Personal Finance
1) What is Your View on the Personal Finance Industry? This requires an extremely lengthy response (outlined by hundreds of posts on this blog). In short, the current personal finance industry is a scam in our view where each individual attempts to *seem just like you* in order to sell you advice that will only lead to $1,000 in extra *savings*. The standard pitch is “I was 25-35 years old with $XX in credit card debt and made it by…. “. In reality is no one gets rich by penny pinching, the same bloggers giving out such information make $500K+ from their personal finance blogs which is how they really make money. It is not mathematically possible to get rich with $30K per year in total savings. You need to move your income into the multi-six-figure range before you start accumulating real wealth. If you were to make $400K in a single year your total savings could be $300K+ which is ~60x larger than the median of just $5K assuming a 10% savings rate.
2) What Do You Think About the Stock Market Levels? Always the same answer, do not worry much about the stock market. In general you shouldn’t care if the S&P is at 1,700 or 3,000… simply dollar cost average into cheap ETFs such as VOO, SPY, DIA, etc.
If you’re trying to beat the stock market and you only have a half million dollars or so in the bank, your time will be better spent elsewhere (starting a biz!). $500K in the bank does not give you enough leverage to see out-sized returns. It means if you beat the bench mark by call it 5% that is only $25K. You may as well go and chase real revenue in a business. $25K for 10+hours a week is only $48/hour… That is significantly lower than what you’re making in your career anyway.
If the economy collapses? It doesn’t matter again. Generally recessions last about a year so you simply sit around and take the extra cash that was on the sidelines an buy any time there is a large correction. Your cash was on the sidelines because you want to continue buying through the dips so you get lower entry prices. Maybe you lost your job for a few months. No big deal. You had cash on the side to keep buying and get your next position.
If the market goes up 20%? Great already exposed getting richer!
What if inflation goes “crazy”? If you own assets… you’re getting richer! If you own an asset such as a home, it typically goes up along with inflation.
3) I Make $50K and I am X Years Old What Do I Do? Some tough love, we think you can do better. If you look around there is money everywhere. A weekend in a high cost city driving an Uber will net you $30+ an hour. That is an extremely low estimate and yet that gets you an extra $60K per year. Why is it an *extra* 60K per year? Well, if you’re not working at least 80 hours per week and you’re not happy with your income… you have no one to blame but yourself. Anyone who believes they should be rich working 40 hours a week is going to be in for a rude awakening.
If anyone believes that anything over 40 hours is “too much work” then how exactly will that person catch up to someone with *more* talent putting in *more* time? If Person A is working 60 hours a week making $100K per year and you’re working 40 hours a week making $50K… You’re already making significantly less than Person A on an “hourly basis” and there is no way you’re going to catch up by working less and learning less.
Get to the grind! We also strongly suggest you read our post on careers. Finally, if you really want to get rich, you must start a business.
4) I get it, Sales, Wall Street and Silicon Valley are the Only Careers to Get Rich, Which Position do I Take?
We are glad you see the light! As stated many times, the *fastest* way to get rich is with a scalable business where you are selling a product that adds value to everyday lives. Assuming you do not have an idea yet, it is wise to hedge your bets and build skills in one of those three positions. (IE: may as well start a career until you have at least one revenue generating idea)
We do not give out advice that is not based on real experience so for Silicon Valley we suggest you reach out to top tier Silicon Valley people. We are not the best people to ask. Search around, find people who are worth at least $1M (liquid, earned by themselves, $0 inherited) by the age of thirty or so and ask them for advice.
Sales is partially related to Wall Street (it relates to the sell side). With that said, if you don’t want to go into sales, then we suggest looking up mentors (again) in the sector you wish to work in (again) and background check the mentor to make sure he earned it all himself (again). The one piece of advice we can give, is that recurring higher end sales will be much better than trying to sell in volume (we recommend enterprise software sales)
Wall Street, this one we can easily answer. Go to the position that is closest in relevant work experience. If you want to run a long-only portfolio in the future (long-term) it makes sense to have an internship at the bottom of the totem pole in Financial Advisory and work your way up to wealth management/asset management. If you want to work in private equity, then you need to build you experience in transaction based work. You go from a low end boutique in investment banking to a bulge bracket to a PE firm.
When it comes to Wall Street, always always always choose the job function over the bank name. If you can become an investment banking analyst at a mid sized bank this is going to be significantly better than working at Goldman Sachs wealth management. Again, always.
Finally, when you’re deciding where to start you should always ask what your resume looks like. Ideally you have some connections and can get some relevant experience somewhere near the lower end of the totem pole (lets call it wealth management). In that case you then work up from there and improve your options. If you are starting from zero then you simply blast your resume to anyone and everyone who will listen. Remember, if you don’t have any offers, you don’t have any options so you may have to start from the bottom.
