Is a high salary in New York really high?
I'm an unexperienced chimp here, but I was thinking about how inflation and salary affect life. Let's say a guy is earning a hundred grand a year in the South; that's huge. Someone who makes this much in Florida is upper class. However, I think salaries tend to be much smaller than that in South anyway, so someone would not make that much at an entry level anyway.
But in say, New York, a salary like that for a low-level guy seems to be that much after bonuses and such. But is that money going to take you as far in New York as in Florida? Well, I have never been to New York, but it seems that that much money in New York would qualify you as middle class.
So we call it a high salary, but is it really with the high cost of living in New York? How does it end up working out?
I'm not sure abt nyc but I have a point to add. Same thing happens in Asia. Let's say if you work in Hong Kong, 1st year pay is like 70k plus 70k bonus, on par with BBs in nyc but the cost of living might actually be higher. but if you start in Beijing, starting salary is like 55k plus abt 60k bonus (not sure abt this tho) however living cost is dirt cheap and you save at least 60% of your money whilist in nyc/hk/london you could hardly break even in bad years.
But, problem is: you still will work in nyc/london/hk because:
So, whatever the cost of living, you still don't really have a choice but to stick to the financial hubs.
Couple thoughts:
Prestige is a foolish way to make decisions. In the long run, everything tracks to competence and productivity. The cities you mentioned are generally good choices because you're going to find smart managers and a lot of opportunities to learn there, but prestige is a stupid reason to take a job. It's an even dumber reason to hire someone. In any case, competent, hard-working, and strategic people tend to create their own opportunities. Maybe, though I would point out that prop s&t in Chicago is probably bigger than prop s&t in NYC. Between DRW, Jump, Getco, Citadel, and Trillium, you've got a lot of good choices for trading outside NYC. And for the record, anybody with $1 million can do 99% of the prop trading the big boys do from anywhere that you can get reasonable ping times to the exchange. So if you absolutely hate New York, there's no reason you can't move to Milwaukee or some small farm outside Peoria or anywhere within ~250 miles of the CBOE or the NYSE or ICE network gates. I really don't think traditional "networking" is the best way to get ahead in S&T. Or at the very least, I think a different kind of networking is better. You want to be known as the go-to guy in a couple areas. Rather than calling people up, you focus on developing a (hopefully well-deserved) reputation. It's a small industry and people are moving around all the time- you want to be the guy who's the first candidate in peoples' minds when a position opens rather than the first guy to call them and ask for a position. IMHO, it has the potential to make you look weak or cut you out of the virtuous cycle of competence->opportunities-> hard work->more competence-> more opportunities-> more hard work which is generally considered to be the traditional way to create value in the long run.Devote 85%-90% of your energy to competence and creating genuine value for the firm and your clients where applicable, 10-15% on marketing yourself and just making sure you're getting paid what you deserve, and things tend to work out very well in the long run.
That has a bit of a ring of truth for the first couple of years. But I know a lot of incredibly successful traders who got their starts in Houston or Chicago. I also think the sub-hubs like Chicago, Houston, Paris, Frankfurt, maybe Philly, Boston, and San Fran are all options after a few years assuming you stay in industry and keep your connections. A LOT of people move away from NYC after four or five years of work- but they stay in touch with their buddies from NY. Frankly, I can't stand it here. And I would hate the idea of having my kids grow up in the Northeast. Ehh, maybe upstate New York, Vermont, or Maine would be OK. But nowhere within commuting distance of New York, Boston, or DC.
The real question on entry-level jobs is where are the opportunities to learn and get experience. Not prestige, not even necessarily money. Money is more of a concern for the second or third job.
In any case, the reason people go into finance is to make and ideally save money. And if you're competent and mildly independent-minded as an investor or as a trader, you don't necessarily need to work for anyone else after about ten years of careful saving and reasonable success. You can be your own investment manager from a satellite modem at a research station in Antarctica, and you can probably trade anywhere you can get a fast connection to a colocated server next to the exchange's gate. So if the small town IL life or upstate NY life is for you, you can always get there if you save money and pursue market knowledge like crazy.
Irrelevant to the thread probably, but don't know how you lived in HK that it meant it was more expensive than NYC! Rents are high on a per square foot basis (so the have much smaller homes), but otherwise its a cheap city to live in!
