Hitting 7 figures at 28-29

Considering that most ibanking, hf or pe salaries for 28-29 year olds at bulge brackets range from 250-400k, is the only real way or may i say best way of hitting 7 figures at 28-29, is starting one's own hf or pe firm. Although the size of the firm is much smaller u obviously will get a much higher proportion of profits, making the risk worthwhile

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Comments (101)

  • Analyst 1 in IB - Restr
Apr 25, 2021 - 12:47pm

See a lot of BS here about comp, here are the steps. 

1. Grind your ass off in highschool to get to a target, grind harder in college, get to a top BB/EB/MF PE group, grind even harder and get looks from top HFs. Zero sex life, work 18 hour days minimum, follow the markets for fun, but try to come off as a chill dude for recruiting/interview purposes

2. Become an analyst at a $7bn+ L/S  HF. You know the type, Tiger cubs + top notch non tiger cubs. Tiger Global, Lone Pine, D1, Whale Rock, Eminence, Darsana, Coatue, Viking, Altimeter type shops. This should put you at ~$300-500k base

3. Continue the grind and work the hardest here. If the fund has a monster year, you want to be a hard working analyst who put in the work and contributed to some of the monster year

4. IF you actually perform + fund has sick year + you have been there for 2+ years, you will make $2-3m. Confirmed from many sources, in some cases as high as $5 but that is by no means a proxy for how much you can make working as an analyst at one of these funds. $2-3+m in a really good fund with a phenomenal year is realistic 100%, and you could be 28-29 at this stage. NOW, notice how I said L/S. Credit/distressed guys are stingy as fuck - I know a distressed analyst who put on a trade that made ~200m for the fund (fund was like $7bn AUM), and he only got paid $900k. That's a lot, but it's fair to say he was underpaid and he left for a L/S fund. 

5. Stay at this L/S fund for > 5 years, maybe you're like 32-33 now, maybe you joined when you were 26. Keep pushing and contributing to fund outperformance, and as long as the boss is not racist or discriminatory in some way, you will make PM/Partner where you can reasonably expect to make low 7 figures in a year, and higher/8 figures in blockbuster year. Do this for a few years, maybe catch the next tech wave, put your earnings back in the fund, and you could probably be worth $20-30m by the time you're 37-40, if not higher. Then you go off an start your own fund. 

Now this is the story for maybe 1-3 people out of 100 in this business. Maybe. Incredibly difficult, requires the right fund at the right time + the right boss, self determination/drive, and you actually have to be good at what you do. It's the dream for many, but it's a lot easier said than done. Finito. 

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  • VP in IB - Gen
Apr 25, 2021 - 1:17pm

What you're describing is probably more like 1 in a 10,000. The people who achieve what you describe are probably HF managers themselves. That makes sense, since in the grand scheme of things, there aren't that many legit HF managers. 

To grind starting as early as high school is rare, unsustainable, and quite frankly depressing. Going down this path, you'll probably die of stress before getting to enjoy all that money. 

Lastly, there's easier ways to make tons of money. Go work for a tech start-up, break into sales (B2B and something high margin), or invest in risky stuff with high (HIGH) potential reward. I have a friend who bought Bitcoin back in 2013. He sold half of his holdings a few years ago to pay off medical school loans, but still owns about $759,000 worth. His original investment was only ~$2,000.

  • Analyst 1 in IB - Restr
Apr 25, 2021 - 1:41pm

Yeah I completely agree, meant to say maybe 2-3 out of 100 will make it to the analyst seat at a top shop. For the highschool thing, there is a kid on this forum whose username is like shaq or something -- to me he sounds like a kid who is on the road to a top fund

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Apr 26, 2021 - 3:25pm

Growth Equity or Fintech Sales.  Tech sales in general is beating out IB when it comes to entry level pay. Amazon SDRs are making 120-140k+ starting off, so just imagine their compensation 10 years later. Stop getting caught up in the prestige bs, there are lucrative careers out there. 

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Apr 27, 2021 - 1:28am

Agree w/ this. Maybe just me but there are some pretty smart people out there who see almost no correlation between how hard you work and how *consistently* successful you are at L/S investing. The vast majority of HFs simply do not deliver alpha over any meaningful period. And you could be there grinding away and - yup - making lots of money, but come to the realization that what you're really doing with your life is helping to part institutions from their money, and charging 2 and 20 for the same performance your clients would get with 5 Vanguard funds. (Not being cynical, or jealous - I've been there and quit for that very reason. Who wants to go through life as a destroyer of shareholder value...?) 

