Young People of WSO: What is with this fascination towards IB?

Opslivesmatter's picture
Rank: King Kong | banana points 1,110

I'm a lot older than most of you guys and while I never worked in FO IB or desired to do so, I don't understand the obsession and circle jerk of getting into IB. I genuinely believe this behavior is putting too much pressure on yourself and it DEFINITELY will show during an interview. Any banker hearing how you came out of the womb wanting IB will call you on your BS. I've read some of @ArcherVice 's comments and he really seems to be the only voice of reason on this topic.

I do believe IB is a good job with a TON of opportunities, no doubt, but it seems like some people on here have let this obsession of IB get in the way of other jobs they could've had. Example: How many posts do we see of Seniors in college asking how to get in IB with no relevant experience? Tons. Then because of this behavior they have to scramble to get some random job (maybe ops) and then hate their life because it isn't this prestigious ib job that they only know about from reading WSO threads.

It's one thing to swing for the fences and another to burn every bridge in pursuit of this BB IB career that you have to do seemingly everything perfect to reach.

Comments (194)

Apr 19, 2016

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Best Response
Apr 19, 2016
  1. this is a finance forum
  2. finance has a theoretically unlimited earning potential, and people are drawn to that. in other professions successful kids might go into (engineering, medicine, law), there's often times a ceiling: people make partner at a law firm, open their own medical practice, or become a VP at a technology/industrial company. all of those positions pay very well, but kids feel that because you see some hedge fund/PE guys make $1bn in a year from carry, or MDs get paid 7 figure bonuses, that finance is the way to go.

the problem with this is kids don't accurately handicap the likelihoods of these career paths. I'd say it's just as likely for someone to make VP at goldman as it is for someone to make VP at Cisco. neither of these are particularly easy, but they pay about the same, and yet you have kids willing to dole out blowjobs to get an interview at goldman (hyperbole, yes).

  1. unlike other paths (engineering & medicine in particular), finance is something that doesn't require a lot of prerequisite coursework or training, kids can decide in their sophomore/junior year that they want to be a banker (or even later in some cases). and while you don't have to major in a hard science to get into med school, good luck on the MCATs if you haven't had an anatomy class. engineering? fugeddaboutit, the engineers I know started as freshmen, and the courses are ordered such that you need to get in early, you can't just wake up one day and decide you want to be an engineer, it's truly a 4y degree.
  2. it's one of the few jobs where you can make $100k as a 22yo, despite the fact it'll likely be in a super high CoL city. money attracts a lot of people.
  3. it's one of the only careers you can start at 22yo. it's near impossible to get into a buyside role straight out of undergrad, so IB is a logical path.

as far as kids getting disappointed, it's all about expectations, kids think they can't be happy if they don't make $1mm a year, have a house at nantucket, a trophy wife, and a business card with a top tier firm on it. it's just not like that in the real world. finance is an uber-competitive industry, sales driven, so you have a super high concentration of type A people, and if you're type A you want to be the best, so when you don't become the best, it's a let down.

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Apr 20, 2016

Church. This reply is spot on and explains the mindset of me and all of my finance friends throughout our time in undergrad.

The fool thinks himself to be a wise man, while the wise man thinks himself to be a fool.

Apr 22, 2016

Church indeed, sir.

Apr 22, 2016

Good post and agree with all your points. However, the "cost of living" in NY or SF is really what you make of it. I've lived off $2,000/mo in SF without any issues (eating well, all amenities, pursued hobbies, no deprivation of any sorts). I spent $1,000 on rent for a 600 sq. ft. studio, but I was also saving $1,000+/mo. because I didn't need a car (no monthly payment, insurance, parking, gas, maintenance, tickets, toll fees, license and tabs, etc.). It's practically like getting free rent.

The reason is that I don't care for living in a ritzy house/apartment, stupid sports cars, boats, fancy electronics, and other bullshit that (mostly insecure) people use to make themselves feel better. The reason why people in NYC or SF tend to spend a lot of money is because (a) they make a lot more than most people in other cities -- that's why they're probably there in the first place -- and (b) they feel they need to keep up with the Joneses because everyone around them is rich and piss away money where it's not needed. People naturally aren't very disciplined and normally spend what they make whether it's $20,000 or $200,000.

Anybody who says you need $100,000+/yr to live in NYC or San Francisco is completely full of shit. There are plenty of people who lead very solid lifestyles who spend no more than $2,500-$3,000 a month. Some immigrants in these cities make $20,000-$25,000 a year on minimum wage, live good lives, and still send half of it back home.

Anyone who thinks living in Fargo is the solution to getting rich because you can save more... I have news for you. I'd argue that I can actually live CHEAPER in SF or NYC than I could there where the public transit is useless.

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Apr 22, 2016

I agree with some of your points but living in the bay area below $100K, is a major struggle and it is not about posing with what I can and cannot afford, the cost of living, the taxes, insurance, health care all take their toll, even crossing over the san mateo/golden gate/sf bay brigde every day adds up, plus the highway 101 is filled with congestion during the rush hours, which means spending more times in traffic (wastes potential time), plus not every one can take the bart system. One need over $100K to just get buy, have you seen the rents prices lately? $2,500 a month for a single one bed and that is at the bottom end.

Want to Lose the body fat, keep the muscles, I can help.

Apr 22, 2016

I saw an article of some programmer who works at Google who lives in a van, do it man!

Apr 22, 2016

Yes, that is correct, I lived in that town and believe me, you can work for a very great company and still be homeless if you are not careful.

Want to Lose the body fat, keep the muscles, I can help.

Apr 22, 2016

Well the kid chose to be "homeless," so he could bank all the money from his check. They interviewed him and he said he doesn't see a reason to spend all his earnings on the costs of living especially since he had no big obligations like a family.

Apr 23, 2016

I don't agree at all. The median income in the Bay Area is only barely above $60K so this "you need $100K minimum" is completely false. I'd say less than 15% of workers actually make $100,000/yr. You have janitors in SF working for under $30K a year who do just fine. Not everybody is a skilled worker making even $50K... far from it. If you're struggling off $100K+ a year, then that's not really an issue with the city itself. It means you simply have expenses that people anywhere else in the country have. If you have a BMW, a boat, four kids, a $5K/mo mortgage, eat out every day, regularly take in entertainment, among various other activities that suck away money, then sure, you're going to be spending money.

You do not need to spend $2,500 for a one bedroom. Only in certain neighborhoods. I can get a studio apartment (clean, good quality), with no more than a 45-minute commute to the financial district for $1,000 max. And have tons of options if I'm willing to go up to $1,200/mo.

But just for the sake of argument, let's assume you need to spend $2,500/mo for rent. That's $30K/yr. Where is this other $70,000+ of required spending for a presumedly single individual? There was this study in the Wall Street Journal that measured cost of living expenses by urban area excluding housing. SF was 34th. If your housing is $30K, then I'd be really curious what one is doing to feel like it's obligatory to spend over $70,000 a year on non-housing expenses (i.e., single individual).

