All The Money In The World

All the money in the world

The call was intriguing, though not entirely unexpected.

On the other end of the line, a well-regarded headhunter didn’t take long to make his case.

Post the perfunctory introductions (“leading firm”, “senior professionals”, differentiated mandates”), he outlined the parameters of the latest role he was looking to fill.

A fast-growing asset manager, with a very specific sector focus.  One that happens to be right up my alley, hence the call.

Significant capital to deploy.  An executive-level position.  And a comp package to fit the job description, including significant carry.

We danced around the last topic for a while, trying to narrow things down without showing our cards too early.  Then again, both of us have been around the block.

The headhunter clearly had a good grasp on banker comp, and I’ve got enough good friends in private equity to be able to size up his end of the bargain.

Eight to ten years of intense work.  On the other end of the rainbow, an eight-figure sum.  Big enough to make the interim salary payments look inconsequential, provided the investments perform well.

I couldn’t argue.  It was a differentiated mandate indeed.

It’s also one mightily at odds with my own plans for the next decade.

And yet, I’d be lying if I told you I dismissed it without hesitation.

Head Fakes

Money can be a funny thing.

In the personal finance community, you often hear people say they are fed up with exchanging their time for money.  Stop the madness, I’m retiring!

But what they really mean is they are fed up with exchanging their time for a specific amount of money.

Someone who is making $100k a year and retiring at 45 is making a very specific trade-off:

The next 15 years are worth more than $1.5m, which is what that person would have made if he or she stayed in the workplace.

But what if you were to ask this person a slightly different question:

Are those 15 years worth more than $15m?

How about $150m?

And what about $1.5bn?

I can assure you that few (if any) would stay the course without at least taking a pause.

At best, giving up the opportunity to make so much money might feel irresponsible.

At worst, it can become destructive – to you and your relationships.  Causing you to feel egotistical.  Driving your family and friends to behave in ways that no longer have your best interests at heart.

Remember when everyone was falling head over heels over Squid Game, what with the symbolism about excessive debt and its impact on people and their motivations?

Well, look around you, and you will see a different type of game playing out.  One where people aren’t necessarily facing soul-crushing levels of debt.  As a matter of fact, they are more than comfortable.

Instead, it’s the pursuit of evergreater amounts of money that drives them to put their families, health, and happiness on the line.

In one of the biggest ironies of the post-industrial world, we now live in a society where rich people have less leisure time than the poor.

It makes total sense – because the more money you make, the more expensive leisure becomes.

The classic tragedy of personal finance is when people put off investing because retirement seems too far away.

But there’s another, equally tragic scenario – which is when people put off living because death seems too far away.

Inconvenient Truths

Don’t get me wrong, money does eliminate SOME discomforts.

But past a certain level, money (and by corollary, work) can also become a convenient excuse.

“I need to work to make more money” can be a great cop-out for so many things we ought to be doing, but don’t.

For not spending enough time with your family.

For not leading a healthy lifestyle.  For not starting that business you’ve been dreaming of.  For not giving back.

As it happens, a high FIRE number can also masquerade a lot of financial insecurities.

I mean, there’s ALWAYS something to worry about.

Future stock market returns. Inflation.  Asset bubbles.

Catastrophic health issues. Tax rises. Getting your kids on the property ladder.

It’s great to be prudent.  Equally, there’s a fine line between being prudent and trying to account for every unfortunate eventuality in the world.

One of the biggest challenges with money is it has the ability to give you a definitive answer.

“If only I had $[x]m more, it would all be different”

or

“Once I hit $[x]m in net worth, things will be sorted”

Then, you spend years and decades chasing [x]. And once you get there, you realize that all the money in the world can’t provide an answer.

Only you can.

Thank you for reading.

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Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

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23 Comments

  1. Particularly poignant at the moment. Great post.

    Similar thoughts to this ie why I’ve left my current job. Joined a fast moving new Co with some senior people from my old business.

    My salaries matched (slightly exceeded) but significantly lower pensions but borderline I’m neutral salary wise

    I knew its a risk to leave my current cushy number but I felt completely disengaged with our current corporate paymaster. It may be that I trade one stress for another starting again but the important thing for me was to take that risk not the outcome. It resets everything and gives me permission to explore other options not linked to a pay packet or needing to justify a high salary at all

    In the midst of all the above suffering one of the worst tragedies you can (the sudden loss of a parent at a relatively young age) just crystallises that I absolutely made the right choice to leave where I was despite everything being good on paper. Life is absolutely too short.

