MBA vs Home Ownership

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dontmindthegaap
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MBA vs Home Ownership

Post by dontmindthegaap » Tue Sep 11, 2018 1:11 pm

Hello fellow Bogleheads,

I am 25 year-old currently working in the financial services industry. My current pay is $75,000/yr + 7.5% bonus. I am a level 2 candidate for the CFA exam June/2019. I am debating buying a house with my wife next year or going to a top MBA program part-time in two years. We currently have $28,107.58 invested (we save $1,200 towards this every month) for a big investment. Conservatively, I am assuming that I would get a $50,000 premium to my current salary + bonus after the MBA. There are only two schools that meet the criteria of being in Chicago and being a top ten MBA program. The cost of tuition:

Northwestern $137,910.00
U of Chicago $138,400.00

I mentioned the CFA program because I think once I finish the CFA I could potentially increase my pay going into equity research or similar field. Even though I do not think the pay increase associated with finishing the CFA would be similar to getting an MBA.

Other information:
Current Monthly Rent: $1,700
Wife's Salary: $47,000/yr
Outstanding debt: Car loan at 3.8% interest; there is only $3,000 left to pay.

If buying a house: (Hypothetical numbers below)
Mortgage (Monthly): Assuming a $200,000 mortgage at 4% interest, it would be $955 a month. Plus around $350 in HOA fees. Total: $1,305.
Chicago Property Tax: 2% - Assuming a $200,000 home it would be around $4,000/yr.

Please let me know your thoughts.

Thank you,
dontmindthegaap

rjbraun
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Re: MBA vs Home Ownership

Post by rjbraun » Tue Sep 11, 2018 3:02 pm

You wrote that you would attend the MBA program part-time. In that case, would you not plan to continue with your current job and earn the corresponding salary?

Without knowing exact details of your current situation, I would suggest staying in the workforce and attending part-time (at night, most likely), especially if you want to stay in financial services. Ideally, you could also get your employer to foot the bill (partially, at least) for your MBA.

I would be reluctant to give up the income from my job for almost all MBA programs unless I was highly confident that I would want to work in a field completely different than my current one upon graduation. In that case, the MBA would, one hopes, enable you to enter an industry you might otherwise have difficult getting into on your own.

Fwiw, I went to business school at night while I was working and my employer covered the tuition. I did return full-time part way through (due to organizational changes at my employer), but my tuition costs were then covered by a graduate assistant position. So, I didn't really pay any tuition and while I did forego some income the freedom from a job was worth it to me.

FlyAF
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Re: MBA vs Home Ownership

Post by FlyAF » Tue Sep 11, 2018 3:07 pm

I certainly wouldn't pay 130+ grand for an MBA, I don't care if it was from the #1 program. Where would that money be coming from if you did decide to go that route?

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wabbajack
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Re: MBA vs Home Ownership

Post by wabbajack » Tue Sep 11, 2018 3:14 pm

I'm about your age and work in a similar industry. My knee-jerk advice is this: Don't buy the house until you're ready to upsize your life. The two of you will most likely be happier in a decent 2BR apartment until you're ready to start thinking of school districts for kids.

I don't know how useful an MBA is in your field relative to a CFA. You have to consider the cost of getting a CFA (Does employer pay for exams and study material?) relative to the cost of getting an MBA (Does employer cover tuition?). Wife's salary seems to be on the low side. I'm guessing she just graduated and started an entry level position? If increasing HHI is your goal, what does she think her prospects of salary growth are? It's not uncommon to go from $50k to $70k in the first couple of years in certain fields.

What is the opportunity cost of getting the MBA? If you worked an extra 10-20 hours per week at your current position and get the CFA, can you get a promotion and make at least half ($25k) of your expected MBA salary increase?

HEDGEFUNDIE
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Re: MBA vs Home Ownership

Post by HEDGEFUNDIE » Tue Sep 11, 2018 3:15 pm

I started my MBA part time at Kellogg, and then after a year in quit my job and transferred to the full time program (afaik Booth does not have this option).

My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.