I've spent most of my life in the Bay Area growing up and outside of maybe needing to spend a few extra hundred bucks a month on rent versus some lower-tier market, every other expense is practically the same (state taxes are a bit higher). The extra income you get --assuming you take advantage of the labor market opportunities -- more than makes up for it many times over. Which is why everybody and their brother wants to live here in the first place.

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Apr 23, 2016

I certain enjoy your feed back but taxes and other expenses eat into the 100K+, not everyone can live in SF city, most people live in the SF bay areas because of their jobs etc. I lived in the SF bay area and the cost/stress level/lack of life balance etc drove me out, I still have friends there, one lives in a rent control area so he is fine, others own property/rent and with that and kids they pay the price.

Want to Lose the body fat, keep the muscles, I can help.

Apr 23, 2016

Sorry to hear of your experience. I know some people who work good jobs and live in Oakland/Fremont/Richmond and save extremely well with pretty decent commutes. In NYC, getting quality rentals for relatively cheap is easier because there's a huge selection in NJ (densest state in the country) and of course the outer boroughs.

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Apr 23, 2016

Sadly, I was working all the hours possible and promotion was out of reach, I worked at several companies and it was like being on a tredmill, do all the work and little reward, a few companies did reward me but nothing compared to the work that I did, the stress got to much, but my times at Google was the best. THX. I certainly would go back if I find a great opportunity, but if I do I will live outside of the bay area and travel in. The place that I used to live was almost crime free, people were nice, total strangers were super friendly, it is still a beautiful place.

Want to Lose the body fat, keep the muscles, I can help.

Apr 23, 2016

Interesting points. Where would rent be 1,000 bucks? Shared roomates in Oakland or San Jose? I think we both can agree that it isn't easy to spend that much the closer your get to Nob hill/financial district.

Apr 23, 2016

Some will go up to $1,600-$2,000 with a girlfriend or whomever and split it. Roommates/housemates in general is a common avenue, or renting a room. Some also go to single-room occupancies, or basically a dorm-room style arrangement where you have your own room with a shared bath. Or you can go to places like Berkeley, Fremont, Richmond, or other options in the East Bay for around a $1,000, sometimes as low as $800 if you're lucky (and we're talking decent clean places, not crap). Some go to rent control units. And some people have connections to help them get good deals, which helps. I know a kid who recently graduated and has his own room and bath for $900/mo, 35-minute commute from downtown SF, which he got through family connections. Deals are also easier to get if you look outside of the beginning of summer or end of summer, as that's when housing is generally in highest demand.

Commute from San Jose to the financial district is way too long -- a little over 90 minutes so not recommended. More likely to get good deals in the Easy Bay anyway since San Jose is near to some of the hottest spots in the Silicon Valley, which is the economic engine of the region. Finance workers are arguably at an advantage over tech workers, given finance people can simply go to the East Bay as they'll probably be in the financial district or maybe Menlo Park.

And yeah, pretty unlikely you're going to find rent that inexpensive on the peninsula through online postings esp. during peak hunting season. To get something that good, you're going to have to do something like my friend did, which isn't viable for most outsiders to the area.

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Apr 23, 2016

You forgot to consider two little concepts called "before taxes" and "after taxes" in your story. 100k before taxes minus 30k after taxes doesn't leave you with 70k.

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Apr 23, 2016

Thank you and well said, people forget about 401 k, medical , opticians, dentist etc. From my experience, I was making more than $100K and I struggled to save, I did but very little, and that included reducing my social life and lets not forget the long hard hours that I had to work, at least in the financial industry people work long hours but they get great rewards, in Biotech you can be stuck in the Laboratory forever, I used see my director work all hours of the day, their stress level was off the roof. $100K, even being modest can disappear so quickly and I am not talking about drinking or other habits that cost much, just basic living is over expensive, I did not mention even about having kids, baby sitter, schools etc. If you want to live well (modest) in the bay area make sure you significant other is working as well.

Want to Lose the body fat, keep the muscles, I can help.

Apr 22, 2016

Agree completely. One thing to add here is that for a lot of people, it makes sense to spend 2 years on it if you're unsure of what to do next because, theoretically, all the doors in the world will open after IB and you'll have money saved up, etc.

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Apr 19, 2016

Why do you care why people are fascinated with banking jobs?

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Apr 19, 2016
iggs99988:

Why do you care why people are fascinated with banking jobs?

Why do you care why he/she cares why people are fascinated with banking jobs?

I think it's a worthwhile question to raise once in a while (similar to the recent 'do you enjoy your job' threads). The IB forum is often full of 'BB IB or bust' kids who seem to have little idea about what they are chasing.

Those who can, do. Those who can't, post threads about how to do it on WSO.

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Apr 19, 2016

My point exactly and @thebrofessor had a pretty decent explanation. I just don't think a lot people looking to go into IB can forget all that comes with it. Working that many hours can possibly give you heart problems and I can think of about 4 or 5 MDs in IB who have had a heart attack at ~40. Not to mention the fact that only 2% of applicants are accepted by GS/MS. No doubt in my mind that 70-85% of applicants don't meet the criteria at all or have a shitty resume (ie 4pages???), but that still leaves the rest of the competition to be quite staggering.

To sum it up in brief for you guys looking to get in IB: You better get solid internships and have a decent gpa. Don't post on WSO "Senior and looking to get in IB" if you haven't already met the criteria.

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Apr 19, 2016

Well, I think there's a tendency to think a little formulaicly (is that a word?) re: how to get into investment banking, so I won't jump to shut down those threads. I had no IB internship, no GPA at all and I came from a non-target country, yet I did 9 years in IB before retiring to a risk management role.

Those who can, do. Those who can't, post threads about how to do it on WSO.

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Apr 19, 2016

First off congrats on working into IB, but I think we both can agree that the IB hiring process is much different now than it was 10+ years. Nowadays if you don't have a BB SA it is very hard to get into a BB IBD analyst gig. It's good to hear an opinion from someone in risk because it seems like Non-FO users on here tend to just lurk around. They don't want to get monkey shit for saying something that is against the GS or bust mentality.

Apr 22, 2016

Thank you and well said, this inspires people that is what we want, what is possible compared to what is not. Thank you!

Want to Lose the body fat, keep the muscles, I can help.

Apr 22, 2016
1234bama:

My point exactly and @thebrofessor had a pretty decent explanation. I just don't think a lot people looking to go into IB can forget all that comes with it. Working that many hours can possibly give you heart problems and I can think of about 4 or 5 MDs in IB who have had a heart attack at ~40. Not to mention the fact that only 2% of applicants are accepted by GS/MS. No doubt in my mind that 70-85% of applicants don't meet the criteria at all or have a shitty resume (ie 4pages???), but that still leaves the rest of the competition to be quite staggering.

To sum it up in brief for you guys looking to get in IB: You better get solid internships and have a decent gpa. Don't post on WSO "Senior and looking to get in IB" if you haven't already met the criteria.

I been on a college hire team and I would say closer to 90%-95% dont meet the criteria

Apr 24, 2016

Is there a reason they don't? And is this a target/semi-target?

