How old were you when you made your first million and what did you do in finance/ life? To specify this, was it gross earnings or personal net worth?
And in general, how many years would someone need to work in NYC finance to make a million in gross earnings?
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In NYC depending if you are frugal or not you'll probably be able to achieve 1 mill net worth by early 30s (you need to save heavy and have good market conditions). 1 mill per year probably mid 30s as well depending on pay structure. Really depends if you get an MBA as well.
Probably the right answer here on all three points. I'd say for the $1M a year, probably not in cash comp until very late 30s/early 40s unless you're really at the top top funds but with the carry and coinvest starting to come back, you could get there around mid 30s. If you do the tech bro on Blind thing and quote "TC" where you include equity vested (carry) as what you claim for comp, that metric would be over $1M by mid 30s for most.
As you say, all dependent on MBA/no MBA + speed of promotion (which has a bit of luck factor to it given fundraise cycles).
The TC metric is funny in tech, especially with start-up guys are touting 1m+ comp packages when in reality they are tkaing home like 200k with the balance being in illiquid common stock which likely will not actually materialize into what the value promised is even in the event of a liquidity event. That being said, of course there are lucky anomalies.
Hi,
I am not from the US (U.K./France/Germany). I thought of doing an MBA instead of a Masters given that I already have 2 FT offers for Top 3 American banks. Could you please provide me with more insights about the difference of a career with or without a MBA please? Does that impact promotion, HF/PE recruitment, pay?
Thanks!
This question heavily depends on where you want to spend your career given the recruitment and programmes differ quite materially across the US and Europe. Assuming you want to stay in Europe, there is virtually no benefit of doing a Masters for a career in an IB or PE funds apart from the fact that you have more time to do internships and are able to add another university to your resume as the comp for people starting after Bachelors or Masters is the same. Given you have received offers already, that does not seem to be necessary for you.
The MBA is quite a different story as it depends on your firm. It's the perfect way for people who have not been in the industry before to enter it after the MBA by joining as MBA Associate at a bank. If you spent your analysts years in a bank, however, in most cases you don't get a benefit of completing the MBA in Europe while it costs you $100-200k quickly plus the lost salary for 1-2 years. There is an exception that there are very few funds in Europe that require you to do an MBA before being able to proceed to Principal level.
In the US, most Associate programme at Megafunds are designed for 2-years only followed by an MBA.
-9 months. I was in the womb when daddy endowed me with a few milli.
By 26/27 my NW was a little over $1mm
This made me feel all types of things, but mostly inadequacy
What'd you do for most of you career since then?
Not me but my girlfriends dad's job out of college was working for Randy Lerner's family office. Was a millionaire at 30, house in east hampton and westport ct at 35
I was six and had just finished the first grade. I started a lemonade stand on the beach in the Hamptons the first day of summer after school let out, persuading my nanny that she should buy me my startup ingredients so that I would have an activity for the day and she could go hook up with her boyfriend somewhere else on the beach. I made $5 that first day, borrowed $5 from the kid next door who I knew from our prestigious pre-K (we were in the same section). I used $5 to buy more ingredients and used the other $5 to buy out two competing lemonade stands that were run by kindergarteners who got bored of running a business after their first day. I expanded down the beach, and by the end of the week I had $100. I paid off my pre-K friend (he charged me no interest), took my profits, and went to the Bank of Dad. I met with the CIO of Bank of Dad and pitched him on my vision of owning the lemonade market in all of eastern Long Island. I had two secret ingredients - I was putting way more sugar in my lemonade than anybody else, driving consumer demand, and my labor costs were way lower than any of my competitors' because I was hiring nursery school kids and paying them ten Cheez-its an hour. Bank of Dad gave me a $900 cov-lite term loan, I hired a more professional CFO who had been around the game for a while (my cousin had an excellent pedigree - he was top bucket at a bulge-bracket middle school and had made a good living on the Pokemon Card desk), and executed my roll-up strategy. Four weeks later, we had 100 locations from Westhampton to Montauk, all staffed by Cheez-it hungry toddlers. The cash rolled in and I was living large. I bought a fleet of pool floaties and was importing cases of the finest Capri Sun straight from the source on the Amalfi Coast. I met a great girl through my pre-K friend. She hadn't even graduated from day care yet and people told me that I was literally robbing the cradle and it wasn't cool but even though she was a lot younger than me, I felt like our souls were the same age. I expanded the business, hiring a second shift to make lemonade all night, pour it into my empty Capri Sun bags, and sell it on at Coney Island, Rockaway Beach, and Long Beach to all those kids who dreamed of the South Fork because I wanted to have a brand that was accessible in addition to aspirational. By the end of the summer... $1 million, all in really crumpled one dollar bills.