Also agree that enterprise sales at a startup is a great path. Cash comp is surprisingly good if you're even above average...plus those options. Sales is a grind, held in low regard by a lot of people, entails tons of rejection and customers treating you like dirt, so, being at the intersection of requiring above average IQ/EQ and not being appealing to most high IQ/EQ people, it pays well. 

Apr 25, 2021 - 2:41pm

Agree that big payouts are some combo of smarts + hard work + good seat + luck. But I take issue with some of the premises here and how "matter of fact" it's laid out, addressed below. Speaking as someone who hit the goal OP has laid out and knowing several people who've done the same. 

1) This is depressing, and I think there's a lot of struggle porn here. While top folks at each successive step are often at the top in preceding steps throughout their career, it doesn't have to come w/ the tradeoff of focusing all your time from the very early days on the singular obsession of making money. Being well rounded early on is more important imo, and honing in on what you're really good at is more of an important focus by the latter half of college (in terms of being in the right neighborhood of you want to do rather than all the specifics mapped out). 

2) Generally agree that well regarded funds w/ large AUM and lean investment teams increase probability of a big payout. But equally have to take into account how fungible they treat entry level employees and what the career arc looks like there. Some of the funds you reference are not like the others. Also, not sure if you're referring to $300-500k as a "base salary" or a "baseline all-in entry level expectation". It's definitely not the former, and the latter is pretty accurate, even at top funds. 

3) Hardest working =/= most valuable

4) Generally agree, though those comp ranges are very much on the high end for 2-3yrs in a HF seat, even in the funds you mention unless you had significant contributions 

5) Can definitely see that kind of earnings arc at the top. Though not necessarily with a PM / Partner title attached (will depend on the type of fund you joined). Rarely does it culminate in "going off and starting your own fund". 

Apr 25, 2021 - 5:31pm

No thanks. When will you live life? What's the point of grinding that hard and you can't even live life and enjoy it? Fuck that. Life is waaayyy to short. Even if I had the option of doing what you listed, I wouldn't. I would've quit after I made my first $5M 

  • Investment Manager in HF - Other
Apr 25, 2021 - 1:13pm

Under any scenario the likelihood of getting to 7 figures before 30 yrs old is very low. That being said, entrepreneurship, PE and HF are your best bets. HF is possible, but again it isn't very likely, you need to make it to a top fund, survive, and have a good year. You need to be the top of your field in a field that is already incredibly competitive. 
I don't quite agree with the other post on the way to get there, but the overall gist that it is really hard is true. 

  • Analyst 1 in IB - Restr
Apr 25, 2021 - 1:43pm

Zero sex life was probably too harsh, but just curious -- what else do you not agree with?

  • Investment Manager in HF - Other
Apr 25, 2021 - 1:57pm

Well I think some parts were a bit extreme.

But it isn't a bad description, I think the problem is really that these roles are pretty hard to come by and the people that get there rarely follow some path. Usually there is luck, there are sidetracks, etc. This may sound a bit arrogant, but the people who make this usually find a way regardless of the path they are on AND (a very big and) get lucky along the way.
The path you describe is definitely a path, but if you go find people who are at that level of income, such a tiny percentage will have followed this path (even those within the top HFs, although obviously more will have gone down that path). Of the people I know in that path one was in tech first, one went straight to buy side out of undergrad, one worked at a bank for 2 years then HF, another went consulting to HF, etc. 

Apr 25, 2021 - 2:05pm

you can do the math yourself. consider the following for a HF. harder to say in PE since your earnings are tied to illiquid carry as you progress

  • 22-24: IBD, $150-175k each year
  • 24-27: HF, $300-500k first 3 years
  • 27-29: HF, $500-700k depending on performance

figures are pretty standard, question is if you can last that long. assumes you're not at a $5B+ fund since comp is obviously higher there. solve for your own net worth estimates based on spending and investment returns on your savings. 7 figures is doable. still, never an easy or straightforward path.

now, let's end the ridiculous number of recent posts on net worth and comp. seems like most of these posters are not even in the industry.