I read an article on Forbes a couple years ago saying that 'living well' in NYC requires an income of 400K per year. With this, you can afford to send two kids to good schools, live in a nice condo, and save for retirement.
It's all relative. I have a bunch of friends from the south who love to say exactly what the OP says: a 'high salary' in NYC is just middle class but may be considered rich elsewhere. That may be true, but then, you don't live in Manhattan and that is far worse.
The trick is to not have two kids and keeping your debt low in your 30s.
The tragedy of life is that what is important is rarely urgent and what is urgent is rarely important. Work tends to be very urgent- families don't.
Keep in mind a lot of NYC analysts and associates live in NJ to save money. $2,000 rent will go a long way in Jersey.
Living in NJ and saving money there paid huge dividends during the crash and recovery- I'll probably be able to retire five years earlier because of it- and I still recommend that analysts outside IBD do it their first year- but for folks with a nest egg and higher salaries still in their '20s, Manhattan makes more sense.
The point of living in NJ is that you can split a pretty nice place for $800-900/month and sock away the extra $15K/year. At a 10.5 retirement growth factor, that's enough for two years of retirement. For someone who wants to spend $2K/month on rent, live in Manhattan for heaven's sake.
on the other hand - have two kids and be debt free by your thirties, and you're home free in your 40's once I'm done paying for daycare, it'll be the biggest raise I've ever gotten!
100k in the south is not huge (at least not in TX). I would even say it is worth less than it is in Florida, since florida took a huge hit in the recession.
100K salary in a suburb of Houston will get you this:
http://www.realtor.com/realestateandhomes-detail/25239-Metzler-Creek-Dr…
5 bed, 3.5 bath, 3400 sq ft, nearly half acre, nice pool
You would easily have to make 3x as much (or more) to get that house in a NJ suburb of NYC.
1) I was comparing TX and Florida, not TX and NY 2) that's a 1 hour commute to downtown on a (very) good day; woodlands traffic + airport traffic. And you can't take the train. So discounting the extra cost of gas, wear and tear on the car, and higher likelihood of a car accident, you can get this house in joyzee city (which is still not even half as far) for for about 420. http://m.trulia.com/property/3036060142-266-Gates-Ave-Jersey-City-NJ-07…
One of the traders from Market Wizards was trading from Peoria, cant remember who it was.
Perhaps the real answer you were looking for is a bit simpler than many of the replies indicate. The short version is that you need to make considerably more (~2x) in a big city to live the same lifestyle as you could in the South. For example, I'm originally from the Knoxville, TN area and $100,000 there is equivalent to ~$250,000 in Manhattan. And sure, while nobody starts out making $100k there, nobody makes $250k for at least a few years in NYC either. Not to mention, $1M will buy you an extravagant mansion most places but won't even land you in a 1000+ sqaure foot apartment in Manhattan (to be more clear, real estate is especially expensive in NYC relative to other places).
An anecdotal example is going out for drinks at a nice place in Knoxville, for example, compared to a decent place in Manhattan. Premium cocktails at a nice club will run you $4-6 compared to $15+. Hell, on certain nights, you can knock down 4-5 drinks for a $20 bill. Can't really beat that!
Surprised this hasn't turned into a NYC vs. Houston thread yet.
Oh, it probably will. I'm desperately trying to steer the discussion to opportunities to learn and get experience vs. prestige rather than Prestige(Chicago) vs. Prestige(New York). But even I am getting caught up in the cities debate as you can see.
Bottom line, though, if you're going into Asset Management, there's probably a bigger opportunity to develop competence working as a research assistant to Warren Buffett in Omaha than there is working at any hedge fund, I-Bank, or prop shop. Not necessarily a whole lot of prestige or money, but a whole lot of opportunity to learn and get experience. And that's what I think smart 22-year-olds and even 25-year-olds should be gunning for.
IlliniProgrammer,
The only question I would raise is, is the savings of living in NJ worth it if you are a Banker working crazy hours--isnt the commute a killer? I can see if you are a trader working faster paced, but less hours--but coming home at midnight every time, I think its worth the money to be a 15 minute train ride from my apartment.