1. So yes it’s worth it, if you are targeting a lucrative career afterwards (not everyone is).

2. CFAs are really only valued in investment management. I received a top corporate finance offer without a CFA, just my MBA. Is investment management your field of choice?

3. What’s the rush to buy a house? During your MBA you may decide to recruit for jobs outside of Chicago

Nissanzx1
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Re: MBA vs Home Ownership

Post by Nissanzx1 » Tue Sep 11, 2018 3:20 pm

I seems like a ton of money for an MBA, but only you will know if it's worth it for you.

Good news is you are so young, there is plenty of time to recover from cash flowing that education. At the minimum, I'd want $25-50K more per year after outlaying all that money and work.

Dottie57
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Re: MBA vs Home Ownership

Post by Dottie57 » Tue Sep 11, 2018 3:31 pm

HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
I started my MBA part time at Kellogg, and then after a year in quit my job and transferred to the full time program (afaik Booth does not have this option).

My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.

1. So yes it’s worth it, if you are targeting a lucrative career afterwards (not everyone is).

2. CFAs are really only valued in investment management. I received a top corporate finance offer without a CFA, just my MBA. Is investment management your field of choice?

3. What’s the rush to buy a house? During your MBA you may decide to recruit for jobs outside of Chicago
In the thread’s context, what s a CFA? Certified Financial Advisor?

HEDGEFUNDIE
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Re: MBA vs Home Ownership

Post by HEDGEFUNDIE » Tue Sep 11, 2018 3:32 pm

Dottie57 wrote:
Tue Sep 11, 2018 3:31 pm
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
I started my MBA part time at Kellogg, and then after a year in quit my job and transferred to the full time program (afaik Booth does not have this option).

My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.

1. So yes it’s worth it, if you are targeting a lucrative career afterwards (not everyone is).

2. CFAs are really only valued in investment management. I received a top corporate finance offer without a CFA, just my MBA. Is investment management your field of choice?

3. What’s the rush to buy a house? During your MBA you may decide to recruit for jobs outside of Chicago
In the thread’s context, what s a CFA? Certified Financial Advisor?
Chartered Financial Analyst. It is a corporate finance and asset management certification that takes many years to achieve.

gusan
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Re: MBA vs Home Ownership

Post by gusan » Tue Sep 11, 2018 3:34 pm

Go for the MBA from a top tier program, it will pay for itself many times over. My preference would be to go full time if possible.

3504PIR
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Re: MBA vs Home Ownership

Post by 3504PIR » Tue Sep 11, 2018 3:49 pm

I think you're looking at this the wrong way. Look at it from the "where do I want to be in 20 years" lens rather than MBA vs house.

I would certainly go to one of those $130k+ schools and I would not listen to those who say its foolish.

Texanbybirth
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Re: MBA vs Home Ownership

Post by Texanbybirth » Tue Sep 11, 2018 4:02 pm

If you can get admitted, I'd go to UC or NW for an MBA in a heartbeat FULL-TIME. Get the most out of the opportunity. Don't buy the house. Y'all are young, and after you finish your program you might want to live elsewhere. You have plenty of time to buy a house, and will still have plenty of time AFTER you finish your MBA.

About half the financial analysts I know have a CFA, the other half don't (duh). A lot can depend on the boss/portfolio manager and what he prefers in his analysts. Some of the CFAs I know can't even tie their own shoes; they were just very good test-takers. You can do very well without a CFA, especially if you get a top tier MBA.

boogiehead
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Re: MBA vs Home Ownership

Post by boogiehead » Tue Sep 11, 2018 4:05 pm

I think you have to ask yourself a few more questions:

1) Are you passionate about getting an MBA, a certain specialization, wanting to change career or are you only concerned about being able to earn a higher wage as you progress in your career? If you are only concerned about the latter than I believe getting a respectable certification such as CFA, CPA, etc.... would be the more financially prudent route.
2) Does your current employer subsidize continuing education for MBA?
3) I don't believe home ownership should be tied into the decision of getting an MBA or not. You could do both or neither, just depends what you're ultimate goal is.... :confused

TheNightsToCome
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Re: MBA vs Home Ownership

Post by TheNightsToCome » Tue Sep 11, 2018 10:38 pm

I earned CFA first, then graduated from Booth with concentrations in finance and accounting. The CFA is a good foundation, but I learned much more at Booth.