5) Where Do You Track Your Investments? For those that are serious about developing multiple streams of income and a high net worth, we can recommend Personal Capital. The Company offers *free* software tools with the following four key features: 1) ability to avoid losing money by tracking all fees associated with an investment product allowing you to choose the best possible fund for your future, 2) portfolio analysis where your risk profile is stacked up against your current age and retirement goals, 3) in addition to these free tools, you can also track your net worth and path to becoming a millionaire and 4) when you hit $100K in networth you’ll receive a free one time consultation with an investment professional at Personal Capital. After linking up all of your accounts you’ll be able to sit back and watch as your net worth goes up and your fees remain minimal over the next several years. We strongly believe that Personal Capital is the premier personal finance software tool when compared to its competitors such as Mint. If you’re looking to avoid personal financial collapse, it makes sense to track everything in one place for *free*.
Wall Street
1) How Much do People on Wall Street Get Paid? Here is the breakdown. We have listed information beyond the entry level positions. If you don’t believe the data, feel free to purchase a full compensation package from Glocap or another headhunter firm. You’ll be wasting your money because we have the numbers right here for free. This is a *guideline*. The numbers below reflect the latest bonus cycle.
Investment Banking (2016 numbers)
Analyst – Base ~$80-100K (100% targeted bonus) 150-200K (age 22-25)
Associate – Base $125-180 (100% targeted bonus minimum) $230-365K if you are promoted to VP (age 26-33, wide range due to young talent and MBAs)
VP – Base $200-225K (100%+, call it 125% targeted bonus due to revenue generation, total $400-550K) (age 30+)
Director – Base ~$250K (Variable call it 1.5x base salary target due to revenue generation, somewhere around $600K) (age 32+)
Managing Director – Base ~$350K (Variable, call it 2x base salary as a target due to revenue generation, somewhere around $975K) (age 32+)
*Note: Yes base salaries at the junior level are moving up a tad, call it $5-10K depending on if you’re an analyst or an associate. However, as the numbers show, your goal is to get promoted since the variable numbers become larger and larger as a % of your salary
2) Should I Take a Financial Modeling Courses? No.Absolutely not. We have given a free three statement model when we first started blogging and that is all you need to be able to build. Income Statement, Balance Sheet, Cash Flow and bottoms up by segment. It is older but this does not matter. Replace it with any company and you’re set. You should be able to build this in 1-2 days maximum.
Spend the rest of your time developing people skills, sales skills etc.
Nail in Coffin. Every bank has different models and will train you for several weeks before you start your career. If you can build a three statement model (clean) you’re going to be fine. If you *must* take “classes” then take excel courses that teach you short cuts (formatting short cuts – alt e-s- (letter), navigation short cuts – F5 and others).
Most won’t listen and will become financial processing monkeys (career suicide). You will do much better than them in your career if you focus on what matters. Salesmanship, strategic thinking (reading about the sector/industry/structuring of deals) and relationships.
3) What Bank/Group do I Join? This question misses the point by a country mile. The question is, which bank/Group will allow you to get promoted the fastest. Always choose the one with the highest promotion rate. If you have no idea which group is good and you are starting blind then you turn to prestige for long-term career development and the rank order is as follows. Elite Boutique: (Moelis, Qatalyst, Centerview, Evercore, Lazard, etc.) Bulge Bracket (Goldman, Morgan Stanley, Citi, etc.); Middle Market (Jefferies, Piper Jaffray, etc.) No-Name Banks (simply make sure it is the same job function).
Importantly, if you want to go into Private Equity and get a career offer in private equity you *take* it. If you want to go into banking and get an offer in banking…. you *take* it. There is no point in “learning something” to jump later. Always jump straight into the position if possible.
Remember after your first job none of this matters at all anymore. From that point forward you choose the firm that is going to promote you the fastest. Think smart. It is about responsibility not prestige. Reiterate: Promotion and responsibility first, prestige last. People who obsess over prestige will earn less than those who focus on getting promoted and obtaining more responsibility.
4) Industry Overview on XXX Sector? It depends on demand, these are for Wall Street folk and we’ll do them if an industry gets hot. This means it’s likely but no promises. We have done quite a few industry overviews and you can see them below. These take a lot of time since we don’t want to constantly update valuation tables.
A Detailed Look at Financial Institutions Group
Overview of the Consumer Sector
Overview of the Healthcare Sector
Overview of the Oil and Gas Sector
A Detailed Look at Technology Media and Telecom (TMT)... also find Part 2 here
We will try to do more of these over time.
