Monthly Archives: February 2023

Feb 18 2023
2 Comments
Financial Services, Informational

Investment Banking – Questions and Answers

I get questions from readers about Investment Banking based on earlier posts where I mentioned work related matters.

So I thought I would provide some answers to the FAQs:

What is Investment Banking?

The definition is something along the lines of helping companies raise funds through debt or equity and broadly advising clients on investment opportunities.

Most of the time in Junior ranks you’ll be editing slide decks and helping with the materials for client meetings and communications. Once you’re a bit more senior you’ll be building out and reviewing models and managing teams

Does it pay well?

In short, yes.

These days I’d say $150k base is fairly normal starting out (Again this varies widely between front and back office, team and bank) bonuses can be as big as your base depending on performance

What are the hours like?

I’d say 12-hour days are the norm for most Analysts, however if you’re working through a complex M&A and the project is at a critical stage you could do more than 16 hours. Think worst for me was an 18-hour day. Also, on average I’d say one weekend a month would be expected.

What are the exit opportunities?

There are heaps of options. Many people try to continue the long hours but trade up for more pay by going into Private Equity. Some go work at clients and do in-house Corporate Development / M&A work. Others move into Technology companies and work in areas like Strategy. It’s a fairly broad spectrum of opportunities with the skillset you acquire.

If you have a good reputation with colleagues and clients there will regularly be opportunities coming up in conversations, but as you understand yourself more and realise what you like and don’t like – you’ll end up being far pickier with roles you’ll consider.

Do you need to go to a Top University?

It won’t hurt if you do. If you’re in Australia, given how small the intakes are, it would be a lot harder to get into an Investment Bank as a graduate from a lower tier University. Overseas in places like the UK or US, it’s a bit more open given there’s a much larger in-take. You can also move into banking as a lateral hire given the right employment background.

What are the different ranks?

Analyst -> Associate -> Vice President -> Director -> Managing Director

Is it for me?

if you’re a driven person whose interested in markets and corporate life you could enjoy it, however, there comes a sacrifice with the hours you’ll do in the job as well as the stress that can have harmful impacts on your health.

Feb 01 2023
2 Comments
Financial Services, informational, Straight talk

5 Things to do ahead of the expected recession

  • Build up an Emergency Fund
    With unemployment expected to rise, and massive layoffs in many major companies recently. It makes it obvious to have money stashed away for emergencies (e.g., Losing your job, medical emergencies and so on). This is not money tied up in the stock market or in property, it is purely cash, the most liquid asset! This could be something along the lines of 3-6 months of living expenses for people currently employed full time and if you’re self-employed, 6 months for living expenses and 6 months of business expenses. This will give you that piece of mind during the period where cost of living is increasing.
  • Avoid high interest borrowing
    Interest rates are rising, and the cost of borrowing continues to increase. So, it’s important now to be paying down on your existing debt. Weather its car loans or credit cards, now is the time to be paying down these outstanding loans. You’ll be getting a guaranteed return on your investment; you’ll be saving on the interest that you no longer need to pay!
  • Don’t realise them losses
    The stock market is quite unstable and has dropped considerably since 2021 in numerous sectors. It hurts waking up and noticing the investments going from Green to Red and it’s tempting to wanting to end it all and cash out before it gets even lower.
    But do not panic sell! I’ve seen smart, talented people in Finance succumb to this, when the times are tough – all logic goes out the window.
    If you’re investing money that you don’t need and have a good emergency fund, it makes sense to have those diamond hands. Look at March 2020, those who sold when we had the first lockdown dip are regretting their choices. Markets came roaring back and history has shown us time and time again that after a dip and stagnant period, the market corrects itself and improves over the long run. Look at the 1979 crash, the dot com bubble, the GFC and so on, they were all overcome. It’s all about time in the market, not timing the market.
  • Buy now
    In conjunction with the last point, when quality stocks are discounted, you should go in and buy up. See it as a sale. I look back at some of my recent gains, and the biggest capital gains I achieved were from stocks I bought during 2020 when the world was in panic mode.
  • Diversify income streams
    It’s always handy to have a few side hustles that you can attain some income from. Weather its selling digital content or monetising a hobby – having fall back options and diversity in income helps when times are uncertain and can help provide you some piece of mind in the event you lose your day job.

Have you made these mistakes before? Don’t sweat it. Don’t dwell on the negative. Don’t spend too much time thinking about past mistakes, you learnt from them. He who clings to the past has no present, and compromises his future.