If I was your age I would plan to obtain the MBA (and the CFA, albeit the latter would be less important once you have the MBA), and if your interest is finance, accounting, investment management, or investment banking then I would choose Booth rather than Kellogg.

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whodidntante
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Re: MBA vs Home Ownership

Post by whodidntante » Tue Sep 11, 2018 10:49 pm

Say hello to Dr. Fama for me.

gotester2000
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Re: MBA vs Home Ownership

Post by gotester2000 » Wed Sep 12, 2018 2:19 am

gusan wrote:
Tue Sep 11, 2018 3:34 pm
Go for the MBA from a top tier program, it will pay for itself many times over. My preference would be to go full time if possible.
+1

It seems that you are not ready to buy a house yet. Improve your skills and income and then go for it.

Valuethinker
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Re: MBA vs Home Ownership

Post by Valuethinker » Wed Sep 12, 2018 2:49 am

dontmindthegaap wrote:
Tue Sep 11, 2018 1:11 pm
Hello fellow Bogleheads,

I am 25 year-old currently working in the financial services industry. My current pay is $75,000/yr + 7.5% bonus. I am a level 2 candidate for the CFA exam June/2019. I am debating buying a house with my wife next year or going to a top MBA program part-time in two years. We currently have $28,107.58 invested (we save $1,200 towards this every month) for a big investment. Conservatively, I am assuming that I would get a $50,000 premium to my current salary + bonus after the MBA. There are only two schools that meet the criteria of being in Chicago and being a top ten MBA program. The cost of tuition:

Northwestern $137,910.00
U of Chicago $138,400.00

I mentioned the CFA program because I think once I finish the CFA I could potentially increase my pay going into equity research or similar field. Even though I do not think the pay increase associated with finishing the CFA would be similar to getting an MBA.

Other information:
Current Monthly Rent: $1,700
Wife's Salary: $47,000/yr
Outstanding debt: Car loan at 3.8% interest; there is only $3,000 left to pay.

If buying a house: (Hypothetical numbers below)
Mortgage (Monthly): Assuming a $200,000 mortgage at 4% interest, it would be $955 a month. Plus around $350 in HOA fees. Total: $1,305.
Chicago Property Tax: 2% - Assuming a $200,000 home it would be around $4,000/yr.

Please let me know your thoughts.

Thank you,
dontmindthegaap
You are too early to buy a house. Houses can wait - Shiller's data shows they are generally poor investments. Exceptions are basically houses in the coastal cities (E & W) where zoning contributes to a housing shortage. (There is some statistic that if you could reach the density of Manhattan in Palo Alto then US GDP would increase by ?2?% in and of itself - Edward Gleaser at Harvard is the go to on this kind of research).

If you continue in financial analysis or portfolio management you will need the CFA. Arguably, if you stay in those fields you do not need an MBA.

The experience of a top MBA is unparalleled. It will shape your career and your life for the rest of it. That said, the full time programmes are better than the part time ones. One problem is the recruiters know the full time ones are harder to get into, and so screen out the part time students. You need to make sure you will have the same classes, and career resources, of the full timers.

But to go to Booth or Kellog? I'd go in a flash. Do it before you have kids, though, if you can.

Be prepared to have your eyes opened wide. New vistas & horizons.

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wabbajack
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Re: MBA vs Home Ownership

Post by wabbajack » Wed Sep 12, 2018 9:51 am

HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?

fourkids
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Re: MBA vs Home Ownership

Post by fourkids » Wed Sep 12, 2018 10:08 am

Chicago or Kellogg MBA. All the way.
Forget about the house- just a distraction. focus on your education, networking and job opportunities in your 20's. it will work out well for you.
It worked out very well for me.
Good luck.

