Monkeys,
Generally speaking, I think we would all agree that the easiest way to get rich is to invest the most amount of money as you possibly can, as early as you possibly can and to let it ride.
I personally believe this, and this is what drew me to a career in this industry. Also due to this belief, I always worked part time jobs through HS (20-30 hrs/week), and as soon as I went to college I started working full time. Went to state schools, lived at home with parents, all with the intent of getting through school with 0 debt and some money saved up.
Was able to execute this plan, graduated at 22 with a BS in finance, 0 debt and about $70k net worth. Also upon graduation, had about 3 years of finance experience, was able to join a large bank during UG.
Fast forward a few years, still with the same firm, and work in middle market credit in a tier 3 city. In my role I underwrite and structure credit facilities (syndicated & bilateral) for companies with revenue between $50-$2Bn. Never work more than 40 hrs/week and comp is great for what the job entails. All in all, I’m able to save ~$65-70k a year (retirement, brokerage, home equity) per year. Right now at 25, my net worth is about $300k, piling on an additional $65-70k annually, plus returns.
Just running the numbers above would inevitably guarantee becoming a millionaire in early 30s.
The dilemma
While I do like my current role and have always performed well, I feel like the upside is limited. Recently I have been looking into the top MBA > IB path. The opportunity cost to do so would include 2 years lost wages, and the cost of attendance. However would offer much more career upside. There is always the chance that I fail and don’t land a role in IB. I often also think about the chance of potentially recruiting into a recession.
I think the high level evaluation of this situation is as such:
1)Stay in current role, stick to what I’ve been doing financially, and still have a great life. Downside would be “what could have been”, and feeling like I never took the big leap of faith.
2)Bschool> IB, end up better of financially (in the long run), but it would just take longer to get there. Also noteworthy that the career would be more stressful.
What would you do monkeys? Take the sure thing or take the leap of faith?
If you put $300,000 into the VTSAX at the beginning of the year, you would have made over $64,000 - in not even 3 months.
Honestly, I would not waste my life going into IB but rather spending my time at home researching stocks and making safe investments.
Thanks for your input.
The $300k net worth is a mix of cash, liquid investments, retirement accounts and home equity. Wish I had $300k cash laying around!
Look into penny stocks, I hear Tim Sykes has made a lot of millionaire students
From what you said, it sounds like not pursuing an MBA would be a better fit for you. I get the sense from the way you explained your story that you have consistently taken a very high, and thoughtful, risk-adjusted approach with extreme emphasis on long-term wealth creation. Does career upside really matter that much to you? It sounds like you seem pretty happy and content with your current trajectory. Everyone measures success in different ways and you should force-rank the factors that comprise your definition of success and see how pursuing an MBA over the long haul compares to the status quo.
Bump, anyone
What are your life goals? Have you thought about what you want?
If the goal is to retire early and then, heck, maybe do IB for fun...you're already on that track. You've kind of already made the huge investment in your financial health and perhaps you'd look to other things for meaning in your life. Money? You have money. You'll have more money. What else holds value for you? Do you want to be a scientist? An artist? A CKO instructor? What tickles you? Years ago I used to bartend with a guy that owned like 11 rental properties: he didn't need the money, just like talking to folks a couple days a week. You could be a part time sushi chef for the hell of it. Or you could travel the world and blog about it. You're approaching that level of financial freedom.
If your goal is to blow maybe half of your savings on an MBA and then do IB....you need to ask yourself why. Keep in mind an MBA is no guarantee, and if a recession hits in the next couple years you could find yourself unemployed. Then what? Assuming you get into IB, then at what point do you have enough money? Many folks who think they're just going to go into it until they hit their number end up making a life out of it. People get addicted to the lifestyle and you can't blame them. If that's what you want, well cool, just take the time now to think about why you want that.
You're done yourself a huge favor and given yourself the gift of real choice.
IMO, if it's just money you want, pure cold hard cash, then you'd probably do better in the long term doing what you've been doing up until now. Warren Buffet never did IB, and frankly most IB guys don't end up as wealthy as people think. A shocking number have more debt than assets. They're middle men, not investors, they have no ownership and the reason they work so much is because they answer to everyone else. Now investors, of which you seem to be one, much more often end up insanely wealthy, and they don't have to work 100 hours a week to do it. Unless they really want to. They're in the driver seat. They OWN it. Better place to be. Again, that's my opinion.
What the guy said is pretty much what I want to do. I feel like investing for the long term and taking advantage of compound interest. And statistically speaking, starting out with a higher amount of capital, in the beginning, will advance quicker than building it up slowly. So what better way than IB and then moving to an easier PE or HF job while maintaining a wealth of knowledge and a relatively high salary?
I really want to adopt the Warren Buffetesque strategy of stock picking and accumulate my wealth from there, but I feel like his scalability from millions to billions is almost impossible to achieve. So I feel like this guy is trying to do something similar to what I will do. And I'm not so sure going into IB is a bad thing per se for this guy if he's only going in for a couple of years. But if he's cutting into his savings just for IB it's probably not worth it.
build something yourself that snowballs over time
^100%
I'm in CB as well... you're nuts to leave a good paying, stable, 40 hour a week job to go work 80-90 hours in NYC along with the opportunity cost of going to BSchool. Health is wealth. Fuck that IB shit... you're NOT going to be any happier. You'll actually probably be considerably less * happy *
You are so far ahead of most people our age... keep doing what you're doing man.
Not to get into your business, but it sounds like your all-in comp is $90k or so??? That's fantastic for a Tier 3 city, 3 years out of UG, working 40 hours a week.
EDIT: CB comp long term can be really nice if you go the sales route, as I'm sure you're aware. Credit Officer life also doesn't seem too bad.
Have you looked into a part time MBA, sponsored by your employer? I would only do it if there's a decent program in or near your city. With or without that, what's to stop you from rising much higher within your bank, being poached by another bank for a more senior role or otherwise ascending much higher in your field?
I'd rather be CEO of a regional bank than an MBA/ run of the mill investment banker.
I would pass on trying the MBA=>IB path if I was in your shoes. I just don't see the upside as being all that great. You've been wise enough to stick to a plan since you were in HS, a plan which left you w/ no student loan debt and the probability of being a millionaire in your 30s. Abandoning that plan to forfeit a good salary and shell out a couple hundred grand in the hopes of potentially getting a more prestigious job w/ severely worse hours than what you're working now seems a bit like retreating when the battle's victory is already assured.
^^^^ THIS
Also...you can still do an MBA in a year, two, three years down the road. I'd suggest seeing how you feel then. Sometimes it's better to think something over for a while. If in a few years your passive income starts to approach your salary....ask yourself if you reeeeeeallllly like sitting in an office all day :)
If your only concern is finances then you seem to be fine. But unlike the rest here, I say only you should decide what you want to do. Don’t let others tell you one way or the other. If you really want to pursue IB, then that’s something you should consider doing. If you’re on the fence, you gotta think about it. Either way, only you can choose.
Have you considered networking your way into IB? You seem to have a good background, and I don't think it is a stretch for you to get into a boutique the informal way.
Agree. Or lateraling into direct lending, which is incredibly busy, pays way better than corp banking, and will reward you for your credit skills.
You want to lose small, I want to win big. Difference in mindset.
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