Bonus Day Allocations

Summer is in full swing which means bonus season for most experienced analysts. Its a pretty good feeling waking up to thousands of dollars in your bank account when you need it most (Chicken tendy towers at Surf Lodge aint cheap). There is also a weird downside where those thousands of dollars piss you off because it was not as much as expected. Whichever side of the fence you fall on, its important to stay grounded and, more importantly, have a plan for this money. Most of my college friends worked in investment banking, made similar money and had similar bonus day experiences. All of us were also pretty responsible with these large pay days too and didn’t fall into the trap of lifestyle inflation. It is way easier to be responsible with money if everyone in your circle is doing it. One friend started a clothing brand. Another invested in a restaurant group. I told myself I wouldn’t buy a Rolex or Gucci loafers until I owned an apartment in Manhattan. Six years later, I can start looking for a Rolex. Here are some loose guidelines on how to spend your bonus day racks responsibly. **This is not financial advice. You would be a bottom bucket analyst to trust a fictional character on the internet**

Share

We’ll assume you are a solid first year analyst and your bonus is $60,000. First, the government takes their cut of 50% leaving you with $30,000. High level allocations of net bonus below:

Stupid Non-Sensical Fun Shit - 10%

Traditional Investments - 60%

Riskier Assets - 30%

Stupid Non-Sensical Fun Shit - $3,000

Starting with the fun stuff. You worked hard for a year a deserve to spend some money on yourself, just not all of it. Personally, I split this amount between one tangible thing and one experience minimum. This is how I would blow $3,000 (not financial advise).

I love collecting and wearing rare shoes and have been eyeing the Nike SB Dunk Medium Curry for a while. We are finally past the Dunk hype cycle and the neutral colors are ideal for summer/fall. Probably $260 all in with shipping and fees.

Surf Lodge Table. Covered in previous Montauk posts and will reiterate that this is worth every penny. This is actual damage from a light table. You can do better than this with some bonus cash lining your pockets. Budget at least $400.

With the remaining ~$2,000, book a nice warm weather vacation for the lull between Christmas and New Years. One of the best places I have been to in this range is Punta Mita / Sayulita, Mexico.

Traditional Assets - $18,000

Now for the boring stuff. No one can time the market so the advice here is to read up on simple investment strategies. This article outlines some popular “set and forget” strategies that anyone can set up (Golden Butterfly vs All-Weather). If you want to have a slightly more active role, carve out some of the equity ETF allocations for single-name stocks you like. Personally, I missed the NVIDIA pump but have been dollar cost averaging into GOOG 0.00%↑ to capitalize on the same tailwinds. Simple thesis is NVIDIA chips are used in GPUs which provide necessary computing power for AI. Google has the most GPUs in an already supply-constrained market. Again this is not financial advice. Dumping $18,000 will literally bring you zero immediate happiness but you have to stay disciplined to reap the benefits five years down the line.

Riskier Assets - $9,000

These are your Giancarlo Stanton picks. Personal investments that are either going to the moon or striking out in epic fashion. Crypto falls squarely into this category and warrants some investigation. Institutional adoption seems to be increasing and boomers who trashed crypto during the bear market are now changing their tune (ex. Larry Fink, CEO of BlackRock). Many people much smarter than me have written about how the window for entering crypto before institutional adoption is closing fast (one example piece from Arbitrage Andy below)

If BlackRock, Fidelity and other large institutions are putting their weight behind crypto, it may be worth throwing a few chips on the felt. (Still not financial advice)

Ultimately, money is a tool for you to use and we are all lucky to work in a profession that pays relatively well. Do you want to own a beach house and spend every July there? Great. Devise a plan and work backwards from there. Happy hunting.