HEDGEFUNDIE
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Re: MBA vs Home Ownership

Post by HEDGEFUNDIE » Wed Sep 12, 2018 11:06 am

wabbajack wrote:
Wed Sep 12, 2018 9:51 am
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
Two primary paths I can think of to get a $220k job your first year out of a top MBA program:

1. Investment banking or private equity. These will pay $125k-$140k base, plus 50%-100% bonus.

2. Business roles in Bay Area or Seattle tech companies. This includes business strategy, product management, product marketing, corporate finance roles. Base salary will be $140k-$150k, plus 15%-20% bonus, plus $30k-$40k/yr of stock grant that have the potential to grow significantly by the time of vesting.

#2 was my path. The initial offer was $190k total but as of this month the stock portion has doubled so I ended up with $220k for my first year.

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wabbajack
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Re: MBA vs Home Ownership

Post by wabbajack » Wed Sep 12, 2018 12:02 pm

HEDGEFUNDIE wrote:
Wed Sep 12, 2018 11:06 am
wabbajack wrote:
Wed Sep 12, 2018 9:51 am
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
Two primary paths I can think of to get a $220k job your first year out of a top MBA program:

1. Investment banking or private equity. These will pay $125k-$140k base, plus 50%-100% bonus.

2. Business roles in Bay Area or Seattle tech companies. This includes business strategy, product management, product marketing, corporate finance roles. Base salary will be $140k-$150k, plus 15%-20% bonus, plus $30k-$40k/yr of stock grant that have the potential to grow significantly by the time of vesting.

#2 was my path. The initial offer was $190k total but as of this month the stock portion has doubled so I ended up with $220k for my first year.
I work 35hrs per week at my day job. My gross last year was just over $100k. This year my base is $90k and expect a bonus of over $20k. I assume you don't make $200k working 35hrs per week?
I did the math and figured that if I had been working 70hrs per week for 50 weeks this year, I would be grossing ~$200k. And that's before any promotions. The guy in the corner office next to me probably does something like that, but I haven't found the motivation to want to do that yet. Maybe that's why I'm ambivalent about MBAs.

HEDGEFUNDIE
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Re: MBA vs Home Ownership

Post by HEDGEFUNDIE » Wed Sep 12, 2018 12:15 pm

wabbajack wrote:
Wed Sep 12, 2018 12:02 pm
HEDGEFUNDIE wrote:
Wed Sep 12, 2018 11:06 am
wabbajack wrote:
Wed Sep 12, 2018 9:51 am
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
Two primary paths I can think of to get a $220k job your first year out of a top MBA program:

1. Investment banking or private equity. These will pay $125k-$140k base, plus 50%-100% bonus.

2. Business roles in Bay Area or Seattle tech companies. This includes business strategy, product management, product marketing, corporate finance roles. Base salary will be $140k-$150k, plus 15%-20% bonus, plus $30k-$40k/yr of stock grant that have the potential to grow significantly by the time of vesting.

#2 was my path. The initial offer was $190k total but as of this month the stock portion has doubled so I ended up with $220k for my first year.
I work 35hrs per week at my day job. My gross last year was just over $100k. This year my base is $90k and expect a bonus of over $20k. I assume you don't make $200k working 35hrs per week?
I did the math and figured that if I had been working 70hrs per week for 50 weeks this year, I would be grossing ~$200k. And that's before any promotions. The guy in the corner office next to me probably does something like that, but I haven't found the motivation to want to do that yet. Maybe that's why I'm ambivalent about MBAs.
In the case of investment banking you definitely don’t work 35 hours/week. More like 80-100 hours.

But in the case of tech? 40 hours is typical. I work for a tech MegaCorp and it’s normal MegaCorp hours, 9-5. And yes I’m getting paid $220k for doing so.

As for your case, are you paid on a hourly basis? More likely you are on salary so it doesn’t matter how long you work, you get paid the same $100k. So it’s not really about how much you want to work, it’s more about what the role allows you to make.