I wish the story ended here and I could tell you I had it made for the rest of my life, that I invested it responsibly and was able to donate a library to Harvard in order to buy my way in. I wish I could tell you that I did some angel investing and turned my million into a Bezos-sized fortune. I wish that I had invested in real estate and lived comfortably off rental income.
No. Because that summer was the summer of '98.
The summer of 1998 ended, and everyone left the beaches. I closed the lemonade stands and shut down the Capri Sun recycling operation. I was ready to turn my little nest egg into something that would turn heads on the playground in Central Park, and heading into 1999, there was only one asset that had that sort of appeal.
Beanie Babies.
I bought them all, the rarest of the rare, the originals, the dark blue elephant, the Princess Diana bear. I dumped my girlfriend because she started nursery school, and found myself mobbed by new(born) girls who all wanted my attention. For six months, I was the king of the jungle gym. And then the bubble burst. Everyone got super into Pogs. I couldn't even give my beanie babies away. Bank of Dad took me to bankruptcy court because I'd never paid off my loan, with the Honorable Judge Mom presiding over the case. I lost and had wash the dishes after dinner every day for a year.
But the next summer... the next summer I'd be ready. I had a hunger for the hustle and it wasn't going away. I had my ear to the ground and heard that Razor Scooters were going to be the next big thing in transportation and I was going to be there for it. I was going to make it all back and then some.
Either the principal's kid wrote it for him or this PE principal is a chad.
It’s definitely real. Clearly haven’t been on WSO long enough to know this is a very common path
If you still have those beanie babies today, you’d be a billionaire.
I know it’s a joke…
If you live below your income level you can hit $1m net worth far before you earn $1m per year. I hit that milestone at age 28 with a little over 5 years in the workforce with annual comp in $150-400 range, so this can be done on a relatively standard IB/PE analyst to associate trajectory, assuming you avoid business school.
Formula that has worked very well for me: max out your 401k with your base salary, live off what’s left over, and bank 95%+ of your bonus. Do that for 5-7 years and you should have a nest egg approaching $1m.
The big variable here is how the market performs - I would probably still be a few years away if it wasn’t for such an incredible bull run since I entered workforce.
$1m isn’t what it used to be due to inflation and hitting this milestone on a finance career path before 30 is relatively achievable today whereas 10-20 years ago was very rare and required extraordinary luck.
Thank you for the openness. I do plan on living frugally. How long, if at all, did you live with a roommate? And what would you say your annual returns (%) was over the five years, or was it indexed to the market?
29
Is that 7 years of IB? Assuming you started at 22 after college.
You mean networth million right? CauSe yes. Would have been sooner but had a gambling degen one year that set me back a lot.
if you mean a million in comp in one year, I’ve never earned that sadly.
Yup meant net worth. From the comments, seems like 5-6 years for your first mill in IB/PE
Yea that sounds right. Like I said I blew like 400k gambling in my twenties, so took me longer. And I started working at 21, not 22.
Also, I’m not counting 401k money in net worth calc since you can’t touch that until retirement without penalty.
Yea I guess you’re right I should count it as an asset. But to be fair, you should discount it by tax rate and a 10% penalty then when doing your net worth calc.
And then I guess you could also fully count your Roth IRA contributions as well.
Net worth I think was 26 or so
First $1mm in cash comp for a year, I think was 29 (maybe 30)
That's crazy. HF the whole time? Mind sharing type of fund (large cap, activist, or if sector focused, etc.)?
