Is finance a good career path for you: Explained

Is finance a good career path for you
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There are generally two kinds of people that end up in finance. First, you have people who genuinely like finance. They like investing, they enjoy learning about business or doing deals. Secondly, you have people who understand that finance has a lot of benefits associated with the career and are willing to put the time and energy in.

Of course, these are not mutually exclusive. You have lots of smart people in the former camp who also understand that finance is a great career path where you can make lots of money. But I find that over time, most finance people tend to embody one of these personalities over time, you know, like a lot of naive college students, I definitely thought I was part of group number one.

I was part of the investment club. I did all these finance extracurriculars and hung out with a lot of finance people. Over time, I realized that I truly belong to group number two. So if you’re trying to decide whether the grind of investment banking or private equity is worth it for you, then maybe you should ask yourself a couple of the following questions.

Do You Like Finance Itself?

So step number one is to think about whether you genuinely like finance. And in my opinion, this is actually harder than it seems because our subconscious and cognitive dissonance can sometimes make it difficult for us to unearth our true feelings, especially if you’ve never worked in an industry. If you’re still a student, you might idealize aspects of the job and not really understand what you’re getting yourself into.

Now, the first question I would ask is What do you do with your non-work energy? Because pretty much everyone who is practical and ambitious is going to be working hard, getting good grades, and getting good internships. But I want to ask you, what do you do outside of that? A key insight for me is a lot of the people who remained in finance, they were still very interested in finance, in the non-work non-school part of their life.

It didn’t matter if the pencils were down or the grades didn’t matter. There are some people who actively sought out things like finance, electives, or other opportunities to learn about finance. They came from a very genuine place. It’s actually very easy to have a surface-level interest in finance. It’s easy to be enticed by the gambling aspects of investing or the popular memes that you’re seeing more and more in finance culture.

Think of how many people are part of the fun Wall Street BET subreddit or cryptocurrency, and contrast that to the more critical-thinking fundamental subreddits like security analysis. It’s very easy to get carried away if you’re a spectator on the outside of the industry, just looking at the fun parts of investing.

But the actual work is quite different. If you want to do traditional finance, you need to know all the valuation and all the corporate finance, and that should really reveal if you have a genuine interest in finance.

I remember in my senior year of school, a lot of the really intense finance people took very difficult classes like value investing or corporate finance reporting. While I pretty much stayed far away from all the difficult finance electives and I just took very easy stuff and that honestly was kind of a good hint for where our careers would go. Most of my really intense hedge fund friends took those hard classes, and we’re constantly interested in learning about finance.

So some questions that might help you understand whether you actually like finance. Do you listen to investing or finance podcasts? Do you read finance textbooks or finance primers for leisure? What kind of electives did you take? When did you first become interested in finance? Do you actively manage your personal accounts and do you look for new investment opportunities?

Now the second question, which is kind of related, is how excited do you get when you talk about finance? I realized that when I was working in New York and investment banking and I would meet other people, the amount of excitement in our conversations was so revealing to me. I would be talking to other people and they would just be going off about how intricate their deals were or how interesting the underlying business was.

And I already kind of knew that I didn’t want to talk about that stuff. I can’t tell you the number of times I’ve been at a dinner or at a party and the hedge fund guys are just waiting until it’s appropriate for them to talk about their favorite undervalued business.

So I would really take a careful listen to what it is that you actually talk about. If you talk about things like salary and how easy it is to get into the business school from your firm, you might be more attracted to the gossipy nature of finance, and you might not actually enjoy the underlying job functions of finance. But if you get really excited by high-quality businesses and interesting investment structures, then finance might be a great place for you.

Decide What Work / Life Balance You Want

So step two, I would say, is trying to understand the work-life balance you want for your life and how much energy you’re willing to put into your work. And this is much more philosophical in nature, but I think it’s really important. You should try to think about what long-term goals are the most interesting to you.

Even if you have to work 75 hours and you don’t have time for anything else in investment banking, most people only do that at the start of their career, and there’s not always a direct trade-off with the rest of their life.

But that becomes much harder the older that you get. Sharp trade-offs start to appear by your late twenties if you want to have a family around society’s median age time, which often is your late twenties, it can be complicated to do so if you’re in a very demanding job.

If you want to do long-term travel before you have kids, it’s almost impossible if you’re going to be in a buy-side role where you have to be in a certain city. On the other hand, if you want to do things like retire early or buy multiple properties by the time you’re in your early thirties, finance might be the risk-adjusted easiest way to do that.

So again, if your main goal is just to earn money, then it might be better to stay in finance. So I would ask yourself a couple of these questions. Do you have any extremely ambitious wealth goals like being a 100 millionaire, or owning a sports team? Do you want to own multiple properties? Do you want to earn enough so you can self-fund a startup or other ventures?

Do You want to retire relatively early? Do you want to get married relatively early? Do you want to be able to take long-term trips for travel? Take an individual, a lot of these might not give you the answer, but I think it allows for some good self-reflection.

Find Mentors With Similar Values as You

The third step and I would say the most important is to network and reach out with people who you find have similar values to you. Now, finance has been around long enough that virtually every career choice has been thought about, and every decision and every problem has been encountered by someone already. So it’s your job to go and find those people so you can accurately make a decision for your own career.

You aren’t the first person to go into an investment banking internship and by week three wonder if you made the wrong choice. You’re not the first person to switch from hedge fund to venture capital and wonder if you should have done something else. All of these situations someone else has definitely been in and it’s your job to go talk to them.

There’s a book called Stumbling on Happiness by Dan Gilbert that I occasionally refer to when I think about this topic. There is this one excerpt I want to say, and it’s one way to make predictions about our own emotional futures is to find someone who is having the experience we are contemplating and ask them how they feel.

Instead of remembering our past experiences, in order to simulate our future experiences, perhaps we should simply ask other people to introspect other interstates. Ideally, I think you should be trying to reach out to people who are at least two big career decisions ahead of you, or maybe 5 to 10 years older than you.

The reason why I like reaching out to people who are 5 to 10 years older, is oftentimes if they’re very close in age to you, they might be more incentivized to protect their ego and seem like a sick guy. So they might not give you a truly transparent answer.

On this note. If you want to do something really radical, like start a small business or search fund or do something completely different like going to art, then know that it’s going to take a lot longer to find the right person to talk to, and that’s just a feature of the process.

Conclusion

I just want to close by saying that as much as I dislike certain aspects of finance, if I had to do it again, you know, it’s still picked investment banking and private equity. I learned that I definitely wasn’t passionate about finance, but I think I still learned a tremendous amount. It gave me good savings that I could make a real risk in my career, and it did open the door for things like business, school, and tech.

So even if I had to go back in time, I would still likely make the exact same decision. When you’re coming out of school and you want to be on a fast track, there really aren’t that many options.

And I think unless you have a strong inclination towards something, places like finance or consulting can be very good for your career. So hopefully asking these questions will help you understand whether finance is right for you.

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