Let's Talk Saving

I've noticed on this sub that there is a general sentiment that New York IB is superior in every way to places like Charlotte IB. At the same time, I see posts about NY Analysts and Associates discussing their savings and it seems quite underwhelming to me.

If we were to compare Wells Fargo IB in Charlotte, and say JPM in NY, I think the universal answer on here is JPM all the way because of exit opps, being in the city, etc. I think alot of people are overlooking the significance of being able to save in your early 20s, plus maintaining a LCOL while your income increases. Also, I find the obsession with being in NY pretty unreasonable considering you are going to be working all the time.

WF in CLT pays ~150k total comp for a first year analyst according to glass door. Rent here is cheap. With roommates you can get something for under 1k. Taxes are lower, overall COL is much, much lower. 

According to https://www.nerdwallet.com/cost-of-living-calcula… , 150k pre tax in charlotte is roughly equivalent to 390k in Manhattan!!!! Not to mention that from what I've heard, the WLB is also a bit better in Charlotte.

So given that my #1 priority is to save and retire early, why not go to WF in CLT, spend reasonably, if all goes well climb the ladder to VP or another similarly paying exit (PE, HF) save a fat stash, then if I really want to go to NY I can. Am I alone in thinking like this? 

 

You answered your own question and you don’t even know it.

Why choose JPM in NYC? You said it yourself, exit opportunities. Not to mention way more women, cuisines, etc.

You said you main goal is to save and retire early. You’re not going to retire early saving a few 100k early in your career. You’re going to retire early by making a few million on the back end. And you can have a better chance to do that when you start your career at a top shop.

C’mon dude.

Keep it real.

Edit: As usual, most of the people here just take my words at face value and never actually think. I know most of them are juniors (who are scared and post anonymously for some reason) who bristle because I drive home that going to the best schools and working at the best banks is ideal and it really chaffs them that they don’t, but I can’t help but respond.

The OP asked is working in investment banking in NYC is far superior to working in a tier 3 city like Charlotte as a junior. He mainly focuses on asking about the money saved. He completely ignores important real-life things like things to do at night, availability and diversity of women to date, restaurants, museums, etc. I mean there is a reason most rich people have a pied-a-terre in NYC.

And then there is the ease of moving around for exits. I mean why even argue that point. You wanna work in finance? NYC is the best place to start and move around as a junior. Can you do it from elsewhere? Of course you can, but we are trying to make our lives easier. There are plenty of people here who came from crappy college that broke into banking or pe, but it is much easier from an ivy right? The whole point is to make life easier and set yourself up for success.

So completely ignoring the benefits of living in NYC vs random southern city (which would certainly suck if you were not white), lets just focus on money.

You really think you cannot save in NYC? Really? If you were so obsessed with saving because you had to take on college debt or you parents did not invest well and will leave you think some inheritance, than you most definitely make it work.

You don’t have to live in Manhattan. There are places like Jersey City, Hoboken, Long Island City and the outer boroughs that do not have Manhattan prices. You can have roommates. You could even live in a place like Cos Cob and take the metro into the city.

You don’t have to uber everywhere. You don’t have to eat sushi and try the best restaurants on earth, you can cook at home. Stop acting like working for a bank in Manhattan is a death sentence to your taxes.

There is a general sentiment that NY IB is superior because it is. This is like when I say Princeton graduates on the whole are better than graduates from Fordham, and all the Fordham and other crappy school alum on here cry and say I am elitist and a jerk, etc. I am not saying every from Fordham was a moron in high school, I am saying in general that is the case.

Could you work in Charlotte, invest well and also break into KKR? Sure you could. But it is much more likely to do that from an elite bank in NYC. Do you understand?

When you ask idiotic questions like this on this board, you are basically setting yourself up for an echo chamber of replies. People like you who didn’t break into NY IB will happily reply and say it was the best decision they made, NY is full of narcissistic sharks and it has not impacted their ability to move to mega funds. They want to justify their decision and it is a very easy narrative to crap on NYC. And the people succeeding in NY can’t really comment, because they just come off as arrogant or like they look down at people not in the club. But I don’t mind commenting, because I like keeping it real.

Could you play professional basketball in China and Greece? Of course, but winners want to be in the NBA. Could you eventually work in private equity going to a loser state school and starting your career at Baird? Of course, but winners want to go to a great school and start at Goldman. Some people want to do the best and not live mediocre lives.

Doesn’t mean in you work in Charlotte IB you cannot have a great life and save a ton. But if saving cash is your only goal, you can definitely save in NY if that is your ultimate goal, AND you will have much better chances to lateral around to whatever you want to do.

But I get it. This is WSO, which is frequented by young people who get upset if anyone holds up a mirror to any aspect of their life or background they are insecure about.