Yes HF whole time, more “quant like” is the best way to describe it.
yep same here, hit it at 26. didn't inherit anything, most i've clipped in a yr is 3.5 bucks
Going to MF REPE doing single asset acquisitions and company acquisitions/ platform building too. Any advice on breaking into the HF world? Keep reading books, craft a good pitch, master 3-statement modelling? What would be the best thing to do? 3.5M in a year isn't common until you reach MD level in RE or corporate PE I'm guessing.
Also, what type of fund are you at? Similar to what the comment above asked.
Tree fiddy? Better watch out for that lockness monster!
Technically i was worth more than $6M (pre-tax) on paper at 26, but I didn’t know at the time my carry was going to be worth that much because the fund massively over-performed. Didn’t actually have $1M in the bank until my early 30s.
so it took like 6 years for that stuff to vest? or am i missing something?
nice to see you posting back here btw
Vesting was slightly more than six years and the first payout didn’t occur for about six years either.
Thanks for the welcome back!
25. But it really depends 1mm in Denver or Chicago is way different than 1mm in NYC or SF.
Lower CoL or? Were you in banking for 4-5 years, or what did you do?
26 thanks to ape-ing into crypto. Pivoting the gains into my own commercial real estate development that will hopefully make another 2MM profit in two years or so.
Mind sharing what type of commercial real estate development and how you’d expect that much return in only a couple years???
Early 30s for 1M+ Net worth, not including unrealized/unvested carry. Over 1M cash comp (incl carry distributions), late 30s
what type of fund are you in, MF, MM, LM?
Secondaries
24, made just over $1m post-tax off 1 trade. Stonks 🚀
Let's go!! What was the trade if you don't mind sharing.
And the amount you initially invested!
🚀GME🚀
Define "make your first million". Made $1M in gross income? $1M net worth?
Both would be helpful. I want to know how long it would take to make 1M in earnings in various finance paths, and to hit 1M in net worth too (cash, investments, retirement funds, etc.) Defining net worth as market value of assets - liabilities.
Work for a MM credit fund non NY/SF/LA. Background in RX banking and turnaround consulting. Hit $1m in net worth at 32, including the $800k house which I put 25% down for and paid $600k for (housing inflation in TX is nuts) . My general mantra is use my bonus only for my fund coinvest and savings and attempt to save 20% of my salary. Seems overly frugal but the $180k salary, paired with wife's $130k salary, let's us live comfortably in TX. However, Dallas is surprisingly flashy and folks to overspend (Avg credit score <700).
As long as you stay away from bad decisions in concentrated bets and make average comp, $1M by 30 is doable. Took me a few years extra bc of some YOLO international trips to Asia... but that's what we make the $ for! Now that baby is here... We are saving for her!
That's awesome, thanks for the background and insights. I have a couple of questions if you're able to answer.
Are you saying your total comp is 180k and you try to save 20%, or that you save and invest all of your bonus and live off of a 180k base salary (of which you still try to keep 20%)?
Isn't Dallas/ TX income tax free? Must be straight cash, base and bonus?
Thanks and congrats on the house and child!
First you can answer- why you up at 0530 ET on a Saturday?
Total comp last year was 165/165=330k. I save all my bonus unless its for property taxes, down payment on house, fund coinvest, or maybe country club some day. I view coinvest as savings, so I am saving an average of 90% of my $165 (now $180k) bonus.
My wife and I live off of our salaries of $180 & $130k... She doesn't save much of her salary but I refrain from fighting that fight since we have primarily separate accounts. Now with the comp bump, I should be saving around 50% of my take home salary pay.
You are correct on TX having no income tax but they make sure to fuck u real nice on property taxes! 2.4% on city-appraised value of your home
I had about $2M at 32 and then decided to start a healthcare tech company. Now I have a lot on paper and much less in the bank. My approach was to just live off salary (when I was in IB) and save 100% of bonuses. That works well.