Apr 25, 2021 - 4:17pm

misread post. targeting $1mm+ annual comp is a fool's errand. largely a function of being at a $5B fund with tenure >3 years, or your fund/sleeve puts up 30%+ if you're at a $1B+ fund. basically, you need a really good year. odds of finding a seat in either scenario is a long shot.

possible in PE if you're at a big fund, but again depends on how your carry monetizes 5-7 years down the line.

launching your own HF or PE fund at 28-29...jeez. you're highly unlikely to pull this off, much less generate $1mm in take-home...the operating expenses will bleed you dry since you'll be <$100M AUM. this will work out for 0.1% of anyone trying this at that age. just consider the base rate.

you sound like you're in HS. go enjoy life, date a bunch of people, find some hobbies, travel. you'll be in the grind soon enough.

Apr 25, 2021 - 10:50pm

What if u have a staff of 4- Including 3 top b school students and an ex portfolio manager at a top fund who's experienced at this to guide you through. Proof from your own trading accounts to back up your trading skills. Then do you think people will be willing to invest in my fund if i go ahead and decide to create one. Also after 3-4 years with almost all profits reinvested into the business do u see me getting returns of 1mm+ if i manage to keep the firm afloat and somewhat succesful

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Apr 25, 2021 - 2:16pm

I went to college with a (now) product designer at Peloton who is worth around 1.5-2 mil because of stock options. He's 26.

FYI median salary of product designers hovers around 200k at big tech companies & hours are always lower than consulting, IB.

I promise you this person never had the mentality of becoming a multi-millionaire before 30. 

It's funny how life works 

  • VP in S&T - FI
Apr 25, 2021 - 3:34pm

I'm assuming you mean net worth? As you've pointed out, just on just salary + bonus in 99% of roles, you won't especially living in NYC or London. Pretty much the only way is if you somehow get PM type position at this age and hit it big, or start your own company. Or you strike it big on capital gains through a PA trade. 

  • Investment Analyst in PE - Other
Apr 25, 2021 - 7:44pm

I think you vastly underestimate it costs to start a fund. Even if you managed to have the money to run a fund at that age you wouldn't be getting a payout until 4-5 years once you started exiting positions.

Apr 26, 2021 - 12:59am

Search around on reddit r/financialcareers, r/algotrading, r/quant etc about prop/quant trading, plenty of good posts.

Friends in the industry tell me a good trader with a few years exp can clear 7 figs, that seems to be corroborated with what others say online.

There aren't really "exit opportunities" like in banking or consulting though. I believe a lot of people (who are good enough to survive) aim to kill it for a decade and save a few million by early 30s. Some might stay in the industry as partners in their current firm, some go and start their own shop. I think a bunch start businesses in other industries, or just retire. Trader burnout is apparently very much a real thing.

Edit: should probably mention trading at good places is insanely competitive, and they select for quantitative talent, mainly maths/cs/physics undergrads. If you're in an ordinary high school (not hyper achieving with many Olympiad participants every year) and not comfortably one of the best maths people you know, it's an uphill struggle.

  • Analyst 3+ in HF - Other
Apr 26, 2021 - 3:58pm

I'm assuming you're talking about net worth rather than annual income. If not, ignore this comment.

Contrary to other comments here, hitting $1mm net worth by 29yo, while uncommon, isn't that rare and is very doable without starting your own anything. See the table below. It assumes NW starts at $0, no debt, $30k income step-up per year, $50k flat yearly expenses, and cash invested @ 6% annualized. I don't think any of those assumptions is unreasonable. You don't have to be a miser, an investing god, or making more than $400k per year.

  • Analyst 3+ in HF - Other
Apr 26, 2021 - 4:14pm

It's not a joke. Pay $2500/mo in rent by splitting it with a roommate or SO. That's $30k/year, +$20k/year in other expenses gets you $50k/year. Not up to your standard? Fine, but it's not unreasonable. It's one path to get to $1mm, which is the OP's question. You can create your own expense ramp-up. The $50k is a simplifying/average assumption. 

Apr 26, 2021 - 4:17pm

How much do you personally spend on basic food a month?

Entertainment (pre-COVID)?

Restaurants, drinks?

Discretionary purchases / nonessential stuff, vacations?

50K doesn't cut it unless you live like a pauper. <--- Magnify this statement 5x as you start to approach 30. You will not be living like a pauper on fixed expenses of 50K as your comp scales bud.

Apr 26, 2021 - 4:23pm

Why are you drawing such a line in the sand? Pre-COVID, spend $75 during the week for train and food (dinner, some lunches, and car home are comped by firm). $100-$200 per night out on weekends. $2k on new clothes each year, a few thousand for vacation and presents. It's not difficult to make $50k work, even bumping to $60k annually isn't material to the math above.