Apr 25, 2016
lakebeachadvisors:

Is there a reason they don't? And is this a target/semi-target?

keep in mind we may be hiring for 6-10 spots and get over 8000 resumes.. you have to weed them out quickly... if we could take 50. we could hire 50 really solid people but the balance are just off the mark if even just slightly such as GPA, internships, etc etc

Apr 19, 2016

hey my comment got deleted, I had made the incisive remark:
lol says the guy in ops

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Apr 20, 2016
PE_Reaper:

hey my comment got deleted, I had made the incisive remark:lol says the guy in ops

+1

Apr 19, 2016

It's one of the best gigs you can get out of college. It requires no prior training or education aside from a bachelor's, pays incredibly well, and provides you with a skill set and branding that opens the door to countless opportunities after your two year stint. Moreover there's no real ceiling for how well you can do, and there is a defined upward trajectory that sets you up very nicely.

I'm not really sure why you're surprised people are obsessed with going for the aforementioned. If I had the opportunity to get one of those jobs, I would absolutely turn down some random job that I wasn't satisfied with. I'm going to assume a lot of people on this forum went to targets or semi-targets, are fairly competent, and quite young, so I don't believe it would be that hard to find an alternative job if the banking path didn't pan out. Lastly, to address your interview comment, as someone who has interviewed candidates, I know that most stories about interest in banking from a young age are BS, but I do care that candidates have the ability to think on their feet and are well-spoken. That's what the question is screening for.

Is IB the best job someone can get after college? Absolutely not. But it's definitely up there considering the lack of requirements and the aforementioned benefits. You don't need to know computer science like you do for tech jobs or most quant jobs (which are frequently stated as being more desirable right out of college), you have a greater upward trajectory on average than tech (most software engineers plateau very quickly), and probably a little more stability and security on average than trading (see turnover rates at funds like Citadel and Bridgewater).

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Apr 20, 2016

He wasn't indicting the choice itself, merely the mentality and stupidity of burning every other opportunity because it doesn't stack up to GS TMT IBD/who fucking cares--not to say I don't like the "never settle" Facebook platitude--but it can do more harm than good.

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Apr 20, 2016

I completely agree with that. I mean I would say that generally getting a job in high finance (not targeting a specific firm or group) is quite doable for a large percentage of this site's target audience. There are definitely cases though where people overestimate their own abilities or underestimate their competition and end up getting burned. Seems like a very prevalent mentality among target school kids who are type A and so used to excelling in whatever they do that they're genuinely surprised when they don't get GS TMT or MS M&A. There are plenty of great opportunities that don't receive the attention or respect that they deserve because they're overshadowed by some of these name brand or prestigious posts.

I went to HYPSW and legitimately had classmates that had already planned out their career path as follows:
GS/MS top group -> Top mega fund -> HBS -> Top mega fund. People don't understand how narrow the funnel gets as you progress in this industry. So yeah, in that sense I would agree with OP that obsessing about the most elite positions is harmful and unrealistic.

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Apr 20, 2016
throwaway82694:

I went to HYPSW and legitimately had classmates that had already planned out their career path as follows:GS/MS top group -> Top mega fund -> HBS -> Top mega fund. People don't understand how narrow the funnel gets as you progress in this industry. So yeah, in that sense I would agree with OP that obsessing about the most elite positions is harmful and unrealistic.

Couldn't agree more with this. I saw a similar situation on my college football team. So many guys have this NFL or bust mentality and don't comprehend how few get the opportunity / don't have the self-awareness to understand that they don't have the ability to do so.

May 1, 2016

...

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Apr 21, 2016

I dont think Church is criticising people with an IBD career path in mind. Its more that there is a mentality of IBD/FO or bust and putting down others who may consider MO/BO roles. 9/10 of the posts on here that compare a MO/BO role to FO role always has a FO enthusiast declaring that MO/BO should be turned down regardless of the firm, role or opportunities. Yes its an investment banking forum, but IBD takes up less than 20% of an entire investment bank. There is definitely a FO or bust culture here, highly supported by those who don't fully comprehend what it encompasses.

Array
Apr 21, 2016

No one is arguing that you shouldn't shoot for the top. People are arguing that you shouldn't expect to get to the top and just cast aside any other offers that aren't up to your expectations. Statistically, very few if any people reading this forum now who will be recruiting will get GS TMT. Doesn't matter how good they are. They group is only so big. This thread is about a readjustment of expectations.

If you read my earlier post I am pretty much saying the same thing as you. Most of the kids on here are competent enough to land a good banking gig and as I said, I don't think they should settle for just any job if that is the case.

The prestige whoring is a different issue entirely. Depending on what you want, I think there are a number of EBs and MMs that offer better experiences than top groups and MFs, respectively, but they will generally be passed over by kids gunning for seats at Blackstone, Apollo, and the like.

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May 1, 2016

...

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Apr 21, 2016

I'm not really sure what you're arguing about, and I don't think you know either. How is this counter-intuitive? By all means aim for the top shops and believe in yourself. No one is saying to not shoot for the best jobs or to not have faith in yourself. The argument is that you shouldn't put all of your eggs in one basket and burn bridges to other jobs just because you have the expectation that you'll get your top job. Nothing is certain.

Again, not sure what you're arguing about. I'm not making a big deal out of anything. I'm saying that there exist some incredible PE shops like Leonard Green that are far leaner than some MFs and have better growth potential for a new hire, but are overlooked by younger students who only know brand names. I'm not saying you should always go for Leonard Green over a MF. I'm saying it can be a better opportunity for specific people who have different career goals in mind.

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Apr 21, 2016
kkrrjrnabisco:

Whats wrong with having a career path in mind and shooting for the top?Worst case scenario: they don't get what they wanted and settle for what they got or they find out that they like something else within corporate finance along the way..

The kids who you're talking about are a part of the few who probably has what it takes to get top groups and MF placement anyway..

Should they sit down and say they want to work for Wells Fargo public finance? nah..

Nothing is wrong with that and no one is saying that. A large group of people may have what it takes to get top groups and MF placement, but statistically not all of them are going to get there. It's similar to college. There are a ton of candidates who are qualified for Harvard, but the class size is still only going to be 1600. You should have the maturity to recognize this and begin preparing back up plans.

It you read through this thread, you will see we are talking specifically about people who burn bridges in pursuit of these opportunities.

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Apr 25, 2016

As someone who recently graduated from a top-tier Ivy - and did a whole lot of soul searching in the process - I gotta add that IB and Consulting are by far the two most visible industries on campus. So kids pretty quickly start associating "options after graduation" with these two gigs. These also happen to be two industries that are quite serious about the OCR so it all adds up.
Now, I've met many friends with a true passion in: Arts, Music, Entertainment, Sports, and at least some have ended up in finance anyway since it's a safe option with good income and it offers immediate rewards, as opposed to a steep climb of other professions (incl. startups). I wonder how many of them (us) will eventually turn back to the fields that make us tick.

Apr 20, 2016
throwaway82694:

It's one of the best gigs you can get out of college. It requires no prior training or education aside from a bachelor's, pays incredibly well, and provides you with a skill set and branding that opens the door to countless opportunities after your two year stint. Moreover there's no real ceiling for how well you can do, and there is a defined upward trajectory that sets you up very nicely.

