Now that bonus season has more or less wrapped up, how is everyone looking to spend their bonus? I'm interested in both any "fun" spending and investment strategies.
For me, I'm spending ~$7k on "fun" items and the remainder is going to investments (mostly the S&P 500 and a little gold).
Of the ~$7k, I'm spending $1.5k on a laptop, $5k on a vacation, $0.5k on clothes, and $0.5k on gifts for family. I'd love to buy another watch (maybe a Cartier Tank) or more kitchen appliances (i.e. espresso machine), but I want to prioritize savings.
I have decent retirement savings (~$100k) locked away in my 401k and Roth IRA, but I want to start saving up more money for a down payment on an apartment in the coming years. I feel fortunate to have paid off my student loans, but feel like I'm a long ways away to being able to afford my own place.
Based on the most helpful WSO content, your approach to bonus spending aligns well with common strategies shared by finance professionals. Here's a breakdown of how others typically allocate their bonuses and some additional insights:
"Fun" Spending: Many professionals allocate a portion of their bonus to treat themselves. Examples include:
Investments: A significant portion of bonuses often goes into investments. Popular strategies include:
Savings for Major Goals: Saving for a down payment on a property is a common goal. Many users recommend:
Debt Management: While you've already paid off your student loans (congrats!), others often use bonuses to tackle high-interest debt before focusing on investments or discretionary spending.
Your plan to balance fun spending, investments, and savings for a future apartment is solid. If you're looking to accelerate your savings for a down payment, consider: - Redirecting a larger portion of your bonus to a dedicated savings account. - Exploring additional investment options that align with your risk tolerance and timeline for purchasing a property.
Lastly, while it's tempting to splurge on items like a Cartier Tank or espresso machine, prioritizing long-term goals like homeownership will likely pay off in the long run. Keep up the disciplined approach!
Sources: The Last "what should I do with my money?" Thread (hopefully), Retirement Planning for IB Analysts, Millionaire by 30, Managing Your Money - Building a Personal Financial Model, I cant save money
How many YOE and what was bonus total?
bad taste
Charter a private boat dinner date around Manhattan at night. When the weather is warmer though.
Please max out your ROTH. Assuming you have already. Only $7K. In a few years you'll be so glad you did. Assuming you are an accredited investor (or will be in a year?), you have MANY additional investment options. The bonus: you are very well-educated and totally able to due diligence these opportunities. Start learning, familiarizing yourself with sponsors, learning segments you would like to invest in. If you have funds in tax-deferred accounts outside of work (ROTH, or regular IRA), you can self-direct the funds with certain custodians. There really are so many options once you are in private placement territory as an accredited investor. Of course these funds can be invested in taxable accounts, yes you will pay tax but you might be able to accumulate the funds you're looking to purchase real estate quicker. Private lending doesn't require you to be accredited, another great option. Just a thought. Develop the passive income streams and use that to buy your watch, you'll feel so proud of the accomplishment.
Get a little Nespresso machine for the time being - they work just fine - don't deny yourself espresso, but save counter space AND money ; )
In the long run, yes, you will remember great, splurgy vacations forever, but most of the smaller stuff you really don't value much. Save save save - I swear, someday you'll say "that annoying lady from WSO, she was right." Saving and investing and creating passive income REALLY gives you so much freedom - you're not denying, your just delaying.
You have to be under $146k in income to contribute to a Roth IRA, which, even for first year analysts, most of us will never be below that limit
Great call, I forgot how high your income can be even so early in your careers. Thank you for mentioning!
Backdoor roth
Yes - contribute to traditional and convert to ROTH - no limit on conversion.
Advising a kid with 100k in the bank and saving up for a down payment to get involved in private equity/credit is fucking crazy work
Thanks, I found it odd too.