Apr 26, 2021 - 4:30pm

$75 a week? Sounds like you are still very junior. It makes sense that you falsely believe your lifestyle costs will stay fixed as you become more senior and earn more. They won't. The "survive, put your head down and grind" mentality will become impossible to maintain after you get that big associate / VP promotion after 3-5 years of toiling like a slave. One vacation a year won't cut it, you'll want 2-3 nice ones, 5-7K each. You'll meet your significant other the first chance you have to put your head up in the air as a mid-level guy. You may want to start a family as you approach 30. Home ownership? Sure.

50K a year? Yeah, right.

Apr 26, 2021 - 11:35pm

You sound pretty self assured and condescending. I'm a PE VP. The morning subway is $2.75 x 5 and the only meals I buy are lunch on Tuesday-Thursday, so $75 is actually perfectly reasonable unless you feel the need to pay for sit down lunches every day. Also, based on my network, almost no one is buying a house until they have young kids in their mid-30s (for the small number of people that decide to leave the city). 

Apr 27, 2021 - 8:27am

try hard

You sound pretty self assured and condescending. I'm a PE VP. The morning subway is $2.75 x 5 and the only meals I buy are lunch on Tuesday-Thursday, so $75 is actually perfectly reasonable unless you feel the need to pay for sit down lunches every day. Also, based on my network, almost no one is buying a house until they have young kids in their mid-30s (for the small number of people that decide to leave the city). 

Ok cool. I'm in my mid 30s and cannot imagine spending $75 bucks a week, so good on you. I'm married and thinking of starting a family soon so I'm just being realistic with most of the cohort that wants to follow that path (I.e settle down with a significant other), which I'm assuming is the majority of people. We're not gonna buy a house anytime soon, but that's by decision (could easily buy a nice place in the city, all cash). Nonetheless I EASILY spend more than 50K a year. I challenge anyone that has spent more than 3 years in finance to maintain a 50k a year budget - I maintain that it is still extremely difficult and you will have to live like a near-miser in terms of denying yourself certain things you can easily afford. Basically you would have to still be rooming with people in your late 20s, not regularly going out, not regularly dating, one vacation a year, and probably not buying cool stuff or clothes. Doable? Sure. Realistic? For 95%, no, unless "net worth goals" is all the person cares about. Not for me, and I'd imagine not for 99% of people. 

  • Investment Manager in HF - Other
Apr 27, 2021 - 8:35am

I agree with this, although really no sense of arguing. For $1mm net worth, yes it's possible, but it requires either very high comp or savings as outlined by the other post (and you can adjust for anything in between). It is a lifestyle choice, you just have to decide if you want to live like that. Back when I was making $400k I definitely didn't; I wanted my own apt ($4k a month), I wanted to go out to nice dinners, I took many vacations (7-10 trips a year), had a GF and we would go out on weekend, etc, and I was able to still save a decent amount of money. Again, once you make a certain amount, the path to $1mm is just a lifestyle question (how frugal are you willing to be). 

  • Analyst 3+ in HF - Other
Apr 26, 2021 - 4:26pm

50K doesn't cut it unless you live like a pauper. <--- Magnify this statement 5x as you start to approach 30. You will not be living like a pauper on fixed expenses of 50K as your comp scales bud.

Magnify 5x? You're saying your expenses scale to $250k as your income scales to $360k by age 29 (if you were to follow the above table)? No wonder you're burning cash. 

Apr 26, 2021 - 4:36pm

You sound very junior. Wait till you get married, you guys decide you want to buy a house, or your wife wants to start a family. Your costs wont go 5x, but they'll easily go 3-4x. All that aside, your general expenses will scale with your comp, albeit not on a one-for-one basis. But they will scale and you will be shocked. Lifestyle creep is unavoidable unless you're a miserable single manchild rooming with buds in your late 20s. You're living in lala land kid. Take it from someone who has been there and done that.

  • Analyst 3+ in HF - Other
Apr 26, 2021 - 4:43pm

The OP asked if it's possible to hit $1mm NW before 30 without starting a PE or HF, and I'm answering "yes," and providing a potential pathway that's not ludicrous. I'm not denying that lifestyle creep exists. I'm assuming no family here. If you have a family before 30, sure, that changes the equation. I don't disagree $50k is tight. But if you think spending $50-60k a year as a man in his late 20s makes him a "miserable single manchild," then you must strongly condemn the vast majority of Americans.

Apr 27, 2021 - 8:33pm

Some people are really out of touch with reality. Considering that the median income in NYC is ~50k and the mean income is ~70k, that means you have > 50k to live on after taxes.