I'm not really sure why you're surprised people are obsessed with going for the aforementioned. If I had the opportunity to get one of those jobs, I would absolutely turn down some random job that I wasn't satisfied with. I'm going to assume a lot of people on this forum went to targets or semi-targets, are fairly competent, and quite young, so I don't believe it would be that hard to find an alternative job if the banking path didn't pan out. Lastly, to address your interview comment, as someone who has interviewed candidates, I know that most stories about interest in banking from a young age are BS, but I do care that candidates have the ability to think on their feet and are well-spoken. That's what the question is screening for.

Is IB the best job someone can get after college? Absolutely not. But it's definitely up there considering the lack of requirements and the aforementioned benefits. You don't need to know computer science like you do for tech jobs or most quant jobs (which are frequently stated as being more desirable right out of college), you have a greater upward trajectory on average than tech (most software engineers plateau very quickly), and probably a little more stability and security on average than trading (see turnover rates at funds like Citadel and Bridgewater).

Yes, exactly this, SB'd. And as was mentioned earlier, this is a finance forum made for the purposes of IB essentially. In reality there's less than 1,000 new BB analysts a year and when you think about that in the context of graduating seniors it is a tiny blip. That blip just happens to be highly concentrated on this forum.

Again, the skill set and the credibility can really take you anywhere and that is really attractive to anyone who's 22 and doesn't have things figured out yet. One example I like as a baseball fan is that Andrew Friedman (a former Bear Stearns analyst) is now President of Baseball Operations for the Dodgers and got his start via his finance connections. IB is a relationship business and by virtue of being in it you gain a lot of connections you wouldn't otherwise have working internally somewhere.

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Apr 20, 2016

I live in Eastern Europe, i was eager to work in IB although there are very few places (only boutiques) in my country and competition is tough (i guess). I've got in to one boutique present in 4 countries with a fairly large team by local standards. It all started as it's described in the internet, pitches and models, deals, client meetings etc. All this romance ended after 6 month or so when you realize that this is just work and you are sitting extra hours for nothing, also you have to work with people whose ego is so large that you can climb on it, jump down on their IQ and die instantly from the impact. After a year deal flow deteriorated, people started to leave, I left after almost 2 years. Overall the experience was good and unique but there are better career paths in finance.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.

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Apr 23, 2016

My two cents, playing off what @thebrofessor said: If you're someone willing to bust your ass to get rich, the safest route is to get into the medical profession. The path is very difficult, but set in stone: pre-med at almost any school, with good GPA -> stellar MCAT -> good med-school. in my experience, it's a safe route because its all about hard work, and not about luck. It's a low risk, high reward route.
Finance, on the other hand, has many routes and doesn't require graduate studies. Hard work is involved, but so is luck. It's high risk, highest reward.

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Apr 20, 2016

Bad post. Medical school is not a path to wealth. I was pre-med, completed my pre-reqs, and then during junior year pondered the path in front of me and decided against it. The only well-paid physicians are specialists and they sacrifice 8-10 years in opportunity cost, about 2 million bucks (200k average lost salary x 10 years + 200k debt - meager resident pay). Matching into derm, gen. surgery, plastic, cardiology, radiology etc. is about as hard landing a MF spot (probably a lot harder).

If you don't match into a highly paid specialty, you will be a miserable family doctor or internal medicine, making 170K a year with a huge debt load that is accruing interest. Medicine is not a path to riches.

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Apr 20, 2016

Also, who the fuck takes the GMAT for med school?

Apr 20, 2016

1) IBD pays very well: 85 base and maybe up to 70 bonus your first year. How many business jobs out there pay anything remotely close to that? The average business major starting salary is 54K and most likely has very minimal bonus. How long would it take a BO/MO guy to hit say over $120K all-in?

2) IBD scales well: Yes a great base/bonus at the cost of 80-90 hour weeks is very rough, but IBD scales very well. Just going from a AN1 to AO 0/1, you go from 85 base to 125/150 base, and this can be done as quickly as 3 years and doesn't factor in bonuses. As you advance to VP/D/MD your pay can exponentially increase.

3) Reputation: IBD is definitely a beaten path, but because its a beaten path, it becomes very competitive and business people generally know about it. Look at all the famous alums who have had stints in IBD. The list goes on and on and many people who aren't famous still absolutely kill it.

4) Exit Opps: Because of IBDs reputation, great exit opps are available that may be far more difficult to get to than from other paths (PE/HF). If you look at a lot of the tech startups hiring for business roles, many of them are asking for ex-IBD/MC guys. If you go to a solid shop and perform well, you will have so many more opportunities than if you are in BO/MO.

5) Something else to also note is that you don't have to be super technical to get into IBD. The other roles out there right now that generally pay the same/higher than IBD would be top CompSci jobs (~100 base/ 50/year RSU/Options/15% bonus + massive sign-on). But CompSci jobs require tons of more studying and actual talent.

If you think about it, the obsession with IBD drives the competition up dramatically. This means that those who can get into IBD are even stronger candidates and helps reinforce the reputation that IBD is a great career path, partially because of the work and partially because of the competitiveness and drive of the students.

There are definitely plenty of other great career paths, but few have the attractiveness that IBD has. There are great fldps/Big 4 programs and they are definitely competitive, but the thing is that IBD is so competitive, that even if you fail, your average IBD candidate should be able to swing into another career role without so much difficulty. For example, the amount of time IBD candidates spend networking, if they put that into another path (FLDP/Big 4), it would make them look absolutely amazing as relatively not as many others going down that path will network (play the game) like that.

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Apr 20, 2016

Great post, thanks. I'm curious, what do you mean by solid IBD shop? BB/top MM/EB?

Apr 20, 2016

In some respects, getting an IB analyst position can be a pretty "safe" route to take. This obviously excludes people on the BB IBD>MF>HBS>Greatness path, but for many it's essentially a two year position where you can make a lot of money (relative to other opportunities available) while you try to figure out what you want to do long-term. There is a section in the book Young Money that talks about this and probably articulates it a little better than I do.

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Apr 20, 2016

Acquired skill set that is highly applicable to the real world. And also I have a terrible fascination with hard work and long hours..

It ain't what you know, it's who you know

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Apr 20, 2016

IDK IBD seems great but id rather go into trading or ER, id rather have a little more of a life with a little less money and the exit opps arent bad for either of them. But just like the @thebrofessor said, the main reason why i want to major in finance is kind of because of the lack of a pay ceiling and i hate being broke, and i have an interest in markets etc. But i know that IBD is not for me

Apr 20, 2016

Exit opps for trading, especially prop trading like your username, aren't that bountiful.

Apr 20, 2016

Exit opps generally include: early retirement in the Cote d'Azur or the poor house...

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Apr 21, 2016

So in the end, the final expected value is roughly the same as a regular job.

Would you rather play a dice game where you get the number you roll in dollars, or $3.50 straight out?

Life makes some sense after all.

Apr 21, 2016

Live for the journey--not the last chapter. Don't underestimate the power that comes with being a revenue generator rather than someone paid for their time.