    Def use FIRE to give you breathing space but don’t chase a number for a numbers sake. Once you’re far enough align the journey you realise another £ doesn’t move the needle significantly

    Lots of soul searching to come about who I am and what the next phase without the responsibility to be around for an ill parent looks like

    • Really sorry to hear about your loss FBA. One of my parents had an extremely close call a few years ago and it’s absolutely heart-wrenching.

      I agree with you, at some point adding [x] to your “number” doesn’t really change anything but HOW you add that [x] really does…

      Good luck with the new gig, sounds like a good move and very exciting!

  2. Such an important conversation to have with yourself & others.
    I chose to leave work when the opportunity was there and accept the lifestyle I can achieve.
    I had the option to stay for another 7 years on a reasonable 5 figure salary, but I have become acutely aware of time.
    I am 53, not old but definitely not young and being from a career where many colleagues have not made it to old age (70+), that fact has focused my mind.
    My priorities are different to 10 years ago, I would like to have been this aware back then.

    • Yes same here. Ten years ago if you told me I would have second thoughts about an opportunity like this, I’d say you are nuts.

      But… I have a very different view on life at 40 than I did at 30! And ultimately, it boils down to conviction that the path you’ve set out for yourself is the right one, vs the path society tells you to follow.

  3. There’s a good article, I think by Nick M. (who has the best dollar cost averaging article out there bar none) https://ofdollarsanddata.com/climbing-the-wealth-ladder/ .. Have you seen this ? In a nutshell, it only matters if you multiply your wealth by 10. If you don’t it’s just a few more coins in the bank for the same level of lifestyle. (Not that I’m saying this doesn’t matter, and nor am I saying whether it is desirable to chase/aim for the next level on that wealth lifestyle ladder. Instead just that it is not, ultimately going to have that different a life).
    Given I could interpolate from your time in banking, and some of your comments, I think the 8 figure needs to not be one of the first numbers on the odometer for it to actually change things for you.

    (Coming from the other side as mentioned before – everyone must make their own decisions..!)

    • I’m a fan of Nick M and I do remember that post – it’s a good one.

      I guess what I was trying to say is what we say we would do (stop trading time for money!) and what we would actually do are different things. The answer should not depend on how much money is being offered, but it does.

      As far as the 8-figure NW goes, good question. I certainly don’t need that much money to live a happy and fulfilling life. Big houses, vacation properties, and fancy cars do very little for me.

      But if I had a way to get to those net worth levels while living a balanced life, then why not? Which is kind of the path I’m forging for myself right now.

      Does that make sense?

  4. I say go for it! Private equity is big bucks, and I know a couple of senior PE people who make $10M+ a year. They have more flexibility now due to covid.

    In such a way, those with great income opportunity are somewhat cursed if they don’t love what they do.

    I got off before I had a chance to make 7-figures and I’m OK with it, especially with the higher taxes.

    But I will say once u get to $10M+ net worth, things start feeling really good. But wouldn’t you get there in banking after several more years anyway?

    BTW Nick from Dollars and Data should have a net worth closer to $700K now, since his $500K net worth post a year or so ago.

    Sam

    • Cheers Sam.

      What would you say is the biggest difference between a $10m-$15m net worth and one in the $5m – $10m range? The way I’ve always thought about it is perhaps you live in a slightly nicer house in a nicer neighbourhood. Perhaps you own your vacation home instead of renting it out. Maybe a nicer car.

      But does the incremental money really move the needle as much when it comes to lifestyle? Especially given the opportunity cost in terms of time, family, and health?

      And yes, you are right – not out of reach for a banker either but as you say, a few more years to go!

      • It’s really the peace of mind that everything will be OK, even in another global financial crisis where you lose 50% of your net worth. You start feeling like you’re playing with the house’s money ALL THE TIME, and that is a really giddy and good feeling.

        You can give more to charities and people, which brings them joy too.

        Guess it all depends on how sick of your job are you. I was never given the opportunity to make MD or make big bucks in PE. But if I had, I would have stayed until age 40 at least.. if not age 45 to see what it was like.

        BTW, curious if you realized what Nick’s net worth is, and whether other people do as well? I’m wondering whether how much money you have as a personal finance writer really matters. What do you think, given I’m assuming your net worth is much higher than his.

