Time value of money is the fundamental idea of all undergraduate finance programs. On Day 1, your teachers introduce you to the concept and formula of the time value of money.
On Day 2, you understand how to use a financial calculator and never have to worry about math again.
The HP 12c — Also a great Star Wars Droid name
But the irony of using the time value of money for all capital budgeting problems, discounting cash flows, finding IRR and NPV is no one discusses the adjusted concept of monetary value of time.
What is your time worth to you? and what do you really charge for it?
Traderdads.com Shop! Patches, shirts, trading desk accessories and more!
TRADERDADS STORE
Ask yourself a few questions:
What is your ACTUAL hourly wage?
How much do you pay to commute to work each month?
How much would you pay to NOT go to work every month?
How much time do you leave on the table each year?
How much would you pay to take an extra day of vacation?
Investment Bankers are notorious for long hours and late nights. One leaked Research 2021 by Goldman Sachs showed that the workaholism culture was alive and well despite HR press releases suggesting that work-life balance and mental health were “high priorities for our team members”.
Research data leak from 2021
Now, you might say the compensation is worth it. But does it? According Wall Street Prep, most 1st-year analysts in investment banking average an “all-in” comparison of about $170,000 to $190,000. Big salary for sure. Especially for a 23-year-old with no expenses beyond themselves. But think for a minute about what you’re actually charging for your time.
I’m being generous and guess the young lad actually gets 2 weeks off in the year.
For comparison, New York’s minimum wage is now $16.00 per hour, and you can probably do better per hour as a plumber in North Carolina if you hustle.
I was a big fan of his Epicurean Dealmaker blog until he closed up shop in 2015. Among his wisdom and confessions during his tenure was a story about someone missing his father’s funeral because he had to finish his Powerpoint presentation on time, and his thoughts on the famous “rat race” that sucked you in for the long distance. That 23-year-old turns 25, then 30, then 35, and soon 40 is knocking on your door. Yet you still think that Manhattan rent money 95 hours a week for essentially a plumber’s salary. There is no time for life experience. No time for fun. There is no time for reflection.
Definitely not an inspiration for this feed
Sure, as an investment banker you make a lot of money, but I find it so ironic that many of them can’t see their own inefficient profits they are receiving when they were explicitly taught to consider the relationship of time and money on Day 1!
Interested in joining the Trader Dads Podcast in 2024? Send me an email! I would love to have subscribers sit down for a chat
Thoughts; Questions? comments;
I arrive! Maybe I’ll do a full post on the topic or as a Q&A