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Apr 21, 2016

Time is priceless

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
-Most job applications

Apr 21, 2016

If you think time is priceless, you don't understand the most fundamental concept of finance- TVM.

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Apr 21, 2016

Time value of money says that a dollar today is more valuable than a dollar tomorrow. You're assuming a predetermined rate. But we all know rates vary amongst asset classes and economic conditions. We price risk, not time.

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
-Most job applications

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Apr 20, 2016

I realize that for proptrading, but correct me if Im wrong but cant regular BB traders move onto HF trading and then maybe PM?

Apr 21, 2016

I always thought IBD/ER was the typical way into a non-quant fund and STEM undergrad/grad for quant funds. I haven't heard a lot about S&T exit routes but it probably depends on the desk, if you were on a rates or macro desk or exotics you might have an easier time jumping around than if you were just doing execution on US cash equities.

Apr 21, 2016
proptrader101:

IDK IBD seems great but id rather go into trading or ER, id rather have a little more of a life with a little less money and the exit opps arent bad for either of theme

Trading doesn't have any true exit opps. Equity research does, though.

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Apr 20, 2016

The safest and quickest path to riches is definitely in sales. IB no doubt offers you the option of making b/w $30 and $50 million in a lifetime for an average performer. But sales has the lowest entry requirements and usually people make a good deal of money for much less hours.

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Apr 20, 2016
jobseeker1:

The safest and quickest path to riches is definitely in sales. IB no doubt offers you the option of making b/w $30 and $50 million in a lifetime for an average performer. But sales has the lowest entry requirements and usually people make a good deal of money for much less hours.

Where do you get these numbers you speak of? $30-50 million lifetime earnings? Average performer? Please don't spout off misinformation when you have no idea.

Apr 20, 2016

this is what I mean about probabilities of people in finance careers. where are you getting this data? average performers most certainly do NOT make 30-50mm in a lifetime. average performers hit a ceiling and don't advance in IB.

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Apr 20, 2016

Specifically SaaS sales I think.

Apr 20, 2016

Sorry!

I meant top average performers I guess lol. Y'know--the ones who managed to make it through the narrow path from Analyst--> Associate--> Top MBA--> VP--> "Average" Performing MD at top Bulge Bracket. Obviously in the whole population of IB'ers, they are not average in the slightest. But for those who make it to that top of the hill position, I would have figured those numbers are in line.

And also, I feel the need to add: I'm not a prestige-hunting person who puts money at the top of my priorities. I just thought that these figures are in line from what I've read from perusing salary statistics, this forum and a few others, and other anecdotal evidence.

Apr 20, 2016

Some of the comments in this and other threads bring to mind images of undergrads sitting around talking about their future careers in finance and speaking with an air of authority about distinctions between front office, middle office and back office, how many millions an "average" bank pulls in a career, which teams at GS/MS/etc have the most prestige and which car it is most appropriate for an analyst to buy with the first bonus.

Kids, if you're ever participating in one of those discussions, know that you are all talking absolute shit.

Those who can, do. Those who can't, post threads about how to do it on WSO.

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May 1, 2016

...

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Apr 20, 2016

I think given the money, "prestige," type of work, and exit ops - it is easy to why so many young people are attracted to IB. That being said, there seems to be other areas within high finance (such as AM/HF) where the money, prestige, work, etc appears similar but garners much less attention. As a recent (under) grad in his late 20's, the more I learn about IB's the less attractive the work seems to be given the hours and type of (grunt) work you do within your first couple of years. For me AM/HF looks much more attractive.

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Apr 20, 2016

I've met a lot of analysts who got into this for the "prestige", to tell people their group/bank, and to make it to black stone and be a billionaire someday. But there's also a significant amount who see see this as a 2 year training ground to build up your resume, build a network, gain a skill set that is transferable throughout business, have more time to figure out what career is for you, and to open doors for opportunities to get jobs in many careers with less hours that still pay 6 figures to a 25 year old. These tend to be the guys who shoot for a BB but take the average to good group that has a great culture and not the ones shooting for all the groups people go nuts about on here. While WSO seems to have more of the first type then the second type, the second that I mentioned definitely exists as well.

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Apr 20, 2016

Let's be honest - most kids wanting to crack into IB have no idea what it involves. I worked as a lawyer working on IB transactions for the first 7 years of my career and, even from that close proximity, I had no idea what IB really involved on a day to day level for grunts (nor did I have that much idea about what grunt lawyers did before I started either).

Once you're in the industry, you can ret con why it's rational for kids to want a career in investment banking. However, even in this age of the internet and freer access to information, the reality is most kids have less than a half-arsed idea. Delusions of models & bottles, or some variation on that theme, are likely a motivating factor.

Case in point: Many of the ignorant, grasping in the dark comments that get posted on WSO. Some comments read like 13 year old virgin boys talking about the intricacies of sex.

Those who can, do. Those who can't, post threads about how to do it on WSO.

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Apr 20, 2016

Money. Why PE/VC? carry (money).

Everyone has a line about wanting to help business people take it to the next level or wanting to be on the forefront of economic growth or loving the markets, whatever, but you could be a loan officer at a regional bank if you really only cared about helping businesses acquire capital and grow.

Honestly, if you have your entire career mapped out in your head by the time you're a junior in college, what possible criteria could you have besides lifetime earnings? I want to work at GS/MS for the camaraderie, KKR because I love their strategy, HBS because of the student body's academic curiosity, then Sequoia Capital because I love the energy on the west coast? Give me a break.

The investment industry has one function: Make money; for the investors, for the entrepreneurs and for the army of people working on the deal.

I'm not saying everyone falls into this category, or that money is the only reason, but if you want to know why a bunch of undergrads on an internet forum are obsessed with IB, this is your answer.

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Apr 22, 2016

Exactly. Although having said that, I acknowledge that there are really the rare handful that literally live and breathe such a vocation because they genuinely enjoy it.

I just haven't met one yet.

Apr 20, 2016

I started out with the passion for medicine but things didn't work out. Started trading during august flash crash and made a ton of money then lost it, ever since then, I was on a mission to perfect my trading and understanding of the markets, economics, psychology etc

My other reason is the fact that the value and quality of life in my family decreased over time, from bbq's and parties every other month to just a couple a year. This is due to life getting tougher and laws no helping the common man who just wants to provide for his family and friends. I wish to go into a hedge fund (or something on the buy side) because I want to bring that value back. Passion is already there, my trading has greatly improved in a short amount of time (although it has not been profitable in these corrupt times) and I read many books and always check latest news to see what bs tactics are being employed these days.

The jobs on wall street aren't perfect but nothing ever is.

Absolute truths don't exist... celebrated opinions do.

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Apr 21, 2016

With regards to The Brofessor's response, I think there is an important distinction to be made between finance and IB specifically. All of those reasons are great for finance in general, but why IB and not ER or AM? I went back to school for a finance degree in my mid twenties and I definitely found that most finance students had IB dreams in their head, but that few even really knew what the hell IB is. It is just an idea of a high paying Wall Street job in a lot of cases I think. For quite a while I could not believe how clueless some of these kids were, thinking that IB has something to do with stock picking or trading, while preparing to interview with the like of Goldman and JPM. It seems like this happens a lot with PE too; kids assume they will go from IB to PE but really don't have a good reason for, or understanding of either.

