Even through banking, you probably won’t be in the 1%

A lot of people get into investment banking to get rich. But if you’re aiming to join America’s top 1%, you might not be in the right career.

That might come as a shock. Investment bankers are, for many people, the epitome of making what’s colloquially called “F*** You” money. While bankers do make a lot of money, however, they don’t make as much – relatively – as most people think. 

A twitter thread started by twitter account BowTiedBull found that, to be considered in the top 1% for net worth between the ages of 35-39, someone has to have a net worth of just over $4m, based on DQYDJ’s interpretation of the Federal Reserve’s Survey of Consumer Finance (SCF) from 2019.

Another poster plotted out an (extremely generous) compensation + savings path for an investment banker that found that the $4m mark was only reached by age 37 – and barely, at that.

Here is math for NYC career banker who does most everything right. Barely gets to 1% in late 30’s with conservative assumptions. pic.twitter.com/aY6bdssmoH

— Dr. Farthing (@DoctorFarthing) July 4, 2023

Some of the assumptions made are… Perhaps unrealistic. A salary to bonus ratio of 1:1 was assumed from analyst to director levels – our salary and bonus report found that this was not the case, on average; bonuses are often smaller. That tracks with what other sources say, too.

There are some other generous assumptions too. For one, bonuses aren’t guaranteed, especially in a tumultuous market like the current one. 10-15% declines should be expected, but the model on Twitter assumes consistent increases. 

The cost of living is also very low. As the creator of the model said, it assumes “no bad career luck, top bucket every year, and [only] 7% lifestyle inflation”, which is pretty low unless this MD has no intention of ever having children (or getting married, really).

Better get into private equity ASAP, then.

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