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wabbajack
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Re: MBA vs Home Ownership

Post by wabbajack » Wed Sep 12, 2018 1:17 pm

HEDGEFUNDIE wrote:
Wed Sep 12, 2018 12:15 pm
In the case of investment banking you definitely don’t work 35 hours/week. More like 80-100 hours.

But in the case of tech? 40 hours is typical. I work for a tech MegaCorp and it’s normal MegaCorp hours, 9-5. And yes I’m getting paid $220k for doing so.

As for your case, are you paid on a hourly basis? More likely you are on salary so it doesn’t matter how long you work, you get paid the same $100k. So it’s not really about how much you want to work, it’s more about what the role allows you to make.
The problem with tech is that it is in Bay Area, which I have been to and love. But the problem with Bay Area is that I have to make at least $150k to be on par with where I am right now. I am on salary, but the bonus is based on billable hours. Hence going to 70 hours per week would mean an extra 1750 hours per year, valued at $50 per hour, which works out to $87.5k. That would be on top of my existing compensation. We're getting close to $200k in a LCOL city at that point.

If you told me I could go to MBA school for a couple of years and then walk across the street and double my compensation for the same hours, I'd be signing up today.

Texanbybirth
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Re: MBA vs Home Ownership

Post by Texanbybirth » Wed Sep 12, 2018 1:24 pm

HEDGEFUNDIE wrote:
Wed Sep 12, 2018 12:15 pm
wabbajack wrote:
Wed Sep 12, 2018 12:02 pm
HEDGEFUNDIE wrote:
Wed Sep 12, 2018 11:06 am
wabbajack wrote:
Wed Sep 12, 2018 9:51 am
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
Two primary paths I can think of to get a $220k job your first year out of a top MBA program:

1. Investment banking or private equity. These will pay $125k-$140k base, plus 50%-100% bonus.

2. Business roles in Bay Area or Seattle tech companies. This includes business strategy, product management, product marketing, corporate finance roles. Base salary will be $140k-$150k, plus 15%-20% bonus, plus $30k-$40k/yr of stock grant that have the potential to grow significantly by the time of vesting.

#2 was my path. The initial offer was $190k total but as of this month the stock portion has doubled so I ended up with $220k for my first year.
I work 35hrs per week at my day job. My gross last year was just over $100k. This year my base is $90k and expect a bonus of over $20k. I assume you don't make $200k working 35hrs per week?
I did the math and figured that if I had been working 70hrs per week for 50 weeks this year, I would be grossing ~$200k. And that's before any promotions. The guy in the corner office next to me probably does something like that, but I haven't found the motivation to want to do that yet. Maybe that's why I'm ambivalent about MBAs.
In the case of investment banking you definitely don’t work 35 hours/week. More like 80-100 hours.

But in the case of tech? 40 hours is typical. I work for a tech MegaCorp and it’s normal MegaCorp hours, 9-5. And yes I’m getting paid $220k for doing so.

As for your case, are you paid on a hourly basis? More likely you are on salary so it doesn’t matter how long you work, you get paid the same $100k. So it’s not really about how much you want to work, it’s more about what the role allows you to make.
I would imagine high-quality competition for the latter kinds of jobs is significant. What was your experience upon graduation? Where did you get your MBA?

HEDGEFUNDIE
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Re: MBA vs Home Ownership

Post by HEDGEFUNDIE » Wed Sep 12, 2018 1:38 pm

Texanbybirth wrote:
Wed Sep 12, 2018 1:24 pm
HEDGEFUNDIE wrote:
Wed Sep 12, 2018 12:15 pm
wabbajack wrote:
Wed Sep 12, 2018 12:02 pm
HEDGEFUNDIE wrote:
Wed Sep 12, 2018 11:06 am
wabbajack wrote:
Wed Sep 12, 2018 9:51 am


Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
Two primary paths I can think of to get a $220k job your first year out of a top MBA program:

1. Investment banking or private equity. These will pay $125k-$140k base, plus 50%-100% bonus.

2. Business roles in Bay Area or Seattle tech companies. This includes business strategy, product management, product marketing, corporate finance roles. Base salary will be $140k-$150k, plus 15%-20% bonus, plus $30k-$40k/yr of stock grant that have the potential to grow significantly by the time of vesting.

