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Can you make massive money in investment banking?

Are there opportunities to make huge amounts of wealth in investment banking?

Would you be able to make massive money by learning how the big banks invest and applying it to your own capital?

And how would this happen?
(edited 8 years ago)

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...Yes.
Reply 2
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Trapz99
21
Original post by King Scorchy
Are there opportunities to make huge amounts of wealth in investment banking?Would you be able to make massive money by learning how the big banks invest and applying it to your own capital?And how would this happen?

I think you need to learn what investment banks do. They don't focus on investing in shares like the average Joe does. They work on multi-million pound deals between companies (called mergers and acquisitions) which take tens of people in a team for each transaction. Basically they advise companies on how to take over another company or how to raise capital by releasing shares on to the stock market. They also trade shares for clients and advise clients on investment opportunities (equity research and sales). They don't actually invest in the traditional sense.

Of course people who work in investment banking earn a lot of money but it is an ultra competitive industry and very few people get selected. Also, you will have to work long hours, often working though the night to complete Excel models and administrative work (this is for mergers and acquisitions in particular). Traders, salesmen and equity researchers work shorter hours but don't usually earn as much or have as many exit opportunities (btw, for most people, investment banking is not a long term career- they tend to move on to other financial jobs where their experience is valued).
(edited 8 years ago)
Original post by Trapz99
I think you need to learn what investment banks do. They don't focus on investing in shares like the average Joe does, they work on mulit-million pound deals between companies (called mergers and acquisitions) which take tens of people in a team for each transaction. Basically they advise companies on how to take over another company or how to raise capital by releasing shares on to the stock market. They don't actually invest in the traditional sense.


murders and executions?
Original post by King Scorchy
Are there opportunities to make huge amounts of wealth in investment banking?

Would you be able to make massive money by learning how the big banks invest and applying it to your own capital?

And how would this happen?


Research what investment banks actually do, then come back and ask the question again.

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Original post by Princepieman
Research what investment banks actually do, then come back and ask the question again.

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I do always find it odd when BBC news refers to it as 'casino banking'
Reply 6
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Trapz99
21
Original post by Feel Tha Bern
murders and executions?


Mergers= when two companies basically join together to form one
Acquisitions= when a company buys a smaller company
Original post by Trapz99
Mergers= when two companies basically join together to form one
Acquisitions= when a company buys a smaller company


[video="youtube;0RMKEZzbkuo"]https://www.youtube.com/watch?v=0RMKEZzbkuo[/video]
Original post by Trapz99
Mergers= when two companies basically join together to form one
Acquisitions= when a company buys a smaller company


They were referencing American Psycho..

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Original post by Feel Tha Bern
I do always find it odd when BBC news refers to it as 'casino banking'


Hahahaha, it's so inaccurate because they can't even prop trade anymore.

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Original post by Princepieman
They were referencing American Psycho..

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Lol i only realised that a few seconds after posting my response.
Original post by Feel Tha Bern
[video="youtube;0RMKEZzbkuo"]https://www.youtube.com/watch?v=0RMKEZzbkuo[/video]


Yeah I was a bit late to get that joke. Its been a while since i watched it

didn't really like the film anyway :frown:
Original post by Trapz99
I think you need to learn what investment banks do. They don't focus on investing in shares like the average Joe does. They work on multi-million pound deals between companies (called mergers and acquisitions) which take tens of people in a team for each transaction. Basically they advise companies on how to take over another company or how to raise capital by releasing shares on to the stock market. They also trade shares for clients and advise clients on investment opportunities (equity research and sales). They don't actually invest in the traditional sense.

Of course people who work in investment banking earn a lot of money but it is an ultra competitive industry and very few people get selected. Also, you will have to work long hours, often working though the night to complete Excel models and administrative work (this is for mergers and acquisitions in particular). Traders, salesmen and equity researchers work shorter hours but don't usually earn as much or have as many exit opportunities (btw, for most people, investment banking is not a long term career- they tend to move on to other financial jobs where their experience is valued).


Thanks for the fantastic reply!
Original post by Feel Tha Bern
I do always find it odd when BBC news refers to it as 'casino banking'


This use to drive me insane as well. I would literally scream at the TV.

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(edited 8 years ago)
Original post by Trapz99
I think you need to learn what investment banks do. They don't focus on investing in shares like the average Joe does. They work on multi-million pound deals between companies (called mergers and acquisitions) which take tens of people in a team for each transaction. Basically they advise companies on how to take over another company or how to raise capital by releasing shares on to the stock market. They also trade shares for clients and advise clients on investment opportunities (equity research and sales). They don't actually invest in the traditional sense.

Of course people who work in investment banking earn a lot of money but it is an ultra competitive industry and very few people get selected. Also, you will have to work long hours, often working though the night to complete Excel models and administrative work (this is for mergers and acquisitions in particular). Traders, salesmen and equity researchers work shorter hours but don't usually earn as much or have as many exit opportunities (btw, for most people, investment banking is not a long term career- they tend to move on to other financial jobs where their experience is valued).


Original post by King Scorchy
Thanks for the fantastic reply!


S&T guys and gals have similar all-in comp to IBD people in the analyst years. What happens after that is that the top of the range in S&T is generally greater than IBD but the average is less than the average payout in IBD. ER is usually less overall, but can touch S&T/IBD for a stellar researcher (or as they're technically called 'Analyst').

Although most people move on, banks have been incentivising sticking to banking by pushing forward the analyst -> associate promotion timeframe from the original 3 years to 2 years. As well as the emphasis on 'protected weekends' and monitoring weekly hours to make sure they don't reach obscene levels.

However, yes, this is all pretty correct - except you forgot that they help source/issue debt and advise wealthy individuals on how to protect their assets too.

To the OP, you can understand now that it would be pretty much impossible to replicate the way banks make money by yourself: you need the platform (i.e. capital base, infrastructure), team, expertise and track record to even get anywhere near this scale of operation.

Of course bankers make money - their job is to sit near a gargantuan waterfall of it trying to advise/understand/structure/research it, are all tasks that will get you 'wet' (read: remunerated).

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(edited 8 years ago)
Original post by Commercial Paper
This use to drive me insane as well. I would literally scream at the TV.

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I don't even want to go into IB, but given that the BBC is publicly funded, I feel it has a duty to inform people what is going on, in a way which even if it isn't in full depth, is at least true and factual, because the media is what shapes most people's opinions.
yes but its not as rewarding as baking your own cakes and selling them for profit
Original post by Feel Tha Bern
I don't even want to go into IB, but given that the BBC is publicly funded, I feel it has a duty to inform people what is going on, in a way which even if it isn't in full depth, is at least true and factual, because the media is what shapes most people's opinions.


That's the problem. It wasn't true or factual, in any way at all. Banks cannot prop trade anymore.

I have no issue with it being referred to as risky but don't go and claim on national TV that the whole thing is some kind of 'casino' when in reality, this is not the case. It's nothing like a casino.

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How much do investment bankers realistically earn relative to experience?
Original post by kieran12321LFC
How much do investment bankers realistically earn relative to experience?




These figures are about 2 years old (base for graduates a.k.a Analyst 1 is now £50k) but it gives you a ballpark. All-in figures would be base + bonus (i.e. base*(1 + percentage)).

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