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Apr 21, 2016

To those few who were shitting on @thebrofessor , I'm going to assume you're either still in school or uninformed like most. Sure, a decent portion of the job is monkey work, but a lot of it (especially when it comes to supporting trading) can really add value. If your Ops sucks, you're going to have a bad time. This may sound like a non-answer but you really won't know what a role's like until sitting in the seat. There are times in my job where I'm stressed out because FO wants answers, and wants them now. Or another team you rely on fucked up and because of it there's money on the line if you don't get it resolved before the market opens. There are a TON of finance roles out there... banking is just a really popular one because of exit opps and like myself, a lot of kids have no idea what they want to do coming out of school.

Don't forget that a lot of the non-button pushing roles are OT eligible, so at the entry levels you could be making 80-90 all-in depending on your hours. Not a bad start while you figure out what you want to do for the rest of your career...

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Apr 21, 2016

I think that many of us adults forget that we know now what we didn't know then.

I think that many of us adults also forget how badly we wanted it back then.

I think we forgot that we got 12 weeks of vacation/year as college students and assumed that would continue indefinitely.

I think many of us forget how much stamina we had back then. (I am not sure I could pull a 100 hour workweek today, and I'm just ten years older)

Today I am incredibly grateful that I did not wind up in IBD, but had I been offered GS IBD back as a college student, I would have taken it.

And I wouldn't talk down to my 21-year-old self. But I'd show him what I got done because I WASN'T IN IBD (albeit I was still in finance.)

I took up motorcycle racing. I took up SCUBA diving. I took up hang gliding. I ran a 5:30 mile for the first time in my life. And I still never really wanted for money. Or wanted for sleep. Or wanted for a life outside of work. And as a quant I got to work for and with some really awesome people who were truly class acts. Guys with IQs that were 20 points above most people they worked with-- and who didn't take themselves all that seriously. Guys that were even cool enough to be gracious when I arrogantly assumed I was the smartest guy in the room, even though it later turned out they could run circles around me.

Here is my only point with careers- life moves at a crawl in grade school, speeds up to an extremely slow and boring walk in high school, moves to a normal pace in college, and turns into a jog or even a sprint after you graduate. And you blink-- and ten years have gone by. If your life's purpose is deals, that's great- be a banker. But if you like or even love finance- but that's not the only thing you want out of life, you probably shouldn't be in IBD.

The industry is changing and trying to fix work-life balance. This advice may change in five years or it may even be a couple years outdated. But us humans only get a few thousand weekends during our lives- and only 500 in our 20s. Any professional with a good work ethic will spend some of them behind a desk, but it's not healthy to spend all or even most of them unless this is truly your life's purpose.

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Apr 22, 2016

Cool and elaborate. +1

Apr 22, 2016

Sounds like wisdom and experience to me. +1SB

Apr 21, 2016

Honestly, I just really love trading. I couldn't care less about M&A or similar.

Apr 21, 2016
neink:

Honestly, I just really love trading. I couldn't care less about M&A or similar.

My favorite thing about S&T (I was a quant in equity options at a bank, but this applies everywhere from prop shops to hedge funds to institutional broker dealers) is that your weekend is your weekend.

Apr 21, 2016
IlliniProgrammer:

neink:Honestly, I just really love trading. I couldn't care less about M&A or similar.

My favorite thing about S&T (I was a quant in equity options at a bank, but this applies everywhere from prop shops to hedge funds to institutional broker dealers) is that your weekend is your weekend.

That too. I don't mind following markets 12 hours a day. 2 days to recharge batteries and refresh your mind however are needed.

Apr 22, 2016

FB pays a 100k signing bonus for undergrads on top of a 100k salary + stock + performance bonus.

When I heard that I didn't care about breaking into IB anymore. I'm sure many undergrads reading this will have the same reaction.

Apr 22, 2016

I considered google in undergrad, but for what it's worth, you plateau very quickly at tech behemoths in terms of comp and responsibility. It's a great gig if you're just looking for a chill life, but it just gets pretty boring if you're not working on cool projects. There's an entire team at Facebook that just works on buttons. Exciting, I know.

Apr 22, 2016

Yes, I had a great time at that firm but I wanted more.

Want to Lose the body fat, keep the muscles, I can help.

Apr 23, 2016

fair points but I could say the same about banking. Tweaking numbers and and flipping through filings just to be wrong 50% of the time isn't that exciting either. I'd argue the plateau in finance is the same, most people don't actually make MD or even PE.

Apr 23, 2016

As someone who had a few tech offers, I don't think that's a fair comparison. If you're working at a large tech company, you generally work on a very specific piece of a specific product for long periods of time. I had friends who worked on certain aspects of Google+ Or google calendar full time, and as the above poster said there are people who work on buttons for facebook. Google is a really cool company, but as a software engineer the scope of your work is generally extremely narrow.

That's not really a plateau inherent to the job though. Tech also has people who leave. Generally speaking though, if you stay in banking, move to PE, or move to hedge fund, the compensation progression is much higher than big tech. Large companies simply aren't giving out that much equity for you to see meaningful growth and salary/bonus ceiling is around low-mid six figures unless you get into management which is a different animal entirely. The benefit is that your lifestyle will be incomparably better in tech than finance.

Edit: For what it's worth this is the perspective of someone who successfully recruited for tech, has 2 college roommates still working in the sector, and frequent contact with a number of HYP grads in the space.

Apr 22, 2016

Yes, sound nice but how often is the room for promotion and career development?

Want to Lose the body fat, keep the muscles, I can help.

Apr 23, 2016

plenty because in tech you can create your own opportunities. If you invent good things and open source them, companies will hire / promote you.

Apr 23, 2016

Easier said than done, and in reality is not very likely. Sure, you here about people doing this, but it is by no means the norm and is becoming increasingly less common.

Apr 23, 2016

I think you are talking about people who are programmers, which I am not, the industry has various roles. I spent most of my time in Biotech and the pain compared to the financial industry is different, there just seems to me that the financial industry has more to offer.

Want to Lose the body fat, keep the muscles, I can help.

Apr 22, 2016

Those high tech salaries are for developer positions. A non-technical employee at one of those firms is not commanding nearly that level of compensation.

Few people are strong enough both socially and technically to be competitive for both an IBD position at a BB and an SDE position at a strong tech firm. Developer interviews are difficult even for CS students from Berkeley and CMU, and you can't just network and hit up alumni for a back door in. Could you see a typical IBD analyst implementing merge sort or asking one to find the longest substring with unique characters? FO finance and SDE tech are totally different skillsets, and the only things they really have in common are that both are highly desirable and pay well.

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Apr 22, 2016
lebron:

Those high tech salaries are for developer positions. A non-technical employee at one of those firms is not commanding nearly that level of compensation.

