Do investment bankers make millions?
It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year.
Investment Banking Career Path
As an associate, compensation rises significantly. The next level up is Vice President, which can make upwards of 500k. Highest on the food chain is the Managing Director, who makes anywhere from 500k to several million dollars.
How can you earn a six-figure salary at top investment banking firms without any experience in 2023. On average, a first-year investment banker makes a 5-digit salary, in the range of $70,000 – $90,000, while a 7-digit salary is considered above average and is difficult to achieve for most people in their careers.
Position Title | Typical Age Range | Base Salary (USD) |
---|---|---|
Associate | 25-35 | $175-$225K |
Vice President (VP) | 28-40 | $250-$300K |
Director / Senior Vice President (SVP) | 32-45 | $300-$350K |
Managing Director (MD) | 35-50 | $400-$600K |
Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges.
- Entrepreneur.
- Entertainer.
- Law Firm Partner.
- Pro Athlete.
- Hedge Fund Manager.
- Real Estate Agent.
- Software Developer.
- E-commerce Business Owner.
You are roughly earning $70k per month which is well above the average annual income of a family in USA. Even after tax its around 50k a month.
Investment banks impose a high fee based on the amount of the offering (usually 2-8% of the total deal). They earn millions of dollars in commissions as a result. They are also paid for setting an appropriate price and assembling a solid network of enthusiastic investors about the company's long-term prospects.
Age plays a huge factor in the decision-making process. Wall Street is an up-and-out industry. Unless the goal is senior management, most people in finance are out of there by age 50. That's not at just the biggest investment banks, either.
A seven-figure job refers to the number of digits listed in your salary. This includes people who earn anywhere from $1 million to just under $10 million per year. Many people may consider this salary range to be well above average.
Who pays investment bankers the most?
1. Goldman Sachs is the highest paying bank overall - $398k in combined salaries and bonuses, on average. Goldman Sachs, which paid average salaries of $200k and average bonuses of $199k for 2023, was the highest paying bank we polled.
- Top Richest People in the Investment Banking Industry.
- Leon Black. Leon Black started as an accountant and then worked for an investment bank, Drexel Burnham Lambert. ...
- Jamie Dimon. Jamie Dimon is the chairman and CEO of JP Morgan Chase. ...
- John Paulson. ...
- Lawrence D Fink. ...
- Sergio Ermotti. ...
- To summarize…
The biggest investment banks in the USA include J.P. Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, and Citigroup. These banks lead in terms of deal volume, global presence, and financial services offered.
The lucrative and fast-paced career of an investment banker is a highly competitive one. For instance, in a recent year, 236,000 applicants competed for roughly 3,500 internships at Goldman Sachs. This is common across the industry where acceptance rates for programs are typically less than 2%.
Most former bankers have reported that it is quite uncommon for an analyst to hit the 100-hour mark. Apparently, this only happens occasionally (once a month) when an analyst is working on multiple live deals or poorly aligned international projects.
Investment banking is extremely competitive with way more applicants than available positions each year. You will often be up against students from Ivy League universities, with a high GPAs and multiple internships under their belts.
Those earning over $10m per year mostly work in management and finance, though there are significant numbers in sales, real estate, operations, medicine, law, engineering and art at this level.
In broader terms, the finance and investment profession has the most millionaires. It also has the most billionaires, with 371. Here's a list of the seven best careers if you want to be a millionaire.
The standard assumption is 2,080 hours worked per year for a full-time position (40 hours per week for 52 weeks). 2. The calculation is: $1,000,000 / 2,080 hours = $480.77 per hour. If you make $1 million per year and work 2,080 hours annually, your hourly wage would be approximately $480.77.
In 2020, according to Pew Research Center analysis, the median for upper income households was around $220,000 and the median for middle income households was slightly above $90,000.
What is the top 1% salary?
Entering the top 1% of earners requires an average annual income of $819,324. In the highest echelon — the top 0.1% — the average income is $3.3 million.
One common benchmark is to have two times your annual salary in net worth by age 35. So, for example, say that you earn the U.S. median income of $74,500. This means that you will want to have $740,500 saved up by age 67. To reach this goal, at age 35 you may want to have about $149,000 in savings.
From my experience - and I spent 8 years in the industry, many of my friends are investment bankers - most are indeed deeply unhappy. Saying that, many will be happy once they're out. Most dislike their job, it's a grind, it's hard work, it's soulless. I mean everyone is frustrated at some level.
That said, investment banking is a highly competitive field. Because the pay is so high and the job is so prestigious, particularly in cities such as New York, applicants far outnumber job openings every year.
Even with education, experience, and enthusiasm, investment banking might not be for you. Investment bankers work long hours and often earn a high income. Lack of work-life balance is one reason to avoid becoming an investment banker. Investment bankers must also be able to manage high-pressure situations.