        Some things to think about for me in 2022 as I share stuff.

        Sam

        • Interesting perspective, thanks Sam.

          I guess what I’m struggling with is whether the tradeoff of time vs incremental money is worth it. Give or take, it’s about a decade of life so basically giving up one’s 40s for a few extra million in the bank. If this was a 50 or even a 55 hour / week gig, perhaps. But anything beyond that and I think the price is getting a bit too high for my liking. Then again, may be just me (and the fact that I am ready for a change as you correctly point out!)

          Very interesting point you bring up re: personal finance blogger net worth. In my mind, it doesn’t really matter as long as people are transparent about it.

          I’ve once come across a blog by someone who claimed to have $10m+ in net worth yet it was clear by the way he was writing that he is nowhere near that number. As you can imagine, I never came back.

          But give me an interesting, insightful blog by someone who is just starting out and I’ll be a happy reader.

          • Cool. Then I’ll keep my net worth undisclosed then after $3M.

            I think it’s worth at least trying the PE route for one year and see what it’s like. You can always quit after!

            Regarding income though, any income above around $350,000+ for a family of four won’t change happiness. It’s just nice to have IMO.

            Sam

  5. “the less I want, the more I have”

    I saw that a couple of months ago and it has struck me ever since.

    This is a great site BOF. I really do like the practical and philosophical (albeit real) mix of posts.

    The thing you didn’t mention was, would you take the job for the challenge rather than the money?

    Didn’t David Copperfield say that if he wouldn’t do a job for a dollar he wouldn’t do it for a million (although not sure how many millions he had by then!)

    • Ahh, great point and you are right, I didn’t mention it.

      Sure, I’d love the challenge. If I could sign up for a 9-5 (even with a commensurate reduction in pay), I’d definitely take it. But the problem is, it’s never 9-5.

      It’s quite ironic that people who like to say they “win” based on merit actually feel compelled to work around the clock. If they were so confident in their ability, they wouldn’t need to overindex on the effort, would they?

  6. Love the post Damien.

    I think you have had a really hard decision to make there as the opportunity cost both sides are big. That being said there is more to life than just work especially if it would come at the expense of opportunities and experiences with family.

    I can however understand the dilemma as taking over that role would take you to another level which would majorly benefit your family as a whole!

    Great post,
    Josh

    • Cheers Josh, that’s spot on.

      At some point, it’s not just about you anymore, which opens up a whole new Pandora’s box!

  7. As soon as your decision is not based on money. Then it is much more likely to be the right one in my experience bankers are great at the finance side. So by definition if a decision doesn’t make financial sense and you take it. It means that the non financial benefits have outweighed the financial ones.

    By the way I agree with you – going from 5 to 15m won’t really change things. And one can argue (not having personal experience although I am very aware of those at the next stage. It’s just different problems ‘mo’ money…) Eg you have to hire someone who manages your gardener/cleaner/hired help. Then it’s a different set of trust and management for thèse consiglieres. Who your kids play with becomes critical – actually removing you from being open to experiences etc). The grass isn’t always greener !

    • That’s my sense as well. I think in our case, it would mean a slightly different lifestyle – and I am intentionally not using the word “better” because frankly, our lifestyle hasn’t changed much as our net worth went up over the years.

      And that slightly different lifestyle comes with some incremental complexity because you now have more help and you need to manage that help etc.

      But it also comes at the expense of a LOT of free time, making you wonder – is the tradeoff worth it at all?

    • …and the comp is structured in a way where most of it vests on the back end of your tenure, subject to jumping through multiple hoops.

  8. I retired at 60 making a few hundred thousand a year. Shortly after that a competitor offered me a smooth million dollar a year salary and another five million in expected bonus compensation over the next five years. It took me maybe 15 seconds to say, thanks, but no thanks. What in the world would I do with more money?

    • Spot on. Not 60 yet but 5 years is a long time… sadly it takes the passage of time to start appreciating time itself!

  9. Great post and insight on this one BoF.

    Not sure what I would do in your shoes though family health scares since I’ve moved to London does drive the point home on the time vs money exchange.

    It does sound like an exciting opportunity though I think you’ll find your version of success / happiness in whatever you do choose!

    • Thanks KoF!

      Let’s see what happens on this one – still mulling it over. Will make sure to provide an update – would only be fair after all the debate this post has inspired!

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