Dang. Congrats to all the $1M net worth before the age of 30 responses. I was pretty close before business school, and then I was subsequently much less close. Paying for school at the same time as foregoing earnings is a nasty double whammy to net worth. I was 31 or 32 when I was comfortably over the $1M net worth line.
I got in the habit of living off my salary and banking my bonus early in my career, and honestly, never found a need to change. I make about the same salary now as I did as when I was in my late 20s, and the difference in total comp from then to now comes entirely in bonus. January is a busy financial planning month for the Staley household ("well now what do we do with this lump sum") but otherwise not much changes year to year.
Kids are as expensive as you want them to be. I have a close friend who makes about $60k/yr, has two young kids and a wife that doesn't work, and is as happy and fulfilled in his life as anyone I know. His kids have everything they need and they just don't live very extravagantly. Granted, they live in a pretty low cost of living area, so their dollar goes farther - but still.
I have another close friend who makes ~$250-300k/yr and spends. every. last. dime. It's almost a challenge for him - how can he spend what he makes. His kids have a lot of nice things but I'd be hard-pressed to say they live a meaningfully better life than the above example.
Early 30s for the first mil. Second mil within reach 3-4 years after
Two years IB and PE since in NYC? Did you live frugally, decently, or lavishly?
Probably more than what you want to know, but here goes nothing. Went to a target, good but not stellar GPA, hoped to go to NYC, but life happened so stayed in T2 city. MM IB, bounced around a bit (it’s OK to have a quarter life crisis after IB or any career struggle), then off to MM fund in an untraditional path. No MBA, even though I did want one at one point. Decided it was cost prohibitive. Religiously frugal throughout. Maximized leverage to take advantage of depressed real estate reasonably early on, then recapitalized/reinvested. Not saying that was a smart thing to do as it could have easily failed (and have failed other things). No regrets staying humble/sticking within my means. Sometimes I do envy those that have made it big on the coveted blue blooded paths, but realized over time that I just don’t have what it takes to make the cut in that league. Played where I could still contribute and have been happy most of all. If I had $10mil, I’d still wear no watch and drive a used sedan. If I’m fired tomorrow, I’ll get back on my feet in time. Sorry TLDR it’s OK to “fail”.
$30k net worth at 25
$1M net worth at 27
$1M cash and ~$8-12M net worth at 29, mostly tied in equity of business. The delta depends on valuation multiple
Excuse the language, but wtf did you do?!?! I'm guessing a startup that took off, or something like super risky options at a pharma company?
bough a bunch of companies in the same sector at low multiples using a lot of debt, the industry multiples went up a lot since I started 3 years ago. Lots of work, leverage and some luck. Multiple arbitrage is sweet
26 for $1M+ "net worth", if you count illiquid carry/co-invest.
28 when I first saw $1M+ in the checking account.
Liquidity is great. Taxes suck.
Was worth $1mm+ at 31. I spent pretty aggressively in my 20s on travel, entertainment, nice apartment, etc. but don't regret any of it. I would always max out my retirement accounts first at a minimum and obviously some years significantly more than that.
.
Didn’t y’all have teachers to tell you to keep your eyes on your own paper? Sheesh, these comparisons are going to drive people mad
I agree. This is the kind of stuff that makes most people in our industry totally miserable at all times.
Not there yet
I did MF PE for a few years, followed by large HF role. Living / working in low tax place in Asia. Reached $1m net worth at age 28. Made >$1m cash comp for the first time at age 31. Don't underestimate compounding effect. I reached >$10m net worth at age 35.
Wow! Thats awesome! Congratulations on the successful career thus far
If its not a problem would u mind sharing how much u made in your best year at the hedge fund?
Around $4m all in.
26 - marry rich!
Offering the London perspective here for the three-dimensions and British bros. If you are going to build a net worth of £1m, it's probably by your late 20s and early 30s, but that's dependent on your obvious consistency and of course where/if you live directly in London and the costs around that. Honestly the expense can take up a significant percentage of your income in your early 20s, and being frugal is the best bet to at least finish your first two years with an NW above £500k. Earning £1m a year is definitely mid 30s group, depending on Master's, Chartering etc.
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