  • Investment Manager in HF - Other
Apr 27, 2021 - 8:59pm

I generally agree that people (especially on this site) are out of touch with reality. I cringe at the posts about being "middle class" at $500k, etc. But I do think that $50k a year, in nyc, in your late 20's is stretching it. It's completely possible to do, but you have to realize that people working 80 hr weeks and motivated by money usually enjoy spending some of that money. A $4k apt is NOT super luxurious in nyc, there goes your whole budget (if you want to live in your own apt, although you can probably get by on $3k/month). It is an expensive city, and most people are here to advance their careers and enjoy the city when possible.

Many people go into this industry so they can enjoy some of that money. I'm not saying blowing it all, or doing stupid things, but it also isn't necessarily out of touch with reality; it is much more likely that if you make that much money you will want your own apt, you will want to travel a bit, you will want to enjoy some nice meals, etc. 

  • Intern in IB - Ind
Apr 26, 2021 - 8:17pm

I guess this is pretty conservative. I'm not sure if I'd be able to resist the lifestyle creep.

Apr 27, 2021 - 4:04am

So Arjun, let me get this straight. You're graduating college at 22, want to make $1M a year by 28-29, and you're planning on taking 2 years off for school. So you're asking how to make $1M a year with 4-5 years of experience?

Apr 27, 2021 - 4:48pm

I suppose some people I know might be wealthier than I imagine, but in terms of my personal circle of close friends, all the guys I know who are my age (early 30's) or younger and are definitely self-made multi-millionaires or deca-millionaires made most of their money from crypto. For context, we're not talking a big group, but a handful of guys I know. They had traditional finance jobs out of college and were putting money into crypto circa 2014-15, then they ultimately left their traditional jobs to pursue crypto-related projects full-time after making enough from crypto to be comfortable taking that leap.

And I think the main takeaway from the paragraph above is that to make millions or tens of millions by the time you're in your late 20's, there's usually at least some element of good fortune involved. That's not to diminish anything they did, but just to say that the further you get away from the median, the more unorthodox the stories tend to be. It's difficult to articulate any "guaranteed path" to graduate college at 21-22 and be worth eight figures by your late 20's.

In terms of minimizing lifestyle creep, I've seen people kill themselves buying expensive cars and staying in fancier apartments than they needed, but especially cars. Everyone has to decide what they value most, but I feel like a significant number people regret buying an expensive car six months after they buy it.

My recommendation, if you can store it relatively safely, consider getting a motorcycle. They're a huge bang-for-your-buck. I paid cash for my car; it's "nice" but old, I bought it at 10+ years old because I rarely need to drive it where I live. By comparison, I bought my Kawasaki Ninja brand new for a small fraction of what any "nice car" costs. It gets way better gas mileage and it will smoke any car under $75K from 0 to 60. And though I don't really care what women think about it, it gets more attention from them than any $50,000 "nice car" I've rented on vacation. They don't know (or care) what it costs, they just know it's cool. Finally, it's a wonderful escape for 20-30 minutes after work to tune out everything and ride, no distractions, no cell phone, nothing. I recommend it as a "toy" or indulgence that still has some practical uses and won't kill you financially the way a brand new sports car would.

"Now you's can't leave." -Sonny LoSpecchio
  • 1
Apr 27, 2021 - 8:00pm

tractionattraction

I've seen plenty of traders at prop firms hit 1mm before 29. Rare but still doable at a bank trading desk.

+1. Great point, I completely forgot about the traders. Probably not the average outcome for the average trader, but I'm sure a lot of those guys become millionaires and multi-millionaires by their late 20's. One of my former roommates was an equity trader at a prop shop and I know there were some young guys there making ridiculous money. It's one of those fields with a flat hierarchy where someone who's talented enough can rise to the top very quickly.

Trading might be one of the most common/mainstream paths for young guys to make a truckload of money at a young age. But from my close friend I mentioned who does it successfully, he's basically told me that guys come out of the school and get into it, and within a couple years they either succeed and start making really good money (and in some instances, incredible money) or they wash out and have to go do something else, and the risk there is that "tried trading for a few years and it didn't work out" obviously isn't a skill set that carries over into many other roles. My buddy who succeeded at it certainly doesn't regret it, but I also think that he wouldn't have regretted it even if he had washed out, because it was something he was passionate about and he had decided to set aside a certain number of years while he was young to give it his best shot. Your early 20's are the time to do that.

"Now you's can't leave." -Sonny LoSpecchio
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