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How I Spent My ENTIRE J.P. Morgan Investment Banking Salary & Bonus ($155,000) - YouTube
Channel: rareliquid
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Some people think that if you're an
investment banker you're on the roads to
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riches and you'll soon be partying it up
with models and bottles
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Well okay I don't really know if anyone
thinks that these days but I did find
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this meme that I thought was just super
accurate because I was building a ton of
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excel models when I was in banking and
drinking water all the time to stay
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hydrated and keep myself awake
Anyhow today will be a fun video about
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how much I made as an investment banker
and what I spent all that money on
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What's up everyone my name is Ben, I'm a
former JP Morgan investment banking
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analyst and welcome to rareliquid the
best channel for tech investing
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Today's agenda looks like this. I'll
first be breaking down how much I made,
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then I'll show you how i spent every
single penny and lastly, I'll tell you
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how it all felt
Before I get started I did want to ask
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if you could please smash that like
button because it would really help
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support this channel
and also on a separate note if you're
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interested in getting a weekly
newsletter
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with thoughts about finance, tech,
investing and cryptocurrencies,
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then feel free to check that out in the
description below. Alright with that
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said, let's first discuss my pre-tax
and post-tax income. Just as a bit of
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background I worked in the JP Morgan San
Francisco healthcare group for a little
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less than three years from 2015 to 2018.
I did also make a video about why I quit
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banking and what at the end of life and
investment banker is like, so feel free
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to check
those videos out if you're interested
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Okay but jumping straight into the
numbers, there are two components to your
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income as a banker and that is your
annual salary and your bonus
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and for me in my second year I was
making an $85,000
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salary and earned a $70,000 bonus
bringing my total pre-tax income to $155,000
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The salary is the same across all
analysts in the class but your bonus is
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really dependent on your performance
and quite honestly it really depends on
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your relationships with your associates,
VPs and directors
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I had a few co-workers who I thought
were really great analysts but they
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didn't get the
ratings that I thought that they
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deserved because their relationships
with the team were not as strong
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At JP Morgan you're ranked from a scale
of one to five basically but they call
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the ratings
N, M, Minus M, M plus, and E and if I
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remember correctly the N
stands for needs improvement M stands
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for meets expectations and E stands for
exceeds expectations
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In some groups you can have a lot of
analysts and maybe even the majority
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or a large minority of them receiving
the top
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rating while in other groups like mine
everyone was graded on a bell curve
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which made it pretty tough because we
had something like
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15 analysts in my class and only
something like two received that top
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bucket rating
now since I'm assuming that a lot of you
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guys are going to ask I did get that top
bucket rating in my second year
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In my first year to be just completely
transparent I did not I received
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actually an
M so I was kind of in the middle of the
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pack and a lot
of the improvement that I really had for
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my first to second year
was in my work I guess also but
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really it was in my relationships that I
had with my team which really
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strengthened over time
and more of the associates and people
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that I worked with really started
rooting for me as I got to know them
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better
Now obviously bankers at every single
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level care a lot about their bonuses
because they work so much at their job
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and they just want to earn as much as
they can so
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they can be compensated for all the
hours they put in and bonus day is
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really
intense because everyone gets called
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into an office by your resource manager
and then judging kind of based on the
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expression that the person has when they
leave the room,
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you can kind of tell who did well and
who didn't but
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going into it you also kind of have an
understanding of how you're going to
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perform but you just never know
until you're finally given that
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information of what your rating is and
what your bonus is going to be that year
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But anyway going back to my income, let's
calculate what my post tax
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income looks like. 85 thousand dollars
divided by twelve
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is $7,083
so that's how much I was earning pre-tax
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each month and I was saving 15%
of that into my 401k so that
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left me with about $6,000
in taxable income each month
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From there I paid about 25% in taxes and
i know this looks a little bit low given
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that I made $155,000 during the year
but it's because my annual taxable
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income was about $6,000
times 12 which is around $72,000 which
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isn't crazy high and tax brackets are
structured so that you pay