References
- https://www.assessments24x7.com/blog/financial-genius-are-you-one-peter-lynch-is
- https://www.indeed.com/q-400k-salary-l-california-jobs.html
- https://mergersandinquisitions.com/hedge-funds/
- https://80000hours.org/articles/highest-paying-jobs/
- https://en.wikipedia.org/wiki/Financial_quotient
- https://work.chron.com/high-iq-careers-16001.html
- https://en.amazingtalker.com/questions/1498
- https://memoryos.com/article/who-has-the-highest-iq
- https://www.northcentralcollege.edu/news/2022/09/12/finance-degree-hard
- https://www.efinancialcareers.com/news/best-pay-investment-bank
- https://www.touchdownmoney.com/jobs-that-pay-over-1-million-a-year/
- https://online.wilson.edu/resources/is-a-finance-degree-worth-it/
- https://fortune.com/ranking/best-workplaces-financial-services-insurance/
- https://companiesmarketcap.com/financial-services/largest-financial-service-companies-by-market-cap/
- https://themilitarywallet.com/best-careers-to-get-rich/
- https://www.quora.com/How-rich-is-a-salary-of-800k-a-year-What-lifestyle-can-someone-afford-on-that-income-For-instance-what-type-of-clothing-cars-homes-vacations-etc
- https://www.linkedin.com/pulse/quietly-building-success-introverts-guide-financial-practice-torrey
- https://www.indeed.com/career-advice/finding-a-job/7-figures-jobs
- https://www.indeed.com/career-advice/pay-salary/how-much-do-bs-finance-graduates-make
- https://www.careerexplorer.com/degrees/finance-degree/satisfaction/
- https://growthequityinterviewguide.com/how-investment-banks-make-money
- https://www.wallstreetoasis.com/resources/careers/salary/six-figure-salary
- https://www.coursera.org/articles/finance-major
- https://www.indeed.com/career-advice/finding-a-job/highest-paying-finance-jobs
- https://www.investopedia.com/articles/financialcareers/08/five-undergrad-tips.asp
- https://www.investopedia.com/articles/professionals/080615/5-biggest-financial-advisory-firms-us.asp
- https://online.wilson.edu/resources/accounting-vs-finance/
- https://www.quora.com/If-I-make-1-million-per-year-how-much-would-my-hourly-wage-be
- https://smartasset.com/career/what-should-my-net-worth-be-at-35
- https://www.brightnetwork.co.uk/career-path-guides/accounting-audit-tax/differences-big-four-firms/
- https://www.investopedia.com/articles/financialcareers/08/make-million.asp
- https://www.efinancialcareers.com/news/finance/the-most-and-least-stressful-jobs-in-banking-and-finance
- https://medium.com/checkmate11/top-5-richest-investment-bankers-in-the-world-of-all-time-eb63a5cd0c01
- https://gitnux.org/average-iq-of-doctors/
- https://www.techtarget.com/whatis/definition/Big-4-Final-4
- https://www.shiksha.com/studyabroad/top-10-highest-paying-jobs-in-the-world-articlepage-155431
- https://www.reddit.com/r/Accounting/comments/z2yrlu/what_do_you_guys_think_the_average_iq_of_a_cpa_is/
- https://www.forbes.com/advisor/education/business-and-marketing/careers-in-finance/
- https://news.ycombinator.com/item?id=36559111
- https://www.careerprinciples.com/resources/investment-banking-hours
- http://blog.funeducation.com/blog/kids-iq-test-information/top-5-college-majors-by-iq
- https://s3.amazonaws.com/wsp-blog-images/uploads/2020/11/04142619/WSP_SalaryGuide_V3.pdf
- https://www.investopedia.com/articles/personal-finance/042215/what-do-investment-bankers-really-do.asp
- https://www.wgu.edu/blog/finance-degree-difficult2301.html
- https://www.investopedia.com/ask/answers/120214/whats-average-salary-someone-finance-major.asp
- https://money.usnews.com/careers/articles/is-finance-a-good-career-path-for-you
- https://unacademy.com/content/general-awareness/list-of-top-10-finance-companies-in-india/
- https://csuglobal.edu/blog/finance-hard
- https://www.investopedia.com/financial-edge/0112/financial-careers-with-excellent-salaries.aspx
- https://www.joinleland.com/library/a/top-ten-investment-banks
- https://hbr.org/2023/03/is-a-career-in-finance-right-for-you
- https://analystprep.com/cfa-level-1-exam/quantitative-methods/decision-rule-power-of-a-test/
- https://finance.yahoo.com/news/much-money-among-top-1-203918419.html
- https://www.8b.africa/non-traditional-stem-designated-degrees-for-international-students/
- https://www.universityliving.com/blog/admission-guide/toughest-courses-in-the-world/
- https://www.linkedin.com/advice/0/how-can-investment-bankers-manage-stress-levels-ibr5c
- https://training-you.fr/the-most-and-least-stressful-jobs-in-banking-and-finance/