5) Will You Do Resume Reviews? No thanks, we do not trade time for money. In addition, everyone should learn how to best present themselves (ie: sales!). With all of the time in the world… you’re learning how to communicate your value in a single page. Better to learn these important skills early. Once you have the email and resume templates, the rest is up to you to work on and master. We have clear outlines on how to write a better resume and how a one page resume should look. Yes we said one page for a reason, 2 page resumes will be thrown in the trash.
6) Can You Hire Me? No. We thought about using this as a recruiting tool but it took too much time. We have helped a large number of people obtain careers already and many of them were from non-target schools.
This blog was much much smaller back then and based on our 100% conversion rate we knew the blog had the correct tools to allow anyone interested to break in. If you follow the advice here and grind it out, you’ll be much better off long-term. IE: getting into the Street with no hand holding will serve you well in your actual career.
7) I am XX Years Old What Do I Do to Break In? We also get this one far too many times, here’s the general guideline.
Student: The same structure always applies. 1) Target School, 2) 3.5+ GPA with finance courses taken, 3) Work Experience – this can override a bad GPA and 4) start networking.
Major? Choose the closest to finance. Business + emphasis on finance classes. Engineering + finance is also great. Economics + finance also works. Finally, triple check at the career center to see where people end up. Accounting + corporate finance classes are *required* otherwise the recruiters/HR won’t think you are prepared or serious about a Wall Street career.
If you have to choose between target and non-target. Bite the bullet, go to the target.
If your GPA is a 3.4? Take a couple easy classes bump it to a 3.5
If you have no work experience? Will be extremely difficult to get any interviews. Start networking and start at the bottom if you have to in a job such as asset management intern at a tiny firm.
If you don’t have contacts? You are increasing your reliance on the filter system. Not a good idea.
Analyst: If you are 25 years old or younger, keep gunning for an entry level slot as an analyst. This means you pass CFA level 1 if you have absolutely no finance experience to prove you understand the basics and then you get straight to networking. If you’re at a non-target then read our post on how to network/recruit. Now if you are from a no name school, no work experience and low GPA. You have next to no shot and are better off going to get an MBA later in life. This is the truth. As a non-target or older candidate with no experience, you need to have something to bring to the table otherwise you will lose time and time again to 22 year old candidates with banking internships, top GPAs and a great school.
Associate: If you are 26-33 years old this is your second chance to break in. If you have nothing related to finance, probably best to get an MBA.
Vice President and Above: Likely 33+ years old and you’re making a switch from a revenue generating career. In this case you should already know if you’re well qualified. Generally speaking, if you’re in a sales role or run a product line at a firm and are paid $300K+… You’re likely a good fit (this is general as most people who are in this slot know if they have the skills to move to the sell-side or not)
There you have it, it will answer 99% of questions. If you’re young you simply network and spin your resume assuming you have some skills that are transferable. If you’re in your late 20s you’re likely better off with a top MBA.
8) Networking?
This is now the most common question, none of these answers will ever change.
Part 1: Networking Email for Work
The only reason to change the format is for extremely small boutique type shops (No name, we are not referring to solid firms such as Lazard/Moelis etc.).
1) Introduction of who you are (one short sentence)
2) Why you want to work for them and how you can contribute (2 short sentences)
3) How you can be reached (attach resume)
Thanks,
Name
Simple Example:
“Hi, my name is XXX I have worked at XXX bank for 1 year as an investment banking analyst in the Healthcare group. I am interested in joining the team at (Firm) and believe I would be a great fit due to XX and XX transactions. In addition, I understand the group specializes in XX and XX where I have experience due to XX and XX. If there are any opportunities to join the team, I can be reached at (xxx) xxx-xxxx and have attached my resume as well.
Thanks,
Name
That is it, no reason to boil the ocean, keep it simple. You can change the words around to be even more concise or appropriate to your specific situation but this will ensure you get to the point and show what you have to offer immediately.
The most insulting thing you can do is send them a long winded email. Why? You’re wasting their valuable time.
Part 2: Networking for Career Events
This is even shorter than the email because you’re going to get into a conversation as soon as you go through this introduction. Shake the person’s hand when it is your turn to talk to the person at the booth and proceed as follows:
“Hi, I’m (name) a (junior/senior/sophomore) graduating in 20XX studying (major). I am interested in joining (group/division) because of (reason) and (relevant experience) which I think can add value to the firm. Do you mind giving me a quick overview of (specific question about group/division)?”
That is all, filling in the blanks is up to you.
