How do you spend your bonus?

Seeing how there's so much talk recently about bonuses / comp, I'm wondering how everyone typically spends their bonus? How much do you save / invest, and how much do you actually spend right away? 

If you're an associate or above, did your spending / saving / investing patterns change over time?

 
[Comment removed by mod team]
 

This one's a personal decision and there are pros and cons to both. Given your mindset, I'm guessing you grew up in a developing country?

Even if you don't have a nanny, you're not interacting with your child 100% of the time. Think there's definitely an aspect of it being healthy as well for a child to see their mom not 100% dependent on the dad, and showing that it's possible to maintain a career while also spending time with your family. 

 

Associate 1 in IB - Cov

How do you go about getting the taxes right? Do you adjust the withholdings for that one-off bonus check based on some sort tax of calculator? 

Please find your self a good cpa, avoid trying to go cheap on hiring one.

SafariJoe, wins again!
 

i always feel like JLC's display window for day and date is too small, if you want dress watch I highly recommend Blancpain Villeret or glashütte original senator, both have a big discount second hand too

 

A backdoor Roth IRA is for high income earners that aren't eligible to contribute directly.  You basically contribute funds to a Traditional IRA, and then ask your broker to convert them into a Roth IRA.  I have both a Traditional IRA and a Roth IRA with Schwab, so all I have to do is once a year contribute the maximum allowed amount of IRA contributions (was $6,000 in 2021 and is unchanged in 2022), then get on chat support and ask them to convert the funds to Roth, which means they just transfer the funds from the Traditional to the Roth IRA.

You shouldn't have any funds sitting in Traditional IRAs prior to doing this because you can get taxed based on the pro rata rule.  The above is the only Traditional IRA account I have, and it is always zero except for the few days between my contributing the $6,000 and Schwab transferring it.

 

I'll start investing in venture-stage companies once I get a solid pool of capital going. VC has been getting extremely crowded, but there are opportunities if you know the right places to look. You see lots of startups and their investors getting shafted once they go public. That doesn't mean you have to as well. Most VCs want to stay on the cap table until a solid exit opportunity like an IPO or a takeover occurs. This also sends the message to other potential investors that the company is on a good trajectory. However, as an individual investor that's putting in $20k-50k max, you won't be scrutinized as much if you exit through a secondary offering

Consumption smoothing is retarded. If you stay in this game for a handful of years, money will be the least of your worries. Live it up, because this is the one time in your life where you might actually have time to spare.
 

Is there any backdoor to this without being an accredited investor? Ive been pretty interested in this too and heard of Sweater but not sure how that pans out exactly and they seem to have a large waitlist

 

I think one way you can become eligible is if you pass certain Series tests to become a registered broker or investment advisor. Another way would be to ask your parents to start a $1M trust fund for you, although not many people may have that privilege. 

From what I've heard, it's up to the private company to make sure that its investors are accredited, and there isn't a formal process to certify you as being one. I honestly don't know how strict companies are in checking this, so there may be certain loopholes you can take advantage of. 

One thing I would ask you would be why you are interested in private investing. Unless you have a ton of capital to burn or have awesome connections with founders, the deal flow quality will likely be subpar. You may be better off investing in mutual funds and ETFs.

Consumption smoothing is retarded. If you stay in this game for a handful of years, money will be the least of your worries. Live it up, because this is the one time in your life where you might actually have time to spare.
 

My personal waterfall for all money for myself and fiancée (not just bonus):

  • Max 401k ($20.5k + $12.5k match)
  • Max IRA ($6k)
  • Max HSA ($4k)
  • Max fiancée 403b ($20.5k)
  • Fiancee 457 ($10.0k)
  • Taxable Account (all excess FCF - hoping to pump in $7k per month here)
  • Mortgage Principal (minimum payments on both mortgages comes out to $24k of principal reduction per year)

Wold consider myself an index investor. Basically all investments are in some form of index fund.

After that if I feel like screwing around I’ll dump a couple hundred bucks in crypto or Fundrise (ereit) each month.

This is my baseline financial plan. Splurges include a few nice weekend getaways each year and usually 1 really nice vacation. Personally don’t have many material desires. Not “FIRE” guy but trying build my personal balance sheet ASAP to maximize the effects of compounding in my favor.

 

Bonus from Y1: Paid off student loans. 

Bonus from Y2: bought an impractical and fun car. 

Bonus from Y3: Will probably do something boring af like invest into roth and echo one of the many other comments on this thread. 

My advice would be to pay off your debt, but once you are debt free, do something fun. If you ball out regularly, yeah maybe save the majority of your bonus. However, I feel like many WSO users save their money and probably have a larger nest egg than I do, so dont forget about having fun too. 

I had a near death experience and now I dont think twice about spending money on things (read: mostly experiences) I know will make me happy (ski trips with the boys, a week on an island with the gf, etc.). Life is too short to have the biggest bank balance and the least interesting experiences. 

 

So I was a bit naïve when I set up my student loans and I was accruing interest before I realized it so by the time I started diligently paying down my interest it was closer to 10%. Long story short the first few payments only ate at the interest and it took a while before I was making a dent in the principal. 

Your position is vastly different, and +1 SB for clarifying. In your case, I would continue to make the minimum payments and invest as long as you are hitting your expected returns. I am no financial advisor and the majority of users on WSO are probably better at budgeting / financial planning than I am so take my $.02 with a grain of salt. 

 

If you want to buy a house / apartment, and the debt we're talking about is student debt, you'll likely need to pay it off, or it will be financially advantageous to. Student loans are almost never dischargeable, so a rational person, faced with financial distress, will get delinquent on mortgage, cc, and everything else before missing a student loan payment. Mortgage originators know this, and price your loan accordingly. If we're talking about a 7-figure loan, those extra basis points = real money, and exceed the value of whatever spread you're earning by paying X% on your student loans and realizing X+something (after tax...) in your PA.

 

2022 Audi S5 Sportback optioned out. Coming to 73k with everything I want to do to it.

Selling my car for more than it’s worth and get a 20k loan/pay it down with next years bonus,

50k going to my FA for investing. Keeping 30k in checking for life. Living very comfortably on my base.

 

Do you work in NYC? If so, where do you plan to store the car?

 

Every year in banking I max 401k, Roth, VAT, this totals ~57k this year all out of my base. 

Every year, but the last I had one priority then the rest went to my taxable accounts:

Y1: Rolex

Y2: Engagement Ring

Y3: Condo

Y4: Wedding 

Y5: Condo #2 (Got to build that RE portfolio) 

Y6 (This Year): Largest bonus and nothing I need/ want, actually giving my parents a really nice vacation and paying off my brothers student loans (~20k). The rest is going into index funds and ~25k of crypto ( old dogs need to learn new tricks)

Vacation, home improvements, a few new guns a year and car all come out of general base. I live on essentially one paycheck a month. I also benefit because my wife makes ~250k and maxes out her stuff the same as well. Will liked hit a $3 M net worth this year, which I think is great only being 30. I am jealous of all the 25 year old retirement posts I am seeing because of Crypto, congrats to those guys. 

 

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