#2 was my path. The initial offer was $190k total but as of this month the stock portion has doubled so I ended up with $220k for my first year.
I work 35hrs per week at my day job. My gross last year was just over $100k. This year my base is $90k and expect a bonus of over $20k. I assume you don't make $200k working 35hrs per week?
I did the math and figured that if I had been working 70hrs per week for 50 weeks this year, I would be grossing ~$200k. And that's before any promotions. The guy in the corner office next to me probably does something like that, but I haven't found the motivation to want to do that yet. Maybe that's why I'm ambivalent about MBAs.
In the case of investment banking you definitely don’t work 35 hours/week. More like 80-100 hours.

But in the case of tech? 40 hours is typical. I work for a tech MegaCorp and it’s normal MegaCorp hours, 9-5. And yes I’m getting paid $220k for doing so.

As for your case, are you paid on a hourly basis? More likely you are on salary so it doesn’t matter how long you work, you get paid the same $100k. So it’s not really about how much you want to work, it’s more about what the role allows you to make.
I would imagine high-quality competition for the latter kinds of jobs is significant. What was your experience upon graduation? Where did you get your MBA?
It’s true, for the tech MegaCorps that everyone has heard of competition is intense. But there are a lot of smaller tech companies that are less well known who pay at these levels. For example, Palo Alto Networks, Box, Nutanix, etc. The upside to these are that they are faster growing and so your RSUs have more room to run, and enterprise-facing tech is less “sexy” so the competition is somewhat less intense.

I had 7 years of work experience at hedge funds, consulting and corporate strategy before starting my Kellogg MBA.

lvrpl
Posts: 82
Joined: Wed Feb 25, 2015 3:38 pm

Re: MBA vs Home Ownership

Post by lvrpl » Wed Sep 12, 2018 3:41 pm

wabbajack wrote:
Wed Sep 12, 2018 9:51 am
HEDGEFUNDIE wrote:
Tue Sep 11, 2018 3:15 pm
My pre-MBA pay was $120k, my post MBA pay is $220k (tech RSU appreciation is really something else). And my current job only hires top MBAs.
Quite a few MBAs from 6-figure schools in the house. I'm hijacking this thread because I've been told more than once by a good friend that I should look into getting an MBA. He's a former PE guy who is semi-retired in his mid-40s. I turn 27 in a month.

I didn't think much of it at the time because I'm an actuary (one exam away from FSA). My impression and experience is that MBAs are relatively unnecessary in my field. For those with MBAs from prestigious schools, how exactly has it helped you go from $120k to $220k?
To be fair, it's a bit above the norm to get $220k your first year out of business school, even at the top schools (HEDGEFUNDIE did a good job of providing examples of a few of the jobs where you can do it, namely tech in the current environment or investment banking). It definitely happens, but a majority of students won't be there (especially if they're not counting any one-time signing bonuses as part of their first-year comp). But it's not unusual to get to $220k fairly quickly. And I think there's still big value of a top MBA beyond that - it gets you in the mix for bigger jobs beyond your first few years.

In my case, I was making ~$70k before my MBA (I went to a peer school of Chicago/Kellogg full time). My first year out, my base + bonus was ~$160k. Year 2 was more like $180k. And now 5 years out, base + bonus + equity award is a bit north of $400k. I've also never been in tech or banking. Probability of me getting any of the jobs I've had since business school without a top MBA would have been very, very slim. Having the top MBA didn't guarantee I'd get them, but it qualified me to be in the pool to compete for them. So for me, it was an absolute no-brainer from a financial perspective.

Now, I have certainly worked more than 40 hours per week in every job since graduating from business school. Probably 65-70 in my first job (first couple of years out of business school). And now it's more like 45-55 most weeks, depending on the projects that are going on. In my experience, I don't see a lot of jobs where you make an income significantly higher than the median household income without working more than the average 35-40 hour work week.

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