Part 3: Networking to Meet Women
Again we are getting even shorter. The skills needed to meet women are hard to master but are easy to understand. There are only four currencies you barter with: 1) Looks, 2) personality/entertainment/social skills, 3) Money and 4) other women
Night Club: Your main currencies are other women (now you are friends with the staff), Money (tip heavy now you are good friends with the staff), Dress/look sharp (now it is easier to meet people everyone wants to talk to attractive men/women).
Day Game: Main currencies are 1) looks and 2) social skills. It is harder to show your net-worth in this environment beyond dressing sharp.
Social Circle: Main currencies again are entertainment/personality/social skills. This is followed by money which you can use to buy more entertainment/excitement. Looks are less of a factor since you’re already part of the “in group”.
It really is as simple as above. Ask yourself where you’re weak and begin fixing those weaknesses. It will take a large amount of time to get good.
Part 4: Networking to Meet Business Partners
Even shorter!
Fill the Gap.
This means develop a skill and fill the void for people who need this skill. If you work in real estate and have an incredible ability to add ROI to a home through renovation but don’t have the cash, then you should search out people who have broken down properties that need renovation (with ROI in mind of course)
Final Notes: If you have no skills, no money, no friends, and you’re not interesting… You’re not ready to network at all. You need to build a set of skills first. Go practice on everything that will help you network first (work skills, money, entertainment skills – living an interesting life)
Life
1) How Do I improve my Diet? We have covered diet advice in a post. If you haven’t taken a look then go ahead and read the post. If you’re slogging 80 hours a week you need to be efficient and as we stated before, if you don’t want to read the post, here’s the basic outline:
Breakfast: Fruit + Protein. Worst case a protein shake in the AM and a banana/fruit bowl on your way to work
Lunch: If you have a high paying job, lunch is used to improve your political positioning so you always eat with people so suck up the $10-12 meals
Dinner: You can get $25+ from your company, do not waste it on unhealthy food. Most people will eat terribly which starts the downward spiral. There are hundreds of options online using seamless. If you don’t have to work late… then make your meal at home after your day is done.
By doing this you guarantee 2/3 of your main meals are healthy. Lunch may be hit or miss, but if you’re smart all 3 will be perfectly fine and you won’t break the bank.
2) When Should I Work Out? Well do you even work out? If you’re under 30 years old and you don’t work out 5 days a week you’ve already lost in the first place. If you have been working out 6 days a week, you probably already have a healthy routine! See how that works? So the question is not when you should work out, it is if you even work out in the first place. We got this question many times and the answer when pushed is exactly the same.
“There is no science, there is simply consistency.”
Consistency is how you keep yourself honest. If you can make it to the gym and lift correctly, you’re going to see gains.
3) Does Money Attract Women? Yes. Anyone who says otherwise has never made a good amount of money. Here is a general guideline since the question is asked so frequently:
$50K or less: it will be a negative to your sex life because you are not making enough
$50K – $100K: in a regular city this will be perfectly fine, in a *major city* it is still a detriment to your sex life
$100K-$175K: in a regular city you’re doing well, in a major city it now has no negative or positive impacts to your sex life
$175-$250K: Positive impact to your sex life in practically *every city*
$250-500K: Significant positive, less because of your life but because of the value of your time. At this point you’re extremely busy, you’re traveling, you’re not available, these are traits that will make you incredibly attractive. It won’t be possible to fake these trips/traits.
$500K+: It is practically impossible to blow through this type of money with common sense and everything in the previous tier are truer.
$1M+: If you can make this income at any point in your life you’re set. Your life changes because all of your actions value your time and comfort. You fly business/first class and do not care. You live a life that is impossible to fake.
Given the range and scope of this blog, it is certainly possible to get to $250-500K (before mid 30’s of course). This is achievable for anyone who wants it. When you start pushing up on high 6 figures and 7 figure numbers, you’re going to have to do something special.
4) Are You Writing a Book? Maybe. The answer has not changed much. At the end of the day we don’t want to put in the effort to actually earn money from it at this time. Based on previous product launches in other business lines we know the sales number would equate to low to mid five figures, this is simply not worth the amount of time necessary to create the book. As of now, this blog will remain as a hobby and we’re happy to help people with smart questions left in specific posts.
5) What College Should I Attend? You need to attend a top tier college or you need to attend a junior college and transfer to a top tier college. If you don’t want to do this, then you must become an entrepreneur. Many people now suggest avoiding college all together. We disagree depending on the math. You will find that most successful people at least obtain entrance into top schools and then become successful later by dropping out or starting a company later.
With that said, college is a *major* life changing decision, you do not rack up $100K+ in debt just to get a piece of paper. If you can make say $30K a year without a degree or $80K with a degree, then we suggest that your college education is worth $50K of debt. The point is that the degree you obtain needs to increase your earnings otherwise it is of no value. Our full post on college is here.