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increasingly more taxes as your income
increases rather than paying the same
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rate for your entire salary
Going to my bonus though this is where
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the tax man really hurt me
to the government since I get my bonus
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paid in one month it looks like my
annual
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salary is seventy thousand dollars times
twelve which is eight hundred forty
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thousand dollars
As a result the taxes I paid on it was
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49% percent
so the actual figure I was transferred
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to my bank account from my seventy
thousand dollar bonus
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was thirty four thousand five hundred
seventy nine dollars and I actually went
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back to my old statements to confirm
this so here's a screenshot
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So in total when you add up my monthly
take-home income and my bonus
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I brought home about eighty nine
thousand dollars and about seven
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thousand four hundred dollars a month
Okay so now that you know what I made
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let's talk about what I spent
all of it on. Now first of all, I didn't
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spend my money month to month as if I
was getting a bonus because
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obviously if I was spending more than I
was taking home each month then I'd have
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a ton
of credit card debt and that's just
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totally irresponsible. As a result I'll
first be going over my monthly expenses
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and then I'll let you know how I spent
my bonus
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So starting with the responsible stuff
my biggest cost of course was rent at
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$1,375
and let me take a second to talk about
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my living situation
I was actually living in the living room
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so not even a room that had walls with
five other friends in a town home
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so remember earlier when I was talking
about models and bottles
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yeah that wasn't happening now I
probably could have found another spot
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in SF around the similar price range
that did have walls
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for a room, but I actually wanted to be
in that area close to work and live with
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my friends
and I didn't really mind living in the
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living room because I wasn't really home
that often
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The funny thing though is that amongst
my friends we had the largest home so
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our spot was always the place to go for
pre-games or
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just house parties and things like that
and so a lot of times I would be working
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on the weekends in my living room while
there'd be
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music blasting and people playing beer
pong just a few feet away from me while
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I'm working on a powerpoint model or
excel
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or not powerpoint model a powerpoint and
excel model
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and I would just work as quickly as I
can and then try to join them
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but anyway back to my expenses on
average I spent about 25 dollars a day
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on food and groceries which was about
$750
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a month. As a quick note on this JP Morgan
also covered up to $25
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off for dinners if you worked past 6 or
7 p.m something like that
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and so Monday through Thursday i pretty
much had each dinner expense
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and on the weekends if you worked
anywhere from I think it was four to six
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hours then each four to six hours you
work
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then you have another $25 meal that you
can expense so
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I was saving quite a bit of money on
food just because I was
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kind of working all the time. My portion
of the apartment utilities and the phone
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bill I was paying for my family came out
to around $300
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a month and I paid for most of my
undergraduate degree through
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scholarships and loans so paying back
the loans was around $200 a month but
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sometimes I would pay more of it back
I also used whatever remaining money I
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had at the time to invest
and back in 2017 I was putting all my
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extra money into crypto
since JPM didn't let me buy stocks
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without approving each trade which was a
huge hassle
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By the way if you're interested in
investing in the crypto space I do have
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a video about my favorite altcoin,
one about Bitcoin versus Ethereum, and a
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few videos about Coinbase
and its stock versus Bitcoin, its
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valuation overall as a company, and
things like that so feel free to check
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those out if you're interested. Anyway
now to the quote unquote irresponsible
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stuff
I spent around $500 a month on random
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things like concert tickets or weekend
trips with friends and this amount would
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fluctuate if I went on a big trip to
Asia or something like that
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I also broke out alcohol into its own
category because at that point all my
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friends and I had just graduated from
college so we would go out once or twice
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a weekend
and so honestly alcohol was just a
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pretty significant
monthly cost and lastly I was spending
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about a hundred dollars on Ubers only on
the weekends since JPM paid for the
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ubers I took back home once it got past
9 p.m
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if I remember that correctly. Alright
so that's how I spent my money each
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month let me now go
into how I spent my bonus so if you
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watched my why I quit investment banking
video you'll know that I quit
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rather abruptly during my third year to
backpack across the world
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so I actually spent around fifteen