- https://www.dice.com/career-advice/fintech-vs.-traditional-finance-which-pays-tech-pros-more
- https://poetsandquants.com/2023/01/28/best-investment-banks-to-work-for-in-2023/4/
- https://www.indeed.com/career-advice/pay-salary/how-much-do-finance-majors-make
- https://www.investopedia.com/terms/b/bigfour.asp
- https://www.quora.com/What-would-someone-with-a-5000-IQ-be-able-to-do-What-would-they-act-like-Or-would-they-kill-themselves-instantly
- https://www.buysidehustle.com/how-much-do-people-in-finance-make-lets-just-say-millions/
- https://news.ycombinator.com/item?id=8553015
- https://www.investopedia.com/personal-finance/best-entry-level-finance-jobs/
- https://research.com/careers/finance-major-salaries
- https://www.wallstreetoasis.com/forum/investment-banking/where-are-smartest-guys-in-finance
- https://www.ziprecruiter.com/Salaries/Finance-Degree-Salary--in-California
- https://www.linkedin.com/posts/asimq_i-was-recently-asked-if-most-investment-bankers-activity-7133780785127387136-JEkv
- https://www.quora.com/Which-career-field-pays-the-most-finance-or-tech
- https://www.quora.com/Is-it-harder-to-find-a-job-with-a-degree-in-finance-than-in-accounting
- https://www.franklin.edu/blog/is-a-finance-degree-worth-it
- https://www.investopedia.com/articles/professionals/121515/investment-banker-job-description-average-salary.asp
- https://northwest.education/insights/careers/top-5-highest-paying-jobs-in-finance/
- https://www.sciencefocus.com/science/who-has-the-highest-iq
- https://www.gleim.com/cpa-review/how-hard-is-the-cpa-exam/
- https://www.intelligent.com/best-online-finance-degree-programs/is-a-finance-degree-worth-it/
- https://www.efinancialcareers.com/news/2016/12/iq-on-wall-street
- https://corporatefinanceinstitute.com/resources/career/how-to-get-job-investment-banking/
- https://en.wikipedia.org/wiki/IQ_classification
- https://www.oliveboard.in/blog/highest-paying-bank-jobs-india/
- https://www.zippia.com/answers/is-finance-harder-than-accounting/
- https://www.quora.com/Who-are-the-most-intelligent-people-in-finance-and-trading
- https://growthequityinterviewguide.com/how-to-get-into-investment-banking
- https://www.cnbc.com/2023/06/28/finance-is-the-no-1-industry-gen-z-wants-to-work-in-says-new-research.html
- https://www.investopedia.com/articles/financialcareers/top-10-financial-career-cities.asp
- https://www.forbes.com/2007/02/25/wall-street-retirement-lead_achieve07_cx_lm_0301number.html
- https://memoryos.com/article/10-careers-that-require-the-highest-iq
- https://www.ambitionbox.com/awards/best-financial-services-companies-to-work-in-india-2022
- https://www.investopedia.com/articles/career-compensation/091716/career-investment-banking-worth-it.asp
- https://www.uopeople.edu/blog/is-a-finance-degree-worth-it-everything-you-need-to-know/
- https://www.forbes.com/advisor/banking/largest-banks-in-the-us/
- https://www.wsj.com/articles/svb-silicon-valley-bank-collapse-chief-risk-officer-f6e1fcfd
- https://topworkplaces.com/highest-paying-finance-jobs/
- https://www.greatvaluecolleges.net/highest-paying-finance-degree-jobs/
- https://money.usnews.com/careers/best-jobs/financial-advisor/salary
- https://mergersandinquisitions.com/investment-banker-salary/
- https://www.careervillage.org/questions/788850/what-level-of-math-do-you-need-to-complete-to-be-in-finance
- https://www.forbes.com/sites/rachelwells/2024/01/15/10-high-paying-finance-jobs-in-2024/
- https://www.investopedia.com/financial-edge/0912/how-intelligence-relates-to-wealth.aspx
- https://www.usatoday.com/money/blueprint/investing/are-you-upper-middle-class/
- https://www.indeed.com/career-advice/finding-a-job/jobs-paying-over-300k
- https://bau.edu/blog/why-major-in-finance/
- https://online.maryville.edu/online-bachelors-degrees/finance/resources/finance-degree-vs-accounting-degree/
- https://mergersandinquisitions.com/investment-banking-career-path/
- https://www.investopedia.com/articles/investing/082415/7-reasons-investment-banking-not-you.asp
- https://www.indeed.com/career-advice/finding-a-job/highest-paid-banking-jobs
- https://online.wharton.upenn.edu/newsroom/ebooks/investment-banking-stress-work-life-balance-for-finance-professionals/
- https://fmi.online/how-can-you-earn-a-six-figure-salary-at-top-investment-banking-firms-without-any-experience-in-2023/
- https://www.efinancialcareers.com/news/banking-jobs-with-the-best-lifestyle