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?

Comments (135)

Most Helpful
Jan 15, 2022 - 3:17pm
sandals.com, what's your opinion? Comment below:

Vanguard.com

Money can purchase freedom, if you have the guts to buy it

  • 54
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  • Associate 2 in IB-M&A
Jan 17, 2022 - 1:58pm

which funds champ

Jan 21, 2022 - 1:03pm
XFD1048576, what's your opinion? Comment below:

The only correct but safe and boring answer

Contra omnes dissident
Jan 21, 2022 - 1:03pm
XFD1048576, what's your opinion? Comment below:

The only correct but safe and boring answer

Contra omnes dissident
  • Intern in IB-M&A
Jan 15, 2022 - 6:38pm

gucci and dior for my baby

  • Intern in IB - Gen
Jan 15, 2022 - 8:30pm

Your wife is in IB?

Jan 15, 2022 - 8:48pm
Arroz con Pollo, what's your opinion? Comment below:

How much time during the week / on weekends are you able to spend with your kids? It just seems weird to me having a nanny but my mom was a stay-at-home mom while my dad worked 70+ hours a week

Jan 16, 2022 - 2:34pm
reformed, what's your opinion? Comment below:

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. 

Array
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Jan 18, 2022 - 11:58am
SafariJoe, what's your opinion? Comment below:

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!
Jan 15, 2022 - 7:48pm
Devils Advocate, what's your opinion? Comment below:

Max 401K

Mega backdoor Roth

Buy some luxury piece (usually a watch) and fund a trip

Rest is set aside for investments - largely an index fund (VTI) and then some for crypto, real estate and seed investments

  • Intern in IB - Gen
Jan 15, 2022 - 8:31pm

I think I will be very irresponsible when I start making bonus money 

  • Intern in IB - Gen
Jan 15, 2022 - 8:41pm

Idk. I work multiple jobs right now in college in addition to a max course load for the sole reason of spending the money on useless things. You may be right, and IB is surely more demanding, but I think I will make easy poor decisions like buying a $10k intl first class trip or something. 

Jan 16, 2022 - 1:57pm
PlsFxMnyTs, what's your opinion? Comment below:

NSA Surveillance Van

Another pre-owned watch (thinking of JLC or getting 2 Omegas - Speedy and Sea)

Finish off the student loans

Max out retirement account

Save remainder for future down payment on apt somewhere semi-affordable in NYC

please do yourself and me a favor and go with the former.

also, aren't your student loans forgiven or some bs these days…

Jan 16, 2022 - 10:19pm
NSA Surveillance Van, what's your opinion? Comment below:

Haha I love the JLC, but hard to come by a good price. May likely lean on the Speedy and Sea combo due to market, but they will still be part of my daily rotation.  The JLC would make me look a bit gauche in some situations.

And no, I wish my student loans will be forgiven

Jan 17, 2022 - 3:17am
johnny-mnemonic, what's your opinion? Comment below:

Great watches, the JLC Master Control Calendar is a grail for sure

  • Prospect in IB - Gen
Jan 21, 2022 - 2:04pm

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

Jan 16, 2022 - 1:31pm
ENlGMA, what's your opinion? Comment below:

One nice dinner.  Maybe a present (under $3k).  The rest in investments (max 401k with mega backdoor, max Roth IRA with backdoor, max HSA, rest in post-tax investment account).

Jan 16, 2022 - 1:46pm
ENlGMA, what's your opinion? Comment below:

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.

Jan 17, 2022 - 1:18pm
ENlGMA, what's your opinion? Comment below:

Normal employee contributions cap out at $20,500 in 2022.  You can get extra funds in by contributing after-tax funds (not Roth) and converting them to Roth up until the total contributions are $61,000 for 2022.  So in 2022 you can get up to $67,000 into retirement accounts: $61,000 in 401k and $6,000 in Roth IRA.

