Average Wall St paycheck $300k?
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How does one measure success ?
1. Trader A is happy, but never made a dime in his 3 year career.
2. Trader B is miserable but makes millions for his firm.
Who is successful?
This is very accurate. The vast majority of people don't get how your standard of living and it's associated costs steadily creeps up as you make more money. People who think that if their fairy godmother waved a wand and pufft! they stepped into an alternate universe where they made $500,000 or $750,000 working on Wall Street, that suddenly life is good will find that they are oddly enough not happier, not more relaxed and not more fulfilled than when they were making $50,000.
You have flashier stuff and more exotic vacations, but it doesn't actually make you happy - in fact the only thing you've achieved is you can't imagine the thought of stepping down. I mean, what will your friends on the Street say or think?
That's why there are so many people on Wall Street unhappily trudging along , with retirement nowhere in sight even while making 10 times the median wage.
One way out is to not care at all what other people think, keep company with much poorer friends, and salt away your savings like a miser, refuse to buy stuff and move up in quality of life.
But seriously, how many people can accomplish that? Also, human beings can get nasty - many have deep rooted socialist tendencies and bad vibes can generate between your poorer friends and you.
You have flashier stuff and more exotic vacations, but it doesn't actually make you happy - in fact the only thing you've achieved is you can't imagine the thought of stepping down. I mean, what will your friends on the Street say or think?
That's why there are so many people on Wall Street unhappily trudging along , with retirement nowhere in sight even while making 10 times the median wage.
One way out is to not care at all what other people think, keep company with much poorer friends, and salt away your savings like a miser, refuse to buy stuff and move up in quality of life.
But seriously, how many people can accomplish that? Also, human beings can get nasty - many have deep rooted socialist tendencies and bad vibes can generate between your poorer friends and you.
Quote from Susukino:
Hah, it won't happen.
You think you'll be out at 35, but you find that all the toys - BMW M5, loft appartment, weekend place in the Hamptons, exotic holidays (but only two weeks a year remember) - cost a lot more than you realised and you're not saving that much.
By the time you're in your early to mid-30s the average person is married or thinking about it, and starting to think about kids, which naturally leads to considering how much they and their education are going to cost you. At this point you realise that you're used to the good life and that if you retire at 40, you (and your partner) will be able to get by but you'll have to go back to a relatively modest lifestyle. No holidays in super-luxury resorts in SE Asia, no Mercedes S500 traded in every three years, no costly private education for the kids. And a lot of your friends are in the business as well, which makes it difficult to walk away because like most people you want to keep up with the neighbours. And so before you know it you're 50 and you've been working 12 hour days for 25 years. Yeah, you've earned and spent a lot, but frankly you've spent a lot of time being stressed, tired and (of all things) worried about how much you earn.
I see this all the time. Of course, if you do make it big - let's somewhat arbitrarily say that would be accumulating $5-10m US in cash before you're 35 - then you could afford to leave the industry. Most people I know with that kind of money don't actually do it though. Can't seem to drag themselves away. Note that I am not arguing that it's a mistake to work in a well-paid and challenging job, just observing that the "early retirement" goal is a dream held by many in the industry and achieved by very few.
Suss
I dont know if this has already been said, but the average pay for someone at Goldman is 600k.
Not true. I know people at Goldies on far less than that [Edit: yes, I realise this is an average, but these are competent people and thus I believe a reasonable indicator]. GS has successfully developed this mythique about it being the elite place to work but if you measure by pay, this certainly isn't so. Look at GS' compensation expenses as a percentage of revenue and you'll see it's no higher and maybe even lower than the other bulge bracket firms (usually 48-50% of sales). I once worked at a bulge bracket shop where comp costs got out of control and ended up at the mid to high 50s level, not that I complained
You're probably thinking about the media reports to the effect that if you took all the bonuses paid at GS this year and averaged them it would be 600k. True, but with many at the high end on bonuses in the tens of millions of dollars (and reportedly some are on even more), that's not surprising. Like I said, total comp isn't that high.
Suss
This figure is true, but means a lot less than you think.
Aside from mean, median and standard deviation are other important things to know about statistics
Most Goldman employees at the juniorish level get paid less than elsewhere on the Street. It's euphemistically called paying for the Goldman Halo. It has been a pretty severe discount in the past. Although a comforting side effect of the lower cost of peons is that Goldman has also been better at staff retention during downturns.
So the median pay is substantially below 600,000. Indeed it wouldn't surprise me if it was below most of the other wall st banks.
Pay at Goldman is very top heavy, successfully recreating the pot of gold that the path to partnership represented in the past. It's indeed the most powerful retention tool ever invented.
However, the folks over at the GS hedge fund unit Global Alpha are probably shedding tears this year end.