How people usually spends their bonuses?
About to get my 4th bonus since I started in IB next month, for now I have been stashing all my bonuses and investing the money in the S&P and the NASDAQ. However, I realize how pointless is to work hard and accumulate money just to take it to grave.
I am not very optimistic about this year's bonus but it is fair to assume that after getting it I will have close to GBP 240k
I was thinking about spending a big portion of the money in a down payment for a property in London so I can climb the property ladder - however I don't really like the idea of committing to a 20-25 years mortgage, besides I don't see myself living in London in the long term, plus buying a property is just another way of investing rather than a treat.
Curious to hear from other people about what you did with your bonuses? Down payments? Watches? Fancy weddings? Traveling ?
Ah, the age-old question of what to do with those shiny bonuses! It's like finding a bunch of bananas at the end of a long day swinging through the trees – what's a monkey to do with all that fruit?
Based on the most helpful WSO content, here's how folks in the jungle of finance typically spend their bonuses:
Investing: Just like you've been doing, many people choose to invest their bonuses in the stock market. The S&P and NASDAQ are popular choices for their potential returns and relative ease of access.
Real Estate: A down payment on property is another common choice. It's a tangible asset, and for some, it's a step towards building personal equity. However, as you mentioned, it comes with a long-term commitment and isn't as liquid as stocks.
Paying Off Debt: Some prefer to use their bonuses to pay down debts, whether it's student loans, credit cards, or other personal loans. It's not the most glamorous option, but it's financially prudent and can provide a great sense of relief.
Luxury Purchases: Yes, there are those who splurge on the finer things in life – watches, cars, or other luxury goods. It's a way to reward oneself for the hard work and long hours.
Experiences: Traveling, fancy weddings, or any other significant experiences are also a popular choice. These can create lifelong memories and are about enjoying the fruits of one's labor in a more immediate and personal way.
Saving for the Future: Some might stash it away for future plans, like an MBA or starting a business. It's a less immediate gratification but can pay off in the long run.
Remember, there's no one-size-fits-all answer here. It's about balancing your financial goals, personal desires, and the realities of your situation. If you're not feeling the property ladder in London, especially with your concerns about long-term commitment and location, it might be worth considering other options that align more closely with your lifestyle and future plans.
And hey, if you're feeling generous, there's always charity. Giving back can be a rewarding experience that doesn't require a mortgage or a maintenance plan! Whatever you choose, make sure it swings well with your personal and financial goals.
Save your bonuses, S&P 500 index
Anyone get bonuses lately that would care to share?
VTI, UPRO, and chill.
Definitely not an expert given my lack of experience but if you're looking to splurge on something luxury rather than investing, I would really think hard about what hobbies you have/enjoy and/or what your interests are and make a purchase that builds on that. If you're really passionate about cars, then it might make sense to put some money into one, if you're into a sport, maybe there's some equipment that you've always wanted. If your money isn't going to investing, then it should go to your utility/happiness and hobbies are a pretty sure way to do that.
On the other end of the spectrum, maybe a holiday is on the table?
Regarding spending your boni on luxury items, it depends on your age.
Senior bankers (45 old <) have used to spend their money on luxury items like Rolex, AP, PP. They still buy those items nowadays.
But younger generation does not.
Why?
Senior bankers were in a very early phase with their spending. At that time, there was no hype about Rolex, AP, PP. They could get whatever they wanted from their ADs.
Literally, they still have no issue to order what they want to with their remarkable purchasing record at their ADs.
The younger generation (at least, in my circle) does not buy fancy stuffs, but rather spend their money on vacations.
If they are in a relationship and their girlfriend would like to have this and that (mainly, jewelry from Cartier), they spend money for their girlfriend.
I personally spent my boni on Rolex Daytona Panda. But that´s all in my entire career.
I saved, invested, and purchased a 2BR appartment for renting.
Even at the age of 36, I still have no car (I do not have a desire to purchase one at the moment). I am not interested in cars at all.
But surely, I am in comfortable position to buy one if I need one.
But most people who buy a fancy car regret at the end that they bought one.
P.S.: In Frankfurt (Germany), your boni will be taxed (roughly, 45%). So, I was satisfied with my boni. But at the same time, I was pissed off that it was taxed too much. So, I was always careful how to spend my boni.
Pls ignore if I’m getting too personal here but at what age did you get the house (assuming not fully paid in cash?)
Buy yourself something nice, go on a trip, and save the rest
Good question OP - here are my thoughts as a British-American guy who has worked in both countries in IB/PE. I'm a bit older than you now (early 30s) and my circumstances/preferences may obviously vary from yours but this is just my views on what to spend your bonus/savings on.
Personally in your situation, I would look at buying a luxury/nice 2-bed flat for around the £600k mark. With interest rates being high + the exodus of BTL landlords, there is an over-supply of flats currently and so the market is temporarily pretty soft, meaning you'd have your pick of places around inner zone 2 (just make sure to avoid anywhere with excessive service charges and/or unresolved cladding issues). You could put £120k down for a decent rate 80% mortgage and take either a tracker or 2yr fix product, and then refi onto a much lower rate when they finally start coming down. And then stamp duty would be another £20k - that would still leave you with £100k+ liquid and a flat with equity, which is far more than most people in their 20s, 30s or even 40s outside of finance/tech have (and will do wonders for you on the dating front trust me!)
