt tomorrow.
If you want to buy a house / apartment, and the debt we're talking about is student debt, you'll likely need to pay it off, or it will be financially advantageous to. Student loans are almost never dischargeable, so a rational person, faced with financial distress, will get delinquent on mortgage, cc, and everything else before missing a student loan payment. Mortgage originators know this, and price your loan accordingly. If we're talking about a 7-figure loan, those extra basis points = real money, and exceed the value of whatever spread you're earning by paying X% on your student loans and realizing X+something (after tax...) in your PA.
Work at a German IB, after a grueling long year, with numerous all nighters, I was finally able to purchase a donut.
Must be Blair or some other shitty MM....
Lmao Blair pays above market in UK / US, pretty sure they do too in Germany
Crying, because I’m a wealth person who will make $8k if that.
Cop a Rolex
Holiday bonus went something like this:
40% to Uncle Sam
10% towards upcoming wedding
45% savings for down payment on near future home
5% fun moneys
2022 Audi S5 Sportback optioned out. Coming to 73k with everything I want to do to it.
Selling my car for more than it’s worth and get a 20k loan/pay it down with next years bonus,
50k going to my FA for investing. Keeping 30k in checking for life. Living very comfortably on my base.
Do you work in NYC? If so, where do you plan to store the car?
Live in Hoboken. Costs $300 a month to keep it in my building’s garage
I have a LLC, so I put that cash into building the business, the rest goes into investing and the exotic sports car.
Last year bonus $100k post tax. Invested 100% into crypto altcoins, watched it reach $850k in April 2021 (no joke!), then watched it fall back down again ... now valued at $160k (or +60k/ +60% APY). Such a crazy volatile market. Just HODLing ... consistent with my PE longterm value mindset. Let's see what happens in 2022 ...
How the hell did you not sell when you saw it's 800k+
How are you getting 60% ?
Max 401k
Add a new gun to the collection
Fund a new trip
Bang an expensive whore
WSO has become the new confession booth
I just don’t see the fascination/risk reward with banging hookers.
Not really a fascination - it's on-demand sex. Instead of pretending to be interested in them and making them believe that you're interesting so that you might get to fuck them, you give them some cash in exchange for the certainty that you get to fuck them w/out expending any effort.
I wouldn't call it a fascination. It get's to the point without spending all night and the same amount of money at the club just to end up not banging.
Live on your base and invest the rest. I’ve never swayed from that. I’m a VP and based on investments in RE and a side venture, I have a good shot at being “job optional” in 4-5 years irrespective of what the stock market does.
I don’t have an expensive standard of living though even though I have a wife and kids which cost a lot.
Crypto / Defi
- Buy a couple nice bottles of Scotch
- Make an extra mortgage payment
- Buy a new gun that I convince myself I need for whatever hunt I plan to take this year
- Index Funds
Every year in banking I max 401k, Roth, VAT, this totals ~57k this year all out of my base.
Every year, but the last I had one priority then the rest went to my taxable accounts:
Y1: Rolex
Y2: Engagement Ring
Y3: Condo
Y4: Wedding
Y5: Condo #2 (Got to build that RE portfolio)
Y6 (This Year): Largest bonus and nothing I need/ want, actually giving my parents a really nice vacation and paying off my brothers student loans (~20k). The rest is going into index funds and ~25k of crypto ( old dogs need to learn new tricks)
Vacation, home improvements, a few new guns a year and car all come out of general base. I live on essentially one paycheck a month. I also benefit because my wife makes ~250k and maxes out her stuff the same as well. Will liked hit a $3 M net worth this year, which I think is great only being 30. I am jealous of all the 25 year old retirement posts I am seeing because of Crypto, congrats to those guys.
I’m guessing you’re not in nyc?
Correct, Midwest, money goes further here, plus I am able to have a vacation cabin a couple hours away for weekends.
When you max out your 401k and Roth, do you max out this year (2022) or last year?
Delectus reprehenderit dignissimos tempore deleniti perferendis iusto repellat. Deserunt sed harum quos ducimus at. Sapiente dolorem quas eos nulla voluptatum quo. Illum ut ipsum sapiente dolor.
Unde quas praesentium dolores sapiente quisquam. Earum architecto voluptatem dignissimos quidem id. Voluptatem est dolores illo nulla recusandae nulla consequatur.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Ratione expedita vel et pariatur voluptatem debitis aut. Atque doloribus neque atque sit ex rerum. Nisi quas unde nobis odio. Ut nemo commodi eaque illo sed iusto voluptatem.
Veniam rerum ducimus et qui temporibus et. Voluptatem vel magni dolores est tempore. Possimus totam in cumque repellat temporibus omnis autem non. Eligendi qui harum et est dolore dolor. Aut nisi dignissimos blanditiis quis est quam porro.
Numquam repudiandae asperiores aliquam fuga commodi officia aliquid. Explicabo voluptatem ea veniam rerum sapiente molestiae. Adipisci aut magnam corrupti dolorem non. Et ad eum sit voluptatem debitis. Ut beatae qui rerum impedit. Placeat aliquam accusantium dolorem earum aliquam. Vitae quis adipisci aperiam voluptas consequatur est.
Eos excepturi numquam quisquam ut non quia. Enim sequi soluta ipsum eum molestiae temporibus non. Sed magnam blanditiis omnis est est ducimus ea. Nihil voluptatem dolorum assumenda sint rerum. Quas error quaerat reprehenderit quis incidunt debitis aut.
Praesentium maxime sed itaque eius voluptatem accusamus. Dolores eos eligendi dolor vitae. Consequatur voluptas aut aliquid consequuntur explicabo. Quia quia et cupiditate officia molestias.
Sed modi et ex libero harum velit aut beatae. Quam esse mollitia a ipsa cum voluptatem. At debitis at qui repellendus nulla dolorum. Accusamus similique dicta voluptates et. Magnam dolor voluptas beatae optio.
Provident nihil id consectetur quis velit et placeat. Fugit exercitationem voluptatem esse vitae et magni ut. Et in voluptatem inventore est libero. Distinctio quia sed animi qui fugiat exercitationem.
Sit atque exercitationem explicabo recusandae quas. Nam alias quo sit iusto reiciendis exercitationem. Temporibus beatae quia perspiciatis nihil tempore in doloribus.