OP said his priority is to save and retire early. Let’s say even if you lived prudently in NY, you would still lose out on about $50k a year compares to someone in Charlotte. You do not retire on that, no matter how much people on this board claim. And assuming you are a winner and want your kids to have the best and go to great educational centers, you’re going to need to really earn to give them the best and retire early. And NY is a better launchpad for that kind of life than Charlotte.

Clear enough?

 
[Comment removed by mod team]
 

I'll admit that I don't know too much about how much the exit opps differ. I'm sure they do, but if you make it to VP or Associate at a BB outside of NYC, is it really that hard to find a job that pays comparably to someone who did the same in NY? Also, there are opportunities to lateral within the company. If you can get a couple promotions then you can always make your case for going to NYC and you'd be in the same spot, but with much, much more money in your bank account.

Making millions later in your career is ideal, sure. But having well into 6 figures stashed away in your 20s is huge IMO. Compound interest is big. Not to mention the financial security, being able to go off start your own company, being able to support parents etc. 

 

Disagree with this wholeheartedly. Power of compounding does wonders with 800k in savings by 30, assuming you stay on the IB / PE track, which is much more feasible given the better WLB in LCOL cities. 

Yes, exits are definitely better in NYC, but what % of Analyst classes stick it out to make Partner at a top fund and rake in 8 figures in their 50's? Not many. So, unless your only path in life is IB -> PE/HF, then I don't see NYC as the end all be all. I would imagine many get burnt out with the hours and look to transition to other corporate roles with less comp ultimately killing any chance of retiring early given the taxes in the city. 

I chose between NYC and a LCOL, and ended up picking LCOL because I value my earnings that much. I'm not going to exactly be enjoying my spare time, if I have any, so stacking bonuses in a LCOL when I'm 23 was a no brainer to me. Many get tied up in NYC is end all be all because of prestige and exits, but truthfully I think those are strictly for NYC funds. Are you lateraling from Dallas to NYC for a MF PE position? No, but coming from a top 15-20 shop, regardless of city, will still give you a plethora of exits should you transition elsewhere. 

 

All data shows that those who are able to save and invest more in retirement early are not only able to retire with more money but are also able to retire earlier than those who aren't able to invest as much in retirement early on in their career. Living in a LCOL city will free up more capital for an individual make those necessary early investments whereas living in a HCOL city like NY will hinder an individuals early investment opportunities. While exit opps in LCOL cities might not be as plentiful as those in NY, they do still exist and provide ample earning opportunities and when combined with those early investments the individual will be able to retire comfortably and early. Very few people make it to the level where they are making millions in the back end of their career, you're essentially banking on a lottery ticket to retire.

 

Such a bad take. $100k here and there early in is HUGE for retirement. For being in finance you seem to really misunderstand time value of money. Wife and I hit $1mm banked at 28 by living in LCOL, making $100-$200 each / year, keeping spending tight, and investing in VOO as much as possible. 
 

I think Charlotte sounds pretty dope; friendly people, good local cuisine, assume better hours, and local mountains. A place to actually build a quality life 

 

Lol this got heated. I don’t know who that edit is directed towards but I’m not disagreeing with you my man, I’m just sharing an idea, I don’t know if it’s right. I may very well go to NY despite the things that have been said… just trying to figure out what my best option is. No need for the fighting words lol. But thank you for the info aside from that

 

OP, nothing directed at you my man. I was referring to the cry babies that follow my replies whenever I brusquely tell the harsh truth.

I once commented that parents that do not send their kids to college with no debt or do not guide them to affordable colleges are idiots, and you should have seen the backlash.

People get very triggered when you push the buttons on their insecurities.

 

If all you want to do is save and retire early, then sure pick a LCOL area (or live in the cheapest area that gives you the best opportunity at high paying jobs and exit opps). You listed the issues (exit opps, things to do), but I think you are missing just how important other factors may be too your happiness (but I don’t know you).
I think you overestimate the WLB point (that you’ll never be able to do anything anyway), I’m of the camp that if you have limited free time, be as close to the things you want to do and enjoy as possible. For me, that was nyc. Weekends and nights out are much easier when you are closer to large groups your age, you have access to great restaurants and nightlife, and you can fly basically anywhere you want. 

My enjoyment isn’t in retiring a bit early, because I like what I do, although I appreciate having the ability to walk away. I found happiness by balancing my spending and creating lots of great memories in my 20’s. 

I have no idea what you are like, but I would have regret not enjoying many of the experiences I had just to be a bit ahead on my retirement goals. 