Also, where are you finding a 1BR for $2000 in a full service building? I am finding that for a decent apartment for me and my wife we are gonna have to spend $2300 (1 BR) to $2700 (2BR) a month. I am primarily looking in Morningside Heights and Upper West Side, since I am going to Columbia
If you are in IBD working crazy hours, it is NOT worth it. Spend the extra $10K/year for a (after 11:30PM) 1.5 hour/day savings on the commute.
Morningside Heights has actually become a pretty upscale neighborhood over the past decade. Here are some suggestions from midtown. They're studios, but they're large and I would probably take them if it were just me and my girlfriend or wife.
Midtown West: http://newyork.craigslist.org/mnh/fee/2156398836.html http://newyork.craigslist.org/mnh/fee/2152806947.html http://bondnewyork.com/nyc_apartment_listing_99704.htm UWS: http://bondnewyork.com/nyc_apartment_listing_39835.htm http://bondnewyork.com/nyc_apartment_listing_102360.htm
Bear in mind there could be a ~$1800-$3500 broker fee.
I think I know why I am looking in the $2600 range...no offense but those apartments would make my wife divorce me.
Haha, ok. Your wife has expensive tastes, kinda early for two darned college students.
The PATH train runs every half hour between 10PM and 6 AM. You really want to be within walking distance or cheap cab fare distance of work if you are going to be working 80 hours/week in IBD. If you are in sales and trading, you will get off around 8-9PM as an analyst and be able to catch the PATH with a 5 minute wait, so Hoboken is totally doable if you're outside IBD.
$2600/month is totally doable on $120-130K/year of combined pre-tax salaries. In fact, it's a little thrifty by NYC standards. Is the missus working?
Don't get me wrong--If I was on my own, I would live in a cardboard box on the street (a nice refrigerator box though). When you work for 5 years in the mid west, own a house, and get used to a certain standard of living, there is no going back. Additionally, when you get older, you get the "life is too short" feeling. An extra $700 a month might help me retire at 42 instead of 45, but at the expense of years 29-42 sucking because you lived like a pauper, its not worth it. Not to mention my wife will be working too and we only plan on having 1 kid.
Hmm If you plan on getting out of work before 9-10 on most nights, Hoboken or Jersey City is pretty doable. Here's a quick idea from Newport, Jersey City. It's a newer construction low-rise building. You've got two bedrooms, 1140 square feet, a balcony and partial manhattan views all for $2550/month:
http://newyork.craigslist.org/jsy/sub/2150799323.html
There's a pool and a gym in the complex and you can probably rent a parking spot/ get insurance without losing an arm and a leg. This is a nice, safe, clean neighborhood. It's just kinda quiet- nowhere near as much fun as Manhattan.
The catch is that you have to take the PATH train, so it might be good to find a place in Manhattan if you plan on working 90 hours/week. Oh, forgot to mention- cabs charge around $55 for a ride from Mid-town to Hoboken or JC.
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Sounds like to me I would rather spend 3K and live in the city. I plan on working way later than 9-10pm. I have heard associates can get away with leaving before the analysts, but I don't believe in that sh*t. As an officer in the military, the one thing I learned is you don't tell a bunch of enlisted guys what to do and then go home early while they work late. I imagine the learning curve will keep me in late the first year or so, but even after that point, I don't believe in assigning stuff to people, make them stay late, and then skip out the door. I can see maybe doing it once in a while if they think they got everything under control, but I wouldn't feel right about it until I paid my dues and made VP/MD.
Let me know if you're looking for an analyst, lol. I'm lovin' the leadership style.
Regards
You sound like the kind of guy a lot of people would want to work for.
Yeah. The $2000/month quote for a 1-BD is really for a 550 sq. ft 1-BD or a studio convert to 1 BD, not a genuine 700 sq. foot apartment in a luxury building.
No matter how you swing it, you're going to pay about $3.50/month/sq ft rent for higher-end square footage in a nice neighborhood of Manhattan. If you are willing to live in a prewar walkup, the price comes down a little, but so do the views and the conveniences (like balconies, laundry, gyms, dry cleaning, and lap pools in the building). An early or mid-20 something like me needs only about 300 square feet of space. You and the missus, on the other hand, need more like 400 square feet a person- maybe more. Hence, your definition of a 2 bedroom is going to be a little different than some folks'.
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