  • Analyst 1 in IB - Gen
Jan 16, 2022 - 6:19pm

Crypto and stocks. You're in finance, you should be able to invest for yourself. 

Jan 17, 2022 - 11:47am
Arnie S, what's your opinion? Comment below:

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.
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  • Prospect in IB-M&A
Jan 17, 2022 - 10:36pm

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

Jan 17, 2022 - 11:18pm
Arnie S, what's your opinion? Comment below:

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.
  • 1
Jan 17, 2022 - 11:13pm
bluecollarfinanceguy, what's your opinion? Comment below:

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.

  • Analyst 1 in CorpDev
Jan 18, 2022 - 1:38am

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. 

  • Analyst 1 in IB - Gen
Jan 18, 2022 - 9:29am

How much interest are you paying on your debt ?

For me it's 1.4%. By investing in an index fund assuming 7% return its a 5.6% spread. NOT PAYING OFF MY DEBTS is a no brained imo

  • Analyst 1 in CorpDev
Jan 18, 2022 - 11:28am

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. 

  • Analyst 1 in IB - Gen
Jan 18, 2022 - 9:49am

I am so surprised at people saying pay off your debt. Hello. If you put $100k today in an index fund, 33 years from now you'll be a millionaire assuming standard market returns. And that's assuming pretty bad returns already. 

Jan 19, 2022 - 5:50am
Jean_Henry, what's your opinion? Comment below:

please talk about absolute real returns, a million-dollar today won't be as good as a million dollar in 30 years 

Jan 20, 2022 - 6:23pm
FellowTraveler, what's your opinion? Comment below:

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.

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  • Analyst 1 in IB - Gen
Jan 18, 2022 - 9:57am

Work at a German IB, after a grueling long year, with numerous all nighters, I was finally able to purchase a donut.

  • Analyst 1 in IB-M&A
Jan 19, 2022 - 10:32am

Lmao Blair pays above market in UK / US, pretty sure they do too in Germany

  • Associate 1 in S&T - FI
Jan 18, 2022 - 11:49am

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.

  • Prospect in RE - Comm
Jan 18, 2022 - 12:38pm

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

Jan 18, 2022 - 11:59am
SafariJoe, what's your opinion? Comment below:

I have a LLC, so I put that cash into building the business, the rest goes into investing and the exotic sports car.

SafariJoe, wins again!
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Jan 18, 2022 - 1:21pm
beejay2izzay, what's your opinion? Comment below:

Last year bonus $100k post tax. Invested 100% into crypto altcoins, watched it reach $850k in April 2021 (no joke!), then watched it fall back down again ... now valued at $160k (or +60k/ +60% APY). Such a crazy volatile market. Just HODLing ... consistent with my PE longterm value mindset. Let's see what happens in 2022 ...

  • Associate Director in IB - Gen
Jan 21, 2022 - 9:32am

I wouldn't call it a fascination. It get's to the point without spending all night and the same amount of money at the club just to end up not banging. 

Jan 20, 2022 - 3:19pm
FasterThanYou, what's your opinion? Comment below:

Live on your base and invest the rest. I've never swayed from that. I'm a VP and based on investments in RE and a side venture, I have a good shot at being "job optional" in 4-5 years irrespective of what the stock market does. 
 

I don't have an expensive standard of living though even though I have a wife and kids which cost a lot. 

  • Associate Director in IB - Gen
Jan 21, 2022 - 9:31am

- Buy a couple nice bottles of Scotch

- Make an extra mortgage payment

- Buy a new gun that I convince myself I need for whatever hunt I plan to take this year

- Index Funds

  • VP in IB - Cov
Jan 21, 2022 - 12:45pm

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. 

  • Associate 1 in IB - Cov
Jan 22, 2022 - 3:19pm

I'm guessing you're not in nyc?

Jan 21, 2022 - 11:03pm
fsb.ru, what's your opinion? Comment below:

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  • Associate 1 in IB - CB
Jan 22, 2022 - 9:50am

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