I know you say you're not sure how long you'll be in London (I get that as I'm now in the US) but what does that mean exactly? If you think you'll be leaving in the next two years then maybe disregard my above advice - but even over a 5 year period, the stamp duty would only work out to £4k a year and in the meantime you'd be building equity and hopefully benefiting from modest house price appreciation. More importantly you'll have somewhere permanent that you can call home, without being at the mercy of the rental market - for me personally anyway that did wonders for my mental health and well-being.
Of course if you're into cars, watches etc then don't be afraid to splash out a bit. Having said that once I started earning decent money and bought a flat, whilst I did get a decent car and nice watch (£2k Tag), for me personally I found holidays and travelling much more fun. Especially in the UK you get to take most or all of your vacation time which meant I fitted in fantastic trips to Bali, Thailand, Mexico, Dubai etc over the years. And with Europe on your doorstep you can easily fit in lots of short city breaks over a long weekend.
For myself it was particularly gratifying to be able to "live a bit" after my first 5 years of working in banking - similar to yourself, at the start I was overly cautious with my money (and of course chained to my desk most of the time as an analyst anyway), so being able to travel and make great memories without worrying about the cost was pretty awesome, and also made the grind at work a lot more tolerable. But again it depends on what works for you - I have friends who will regularly drop £300 in Mayfair restaurants (won't name specific places but think the usual suspects) either to impress hot dates or just with their bros because they enjoy the food/atmosphere. Whilst I don't begrudge doing that and have done it myself a couple of times, I don't think it's good value doing it regularly myself - but that's just my opinion, you should do you.
Anyway good luck OP on whatever you decide to splash out on, and congrats for doing well in your career so far! I'm sure you'll have a lot of fun as a young twenty-something with tons of cash in your pocket (I certainly did!)
It's a banana Michael, how much could it be, Ten Dollars?!
Not sure where 2 bedroom flats are 600 pounds.
You’d be surprised - the market for 2-beds in London is very soft right now (relatively temporary situation resulting from the combined headwinds of stigma over past cladding issues, high interest rates, and over-leveraged BTL landlords all needing to sell right now due to rates + tax changes that Osborne introduced which have kicked in).
Here’s a couple of examples (second one does admittedly have cladding work still to be done however the developer Barrett has pledged to remediate it - although caveat is would get the solicitor to do extra DD). If you search on Rightmove however you’ll see more in East London in that price range, and a lot more if you include zone 2 SE London (North Greenwich etc) -
https://www.rightmove.co.uk/properties/142384655#/?channel=RES_BUY
https://www.rightmove.co.uk/properties/142669553#/?channel=RES_BUY
Been saving to buy a pice of land, hopefully I can lock it down next year
I’m putting it all in uranium ETFs.
i see i've found a uranium asshole. Hello brother.
Buy something nice and rest into s&p500, nasdaq and total market indexes
Unless you want to work for the rest of your life, invest it.
Otherwise spend it as you so wish.
luxury items are not 'enjoying your bonus'. Luxury items are having a lot of money, no real personality or interests, and a marketing department convincing your to spend your money to signal your wealth / income / status to your peers (90% of which you interact with on a semi-daily basis, have simar job titles, and in same socio-economic class so its like living in Wisconsin and thinking you need to buy a packers shirt to prove you are a true fan). Of course, there are 'high end' brands for basically any product or service, but things like PP watches are just looking for ways to spend money unless you actually have been a big watch person your entire life (be honest, you arent).
Instead, find a few hobbies and interests that you can pour yourself into. Then, you will have no shortage of ways to spend your money. If you are into cycling for example, it can be new bike upgrades, getting an indoor trainer, paying to ship your bike cross country for a trip, competing in events, etc. etc. Yes, there will be luxury brands in whatever niche you enjoy to blow money on but at least its something you truly enjoy.
If you dont know what you want so spend your money on some marketing department quickly will find something for you
If looking at your 25k watch every day is going to give you joy, then I don't see a problem with buying it.
I agree that spending money for the sake of it is pretty stupid, but the reverse is also true - if all you do is save and invest every spare dime you earn, what is the point? A comfortable retirement is a great goal, but there comes an inflection point where not buying that nice bottle of whiskey right now, in the hopes that you'll be able to afford it without impacting your lifestyle in 40 years, is self-defeating. So yeah, probably a middle ground between dropping $100,000 on a Patek Philippe and "don't buy luxury goods at all, it's a marketing scam," but I just see that attitude so often, where saving and investing becomes an end in itself, and not as the means to an end that it should be.
A decent vacation and TQQQ
Paying taxes.
Bought a white gold submariner for $42k lmao
Does wearing it stress you out at all? I have a handful of watches in the $8k to $15k range, but you basically have an entry level BMW on your wrist.
Very stressful since I haven’t scratched it yet haha
hell yeah
Putting my whole bonus to my student loans :(
You'll feel better about that long term. Happens to the best of us.
Watches
Lmao that watch is so fucking stupid. I love it.
haha - Drake has this one - it is $620K
https://robbreport.com/style/watch-collector/drake-roulette-wheel-watch…
https://jacobandco.com/timepieces/grand-complication-masterpieces/astro…
.
Buying a new computer
Save it
If you don’t spend it on a Rolex, you’re a fucking bitch
Rolex and Macarons
Screw Rolex and get a Breguet instead.
I would buy in London for financial reasons only.
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