 

Interesting take, I hadn't considered it like that. My only counterpoint is that I think it's easy to say that the NY life is absolutely worth the money if you've been there your whole professional career and haven't been in a lcol area…NY is undeniably an awesome place to be socially but people make memories everywhere and there are plenty of people who are very satisfied with their social lives and have plenty of fun in non-NY areas. Charlotte isn't NY, but it's not rural Montana either. I grew up around Charlotte and have never found myself unsatisfied with the city so I am definitely biased, which is probably why I don't necessarily see being in Charlotte as all that bad compared to NY when you factor in the money you can put away.

 

Yes, it a personal decision and it all depends on what you prioritize (and how you weigh that prioritization). 

For context, I did live in a LCOL area for 3 years in my 20’s (not counting college), so my perspective at least includes that. I agree, you can create many great memories wherever you live, and in general who you surround yourself with is more important than where you are (and is really what you’ll remember). That being said, I found that growing up in a LCOL area and going to college in one is pretty different than living in one full time. 

There were a few main differences for me:

1) making friends: this isn’t necessarily a HCOL vs LCOL (as Chicago is probably mid cost or low relative to nyc) but I did find it much easier to make friends in nyc. Many young people gravitate to the major cities and there are alumni groups, classes/events, etc targeted toward younger people. When you are in school, you are constantly around people your age so making friends is easy. Once you graduate, unless you have a analyst class or younger firm, it becomes harder to meet people (and pretty hard to meet people outside of work). Additionally, many more childhood friends have visited me in nyc for a weekend than at other places 

2) culture/art/museums/events: there are many things that are hard to experience outside of major cities. There are clear things like broadway or the many museums, but there are also many smaller  events that happen that are a ton of fun. I’ve been to many plays that I’ve enjoyed, crazy Halloween events, cooking classes by serious chefs, etc. There just seem to be more authentic experiences (head to Chinatown or Arthur ave for some great food). Also, related to the point on friends above, there is more variety in the people you meet, so you don’t have to fit “one mold” to make friends. Smaller areas tend to be more culturally similar, so if you aren’t in the “in” group there isn’t a group for you.

3) food/going out: When I lived in a LCOL area I started going to the same few places. And a “nice” meal was usually at a chain restaurant (Morton’s type thing) because that’s what was there. I find the variety of food and nightlife in nyc is tough to beat and has something for everyone 

4) ridiculous things: probably not aligned with your “save money” goal, but if you want a $1k dinner for a special occasion it’s there, you want to do a ridiculous shopping spree -done, do a spa weekend at the mandarin -it’s there, etc. Just crazy over the top things you can’t really do elsewhere

5) opportunities: finally, the opportunities. From more recruiters reaching out, easier to have chats with people in the industry, to randomly meeting people at events that have crazy opportunities for you. 

Not trying to convince you one way or the other. I have a few friends that moved from NYC to Atlanta/charlotte/Chicago/etc as they prioritized saving, more space, slower lifestyle, etc. Just trying to provide you with my experience. 

 

I think this is a really good answer. With these kinds of questions, it really does make you realize that money isn't everything (little ironic saying that on a finance forum) and everything is nuanced, your desires out of life are what's really going to be driving your decisions in this case. At the end of the day, I think it would help to live in both LCOL and HCOL areas and figure out what you're more comfortable with, especially taking into consideration your goals, living situation, personal finances, and any other obligations you could have (family, business, etc.).

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.
 

The thing that none of these comments have directly said too is that, at least for me, I'd only want to live in NYC until I was 30-35. This city is exhausting, and at 24 that's the time I want to do it. Growing up in the Atlanta suburbs, I can say that living in or around cities like Charlotte and Atlanta will be something I'd always have the patience to do. As others have mentioned, you definitely come here for the opportunity, but the amount of things to do is off the charts. I'll always have the patience for Charlotte or a "slower" city, but there's a very short window of my life I'd want to be in this city (that people worldwide dream of living in, I would add).

 

You could, but the key would be to aggressively invest the difference in savings. For NYC, it's tough to build up to enough savings where you can put a significant amount of money towards hitting it big until you are probably VP level. If you're able to do that as an analyst, and you hit a 10x-20x, then you will be well on your way to your goal. 

 

Valid points, but after going through this over the years, I think you are underestimating the earning upside that being on a common (comp progression) track in New York (or another big city).

You can, and will be, fine regardless, but honestly feel like there is a balance of a) living in a thriving city while younger and building your network and maximising opportunities, b) getting paid commensurately (would you really be getting paid NYC comp in a smaller city?), and c) future earning potential and opportunities 

No perfect answer, but myopically choosing your career trajectory based on savings % as an ANL or ASO is not wise, IMFHO, when compared to your comp potential from VP onwards. You need to work this out yourself... but from my experience, I didn't fully appreciate how well I'd be paid if I persisted and stuck with it... combined with experience, confidence and title resulting in a greater flexibility in your life. If you are in a spot with good culture, you learn a lot, and get some good experience, you continue to get more efficient with your work over time.