thousand dollars traveling to ten or so
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different countries for about eight
months
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I also spent around $5,000 or so paying
back student loans and then the
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remaining $15,000 on a clothing brand I
worked on for a few years called
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Asthetic Studios
which I'll leave a link to in the
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description below in case you want to
check it out
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Alright so before you call me
irresponsible for just spending all that
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money
the $15,000 I spent for traveling was
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just money I was really gonna save up
but then I decided to travel
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and then for Asthetic Studios that was
more of an investment into the business
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but
actually that business ended up kind of
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being a dumpster fire because clothing
and fashion is just a really really
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tough industry. Okay so now that you know
how much I made and spent let me tell
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you
about how it all felt. Now in general, I
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did have a lot of gratitude for the
financial spot I was in
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because I just knew that there were
hundreds of other people who would just
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be willing to take my spot and if I was
ungrateful for the position I was in
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with what I was learning
and the exposure I was getting in my
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work and how much I was just developing
as a person
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and professional I felt like it would
just be very ungrateful and the wrong
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thing to do to have a mindset of being
ungrateful for my job. I also really
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liked my group except maybe for
a few people that were just kind of meh
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or some of them were actually just kind
of crazy but
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in general I really liked most of the
people that I worked with and my
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group had a really good culture. I don't
know if I said that already but
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basically I didn't really have as bad of
a time
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in banking that I thought I would and I
think I
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was pretty lucky to have a really good
banking experience overall
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at the same time did I feel rich I would
say
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no I mean now that I've been on an
entrepreneurial journey over the past
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few years just working on random side
projects and a business that I was
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starting from scratch
I would say that if I was making six
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figures now that would be
great and amazing but I would say that
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because so much of my money was going to
things like taxes
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rent food and all that stuff I didn't
really feel like I was making life
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changing money but I was
of course financially comfortable also
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if you're an investment banking analyst
you're not actually focused too much
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about how much you're making in the
first few years
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or really think that even it's that much
when compared to most people it kind of
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is
because you know that when you keep
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going up the financial
career ladder and when you become a
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director or go to private equity or a
hedge fund or things like that
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your salary and bonuses just keep
multiplying so
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it's not really about how much you're
making in those first few years actually
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it's much more about how much you're
going to make
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10, 15, 20 years down the line. Now of
course the big price you pay is with
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a lot of the time and energy that you
have to put into the job versus other
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jobs and
I would probably just say that you know
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going through a lot of the
entrepreneurial
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more type of ventures that I have been
doing recently with Asthetic Studios my
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previous company
and rareliquid I have a lot more I
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would say a richer set
of experiences that I truly actually
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enjoy much more day-to-day so
personally if you had to ask I have zero
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regrets about leaving my former job
I'm really happy right now working on
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rareliquid and we'll see how this
journey
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you know takes me and where it goes but
basically what I'm just trying to say
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is that I think banking was a really
interesting opportunity that I had where
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I made pretty decent money but
in the end I wanted to pursue things
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that were not just about financial
gain or being incentivized by anything
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like that
but more so um just the set of
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experiences that I have really
I mentioned something similar to this in
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one of my previous videos about why I
quit banking and
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people mentioned that I have this money
wall over here and say that is really
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contradictory but actually it's
a frame of two dollar bills and it's
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like more of an art piece that my
parents bought and I just started this
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youtube channel and I was just like oh
maybe I'll just use this as a background
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since I talk about investing
um so yeah that's why that's there all
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right so that wraps up the video
if you want to check out any of the
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videos I mentioned about the crypto
space or banking I'll leave those
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in the description below and if you want
to check out my other social media
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accounts my twitter, tik tok, instagram
all have the same username rareliquid
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and with that said that wraps everything
up thanks so much for tuning in hope to
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catch you in the next one
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