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I'm at a top-2 business school right now. The wealthiest guest speakers we have are private equity partners and others in the investment professions. My classma
by bkohlmann 10y ago
I'm at a top-2 business school right now. The wealthiest guest speakers we have are private equity partners and others in the investment professions. My classmates leaving school joining or resuming those professions stand to make a lot of money in base salary. Then top it off with bonus and "carry" in the next 5-10 years, and you're talking big bucks. Even those going into consulting for a top-3 firm, if you make partner in 7 years, will have an incredible salary.
But financial wealth isn't about your salary - I.e. Via your nonscalable labor. It's about putting the money to work once you get it. Finance excels at this for two reasons: leverage and equity. Similar to startups actually...buy one could argue without all the risk.
There is survivorship bias in the stories we hear to be sure. But if you truly only care about wealth, your best bet is to somehow make your way into finance.
- cauterized 10y agoWhat does "carry" mean in this context?
- stagbeetle 10y agoBasically a percentage of the profits from sales.
- cauterized 10y agoThanks!
- bkohlmann 10y agoMore exactly, "carry" is the negotiated profit from a deal above a certain "hurdle." For instance, in the traditional 2 and 20 Model in Private equity, general partners get an annual fee of 2% of assets under management. But the 20 is the real moneymaker...they get 20 percent of any profits from the overall gain in the fund. If the fund makes, say, an annualized 15 percent, and the min return to investors I. 8%, the investor gets 20% of the 7% (15-8) profit. And over a 5-7 year fund life, that's a compound number. It leads to immense upside.
- cauterized 10y agoThat is insane!