Fwiw I have more like $200k saved total before my new bonus hits the account ($100k of it is locked in retirement accounts). But given I want to be able to afford my own place in the next ~5 years I don't see why I would lock more after tax money in retirement accounts. I'm 25 now and between an apartment/house, engagement ring, and wedding ring I have a lot of major expenses in the next 5 - 10 years. The lose of liquidity doesn't seem worth it.
Separately, maybe I'm missing something but I don't see the point of Roth investment accounts at this income bracket. A traditional Roth IRA is blocked for high income earners (which is most of us) and while I could backdoor it, it seems better to avoid taxes today and put the money into a traditional 401k. Putting more than ~20% (the max for a traditional 401k) of one's income in locked away accounts in a given year seems like a good way to eat away at any future liquidity.
It's really not that hard. You could do private lending in a self-directed IRA, or own a rental property, neither require you to be accredited. Private equity and credit - find a few sponsors, compare and follow their results for a while, do your due diligence, chose an investment with a minimum investment you can meet (you can always speak to the sponsor and ask if they will take less, they usually do). You do this kind of due diligence all day every day, in a different way. It's challenging and some extra work the first time, then it's cash flow. You can do both. Save for your downpayment, and save some for the long-term. With a ROTH you can also take out the contributions after 5 years, so if you really need the funds in the future, you could pull them out, maybe the account will have doubled by then and you're playing on profit thereafter. There's some extra funds for your larger purchase. Just a thought.
How about a taxable investment in O & G, get a nice break against your W-2 ; ) You will just have to 1031 in a couple years.
Just having a conversation. I get that everyone wants the house/apartment first, but maybe it's not the only way to go.
Bought new skis and boots. Got my dream watch last year. Putting the rest (90%) of my bonus in savings / maxing out my Roth for 2025.
My snowboard was handmade by Hans Kessler in Switzerland - The Kessler Palmer Platinum LE. I'mma ride it till it dies.
Renowned Snowboard Craftsman Turns Olympic Gold into Platinum | Malakye
"High in the Swiss mountains, in a setting surprisingly similar to something you’d see on the set of Heidi, is Hansjurg Kessler’s workshop. Accessible only by foot, packhorse or ATV, the unassuming father of four children works his magic - one snowboard at a time.
Another fan of Kessler’s boards is action sports icon, Shaun Palmer. At the time of his World Cup finish that landed him on the 2006 US Olympic Snowboard Team, Shaun Palmer was riding a Palmer Platinum LE, a limited edition snowboard handcrafted by Hansjurg Kessler exclusively for Palmer Snowboards.
The result is the first snowboard in the world that allows for full-blown power riding without compromising effortless handling and total control. It is also the most expensive board in the world, retailing at $1,900. But it’s worth it."
Most people have no idea they are smowboarding or skiing next to SNOWBOARD ROYALTY. But, one day a lift guy saw my board. He saw the Palmer logo and said "oh nice Palmer," then he saw the Kessler logo with the wings and he was like "NO SH*T KESSLER TOO??!!!!" If you know, you know.
That’s awesome man what a legendary board to ride. I got Völkl Mantra 88s so hyped to ski them. Seems like they would absolutely rip. I love steep groomed black runs. Was just up in Vermont last week and now I’m dying to go back and try the same runs with a more serious ski.
Why would you spend 1.5k on a laptop
I got my personal laptop pre-college. I'm a few years into my career at this point and needed an upgrade. Maybe I could've spent $1k, but at the end of the day its $500 for something I'm going to be using for the next 5+ years.
Cool
Pretty standard for an upper end laptop that "just works" and won't be obsolete for many years.
I definitely wouldn't. I spent $2.2K.
ATP just buy a pc( unless you're a mac user or you don't have desk space)
Writing a check to finally be debt free then saving / investing the remaining ~60%. Im looking forward to finally having complete financial freedom after being held back by my loans.
Also fill free up $500-600 more a month in cash-flow so definitely looking forward to benefiting from that
nice watch ~20-30% and then rest into ETFs
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