 

Yeah was going to say this.  I would do your research about your firms promotion,  but from friends that work in LCOL I have seen ASO that get bigger haircuts in comp and the savings are much worse than NY.

Also I feel like on thing that has not been hit on is the Nerdwallet is not accurate on living cost.  You can find something much closer to work in NY that is cheaper with roommates where something that in LCOL that is comparably close is going to be more expensive.  I know that in my home city,  this is the case. where if you want to be in walking distance you are going to be paying close to NY rates.  but Nerdwallet says its 50% cheaper. 

 

You're 100% correct and unless you're trying to go from like GS TMT to a megafund, it shouldn't affect your exit opps hardly at all. In terms of opting for LCOL, I say absolutely go for it. The amount that you're making relative to your cost of living is utterly insane. Speaking from experience, made street+ in a LCOL city and after only a few years I'm somewhere between $75k-$100k liquid and landed the role I wanted in PE (also a LCOL city).

 

It is a really good question and something I had to ponder myself recently. Did my SA in a LCOL city and was offered a FT offer there. Also received a similar FT offer in NY with almost double the comp. I think it comes down to personal preference and where you want to spend your early working years. I know plenty of people who have no desire to move to NY as it can be insanely expensive to live there. That being said, you are compensated for that, and it is up to you to save during your time there.

What it came down to for me was the exit opps. NY IB can set you on a different path than other cities due to connections. I had no preference between a smaller city and NY and was aware of the cost of living differences. End of the day it comes down to what fits you personally.

 

if your goal is to save and retire early than go LCOL people underestimate the opportunities if you outperform in a LCOL city and overestimate them generally in a HCOL city where the competition is much more fierce. I live in Nashville and i know a guy who went to freaking nothing school in Alabama founded a IB with some partners in Alabama and he makes well well over a million and the bank now has a office in Dallas where he works from and is opening a office in another state soon.

 

Can vouch for LCOL city.  Had saved ~1 mil by 30 and on track for ~2 mil by 32.  No spectacular bitcoin type investments either.  If anything, have been too conservative in market exposure.

One other point besides cost of living to remember are taxes.  In Texas, there is 0% state tax or city tax.   Compare that to up to 13% marginal tax rates in NYC and California.  If you save an average of 30k per year for a decade just on taxes.... you could be up 500k on cumulative savings by the end of that decade just due to tax alone.

Other (debatable) benefits are culture.  Generally, the vibe I get from my LCOL finance counterparts is that they are way less "banker" than NYC or SF bankers.  More SEC and less Ivy League.  This could be a good or bad thing depending on who you are.  If you went to Wharton and you think it's will have been a waste of your pedigree to work with people who went to LSU- you might not like it as your classmates will be in fancy cities and won't be impressed by your job.  How you react to this is up to you.  But generally, I find that less pedigreed people are a bit less egotistical and it's worth any prestige loss multiple times over as you are actually working with these people everyday.

 

It was amazing not being in SF or NY to start my career. Still live in a major city, get paid street, save way, way more. Maybe it would've been different if I was single or was gunning for like MF roles and absolutely needed to have all the amenities of being in a T1 locale, but that's not me. Walked away w/ multiples of $ saved probably. Pretty much never thought about money when I was in banking, but then moved to SF and despite a significant nominal pay increase, definitely was effectively poorer due to the insanely high COL.

 

Interesting question, I have wondered the same. This was the motivation I needed to run some numbers:

Assumptions:

  • Target Retirement Age: 50
  • Annual return on investments: 10%
  • Annual increase in savings: 10%
  • COL Charlotte/ COL NY: .39 (according to nerd wallet)

Charlotte Case:

  • Invests $50,000 starting at 22 years old, increases annual contribution by 10% until 30 years old. Stops contributing from age 31 - 50.
  • Principal Contributions: $678,974
  • Cumulative worth at 50: ~$6.5M

New York:

  • Does not invest in their 20s, begins investing $117,780 at age 30, increases contributions 10% every year from age 30 to 50.
  • Principal contributions: $7,538,189
  • Cumulative worth at 50:  ~$16.5M
  • Cumulative worth adjusted for cost of living (*.39): ~$6.5M

Adjusted for cost of living: Charlotte contributing ~$650k during ages 22-30 EQUALS New York contributing ~$7.5M from ages 30-50.

The dollar multiplier by age, assuming retirement at 50:

  • 22: 14.4x
  • 25:10.8x
  • 30: 6.7x
  • 35: 4.2x
  • 40: 2.6x
  • 45: 1.6x
 

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