Few people are strong enough both socially and technically to be competitive for both an IBD position at a BB and an SDE position at a strong tech firm. Developer interviews are difficult even for CS students from Berkeley and CMU, and you can't just network and hit up alumni for a back door in. Could you see a typical IBD analyst implementing merge sort or asking one to find the longest substring with unique characters? FO finance and SDE tech are totally different skillsets, and the only things they really have in common are that both are highly desirable and pay well.

I know people who can land in IBD and nail a tech interview. You're right that there aren't too many of them, but they do exist. They are also a bit more common at the graduate level than in undergrad, and they also tend to be pretty humble down to earth folks. They do not obsess about it or have to ask if it's a good idea to do it-- they just go interview and get offers in both industries and then go seek advice. (Again they are very rare-- like 1 in 100 at a Princeton or UIUC or Berkeley, usually more into STEM than finance but not always)

But you're right that for most college students on WSO, you're either the fellow who will nail a tech interview and fail an IBD interview or the other way around. I was the guy who nailed technical interviews and was not as good at ibd interviews.

Apr 22, 2016
IlliniProgrammer:

I know people who can land in IBD and nail a tech interview. You're right that there aren't too many of them, but they do exist. They are also a bit more common at the graduate level than in undergrad, and they also tend to be pretty humble down to earth folks. They do not obsess about it or have to ask if it's a good idea to do it-- they just go interview and get offers in both industries and then go seek advice. (Again they are very rare-- like 1 in 100 at a Princeton or UIUC or Berkeley, usually more into STEM than finance but not always)

But you're right that for most college students on WSO, you're either the fellow who will nail a tech interview and fail an IBD interview or the other way around. I was the guy who nailed technical interviews and was not as good at ibd interviews.

Definitely, I've mentioned this in an older post about this same topic, but there are always those rare kids who are both extremely well versed socially and have strong technical skills. They never even think of networking or emailing anyone for an informational interview, yet do the quick 1-click resume drop on OCR and tear through the interview process.

The STEM thing is probably because it's easier/more realistic to go check out finance if you're good at a quantitative field than to do the opposite. Either way, at the end of recruiting season they have offers from Facebook/Google SDE, MS Menlo, Barclays Power and Jump Trading/HRT. Then you ask them what they're doing after graduation and a lot of times they either go to some completely obscure startup or grad school. The absolute smartest kids I knew went to get their doctorate studying some esoteric alien-looking math.

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Apr 23, 2016

I've seen many non-STEM IBD analysts do it with some practice. IMO, its just learning and memorizing another set of concepts and technicals. I'll admit the learning curve requires more upfront investment but its really only an extra few months than standard IBD technical prep.

Apr 23, 2016
lebron:

Those high tech salaries are for developer positions. A non-technical employee at one of those firms is not commanding nearly that level of compensation.

Finally someone making some sense here about the pay in the tech industry. +1.

Apr 22, 2016

The reason I do it: As a young 20-something I am able to help with the buying and selling of very large companies. I am fortunate enough to be involved in the allocation of millions of dollars. Every day, I learn something new; a new space, product, workplace methodology, CEO vision, etc. I also get to work alongside some of the more interesting people I have met.

If you know of a job that allows a 20 something to do those things, with better hours and comparable pay, please direct message me. :D

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Apr 22, 2016

Well, when people see how much the middle class is getting squeezed in this country...they don't want to be anywhere near that shitstorm. They want a ride to the 1% and believe investment banking will bring that without much technical knowledge (such as computer, mathematics, scientific genius etc.)

Apr 23, 2016

I don't understand how someone can post about living off $100k pre-tax comp and forget to take taxes into account.

Unless that person has no real life experience.

Maybe we can have a subforum dedicated to university students and high school kids spinning hypotheticals.

Those who can, do. Those who can't, post threads about how to do it on WSO.

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Apr 23, 2016

"That's $30K/yr. Where is this other $70,000+ of required spending for a presumedly single individual?" This? lol. I don't know what he was thinking either. Also, screw commuting 45 minutes if you're in IB.

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Apr 23, 2016

Yeah I don't think this person has ever worked in SF. If you've ever been boned by the criminal tax rates of Cali / SF there's no way you could ever forget about them in a cost of living discussion. 100k in SF does not go very far after you factor in taxes and absurd rent prices. If someone wants to live like 45 minutes from work while working IB good for them, but the majority of people are going to get fleeced from taxes, rent, food, etc. and have nothing in savings if they're making under 100.

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Apr 23, 2016

Lived in SF for 15+ years.

"but the majority of people are going to get fleeced from taxes, rent, food, etc."

Taxes -- a little higher. However, $100k salary in SF is only going to cost you a couple/few thousand more in taxes than it would anywhere else. Up to $263k, you're paying 9.3%. Not really that much different than the average state charging you 6%-7% at low six-figure income. Federal taxes are the same.

Rent -- yes, but can be avoided.

Food -- No. If you're restaurant person, and spend $30/day eating out, that's $1,000/mo down the shitter. And a lot more if you go to upper-scale restaurants. And don't give the excuse that the only grocery stores around are Trader Joe's and Whole Foods. If you're in IB, you probably don't have the time to go grocery shopping anyway.

Etc. -- Using "etc." is a common rhetorical conceit, which means you can't think of anything else. SF, excluding rent, is only 34th in cost of living in the U.S. If you want cheaper rent, simply move to the East Bay and commute 30-40 minutes. Not rocket science.

Here's a fact... only about 31% of households in SF make more than $100,000 per year. Per capita income for the SF-Oakland urban area is barely above $30k. So apparently, 69% of households are underwater with this "you can't live off anything under $100k" fabrication.

This idea that the Bay Area is a place for the wealthy and "the majority of people... have nothing in savings if they're making under 100" is total bullshit. Most people here don't come even close to making that. You can't just make things up and expect to not be called on it.

If you want $500 rent and no state taxes, go to Wyoming or something. Just don't bitch when you have to take a 70%-80% pay cut and struggle off $30k a year, if you're able to find a job at all. The cheap "taxes, rent, food, etc." isn't going to be that useful.

If you do find a six-figure entry-level job coming out of college, live below your means, don't piss away money on bullshit and you'll be perfectly fine. If you're putting money down the shitter on a new car, expensive hobbies, restaurants, entertainment, drugs/booze, electronics, gambling, an apartment in a neighborhood you don't need to live in, and other crap that isn't essential, that's your own fault.

The thing with people in finance in general is that people who make a lot will spend more simply because they have it, not because they need to. They also disproportionately come from middle-upper and upper-class households, where they were accustomed to a certain lifestyle growing up and saving money was never really stressed and far from essential.

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Apr 23, 2016

Cool it with the MS on everyone. Let's assume 5.5k monthly after city/state/federal taxes.

Rent can be avoided??? Not unless you're living at home with mommy and daddy. Most people on this site aren't going to live 30-40 minutes away. They're going to live in SF proper or near, especially when they're working in IB. 1 bedrooms are prohibitively expensive. The average person is paying $1700-$2000 a month sharing a small two bedroom apartment. Now factor in utilities, internet, and maybe cable. Oh and don't forget your cell phone bill. Let's call it $2200.

Not entirely sure what you're saying. You acknowledge someone in IB has no time for grocery shopping, but then condemn eating at restaurants. Assuming you can expense dinner on weekdays, restaurants are pricier in SF so you're likely paying about $5 for something small at breakfast and $15 for lunch. Add another $20 for weekend dinners. We'll call it $700 a month. And that's without eating at any nice places, which you likely will at least once a month.

The average amount of student loan debt is about $25k, which corresponds to a monthly payment of around $280.

That's ~$3200 a month without even factoring in any discretionary spending. Drinks after work, a movie with friends, nice restaurant on occasion, gym membership, new clothes, going on dates, taxi/uber fares, etc. $400-500 a month isn't unreasonable and this could end up being far higher.

Don't forget about yearly travel. Plane tickets associated with visiting the family for Christmas/Thanksgiving. Maybe a vacation once a year somewhere.

And no, etc. doesn't mean I have nothing else to add. It just meant I wasn't going to type out a laundry list for someone who allegedly lives in the city. Have you forgotten about SF's 8.75% sales tax? Groceries, clothing, and other goods are going to be more expensive as well. If you happen to live away from public transport and need a car, expect 30-40% higher gasoline costs than the rest of the country as a result of the state's higher gasoline taxes and blend regulation, as well as high parking fees and insurance.

The point is that yes, you can live on $100k in SF, but it's not by any means going to be comfortable. Your money in other cities around the country goes much farther. And no, you don't have to take a 70-80% cut. Banking in Houston, Chicago, and LA all pay the same and have much lower costs of living. Even if you live like a hermit, have 0 discretionary spending, go on no vacations, and don't spend anything to visit family during the holidays, you're not saving much. Certainly not enough to afford a down payment on the median home price of $1m, which amounts to a shack. And forget about having a family on that.

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Apr 23, 2016

As someone living in SF who's looking to move to Houston, I couldn't agree more. I make decent money here (more than $100k), but don't feel wealthy at all. I realize I'm far better off than many, and in a very fortunate position, but I just feel like I'm working to live here. I went down to visit a few offices recently and was shocked at the difference in lifestyles. 100k there and you're on top of the world. 1st year associates had their own townhouses and nice vehicles. When I was set on tech, I completely kept home ownership out of my mind. Couldn't see myself in position to have a place until I was in my 30's.

Apr 24, 2016

You won't feel wealthy when people making $100k+ is common in the Silicon Valley. Seven/eight/nine figures for those who really make it. If you go to certain neighborhoods many make it a point to display their wealth in ways that the 100k-ers can't do. Few in Houston make six figures because the labor market is weaker. And you won't get the snobbiness and "keeping up with Joneses" behavior you often see in certain parts of the Bay Area.

Apr 23, 2016

The 30k per capita figure for the bay area is actually pretty accurate. Only people with high debt, kids and those who "need the lifestyle" have any excuse to be spending 6 figures. I rented at $700 a month with roommates for my sophomore internship. Not really sure what a couple ppl are getting their drawers in a bunch over....

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Apr 24, 2016

I've made four downvotes in this thread. The red is far from all mine.

Here were my approximate monthly expenses:

  • Rent: $800
  • Food: $200 (actually higher, but majority is expensed)
  • Utilities: $120
  • Cell phone: $86 (have Internet through this via personal hotspot)
  • Car (payment, insurance, gas, tolls, maintenance, tickets, tabs/license): $0
  • Transportation: $0 (expensed)
  • "Personal care": $100
  • Debt: $500
  • Other discretionary: $100

Tota: $2,100-$2,200

I lived in the East Bay, 25 min to 555 California St by Uber (which I could expense), slightly more by public transit (which I also expensed). I have no issue with getting my ass out of bed 15 minutes earlier in order to save an additional $1,000+ per month.

I ordered food through local restaurants as soon as I got into the office and consumed throughout the day. Expensed to the company. Never shopped at local grocers. Always purchased through Amazon -- free shipping to my doorstep + no sales tax. Clothes, part of "other discretionary" and purchased online as well for the sake of simplicity plus no sales tax. Exception was suits, which I had to have tailored, but that's a one-time expense. I hate the sales tax, too -- that's why I don't pay it.

I've never owned a car and don't plan on it either (just make sure you live near public transit), but if I did, you could add $500-$1,000 onto that. Bay area gas prices are more like 15%-20% above national average. At 1000 miles per month and 30 mpg, that's like $10-$12 extra per month. Not much.

There's this extremely popular blog on the Internet about a guy who lives in the Mission District who lives off $7,000/year. I've read through it and based on his circumstances and what he wants out of life, it makes sense and he's not BS'ing. Just a normal, cheap, non-materialistic lifestyle. A lot of immigrants in the city who work jobs paying under $30,000 don't pay more than $15,000 in living expenses. I grew up in a lower-middle class household in SF and I don't think our expenses were ever more than $40,000 a year combined, off about $70,000 in pre-tax salary (maybe close to $60k after-tax).

A lot of employers do pay lower or higher based on location. I know some do try to equate pay across locations, but it's not universal. I was actually considering Houston at one point, then I saw the salary was $65,000 base and realized it wasn't worth it. The $500 rent and no state taxes aren't going to be saving me the tens of thousands of dollars to make up for it. Not even close. Plus there just isn't that much work in those locations and they're almost totally niche specific. Houston is O&G/airlines; LA, gaming/lodging/leisure/real estate/fin sponsors; Chicago, industrials; DC, aerospace and defense; SF, tech and healthcare. Most people are best off in NYC, unless they really like a certain location, and it becomes much easier to interview and network from NYC as opposed to elsewhere.

If you stick it out in finance, you should be making $300k-$400k or more by your mid-to-late 20's. As for having a family, assuming your combined income is around $500k you should easily be able to afford a house if you want. And you're very likely to have that asset appreciate in SF or the Silicon Valley as opposed to most other parts of the country where there'll be essentially zero appreciation in real terms.

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Apr 24, 2016

+1, I appreciate the post and apologize for being confrontational in my initial comment. We are very similar in that we both live well within our means. I was equally frugal my first year. Starting this summer, my income will be double what it was my first year, but my budget is increasing by about 20%. I agree that most cities are very livable on 100k. My point was similar to yours in that most people are unwilling to be frugal, especially when they're making a salary that affords both needs and wants. I heard of a few people in NYC who ended their first analyst year with credit card debt. That's after $140k+ gross.

This is the other extreme, but I was mainly trying to highlight that life can cost more than you think and for those looking for a luxurious quality of life, high CoL areas aren't the best places to go. You and I could easily survive in SF, but those upper-middle class kids who go out twice a week clubbing and getting drinks will have a hard time. When you're making good money and not counting pennies, it's very easy to slip into a habit of spending a little more here and there, which can really add up over time. Especially when you're working long hours, people sometimes feel they deserve to spend, which can obviously be a very dangerous mentality.

Agree on the housing note if you decide to stay in finance, but I still find it ridiculous that you need that level of income for housing that is considered paltry in the rest of the U.S. I'm from a town where houses started at 100k to put this in perspective.

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Apr 24, 2016