The Ultimate Guide to Becoming an Investment Banker
Looking to climb the ladder in the financing industry? Then, look no further than a career as an investment banker. Investment bankers aren't your everyday bank associate; it's a high-profile position that demands only the best in the sector. There are steps you need to take to prepare yourself for one of the most intense career fields in the financing industry. Below is the ultimate guide to becoming an investment banker, what the job entails, and how you can soar above your competition.
Acquire Your Master's Degree
Because this career can be very challenging, it's important you take your time learning and honing the necessary skills. The best way you can do so is to get your master's degree. More specifically, you'll need to focus on your master's degree in finance. You can also pursue alternative degrees such as economics or business with a minor in finance. How you go about your education is ultimately up to you. Regardless of the route you take, you'll need to figure out how you're going to pay for your degree. A master's degree in finance can be expensive; you're looking at around $55,000 on average. Though, it should be mentioned that the cost will depend on a few factors.
These factors include the institution you're attending, the location, and whether it's online or in-person. One thing we need to point out is that it's possible to spend over $85,000 on your master's degree. This is a rather steep cost; one you might not be able to afford out of pocket. However, there are plenty of effective options you can finance a college education. You can go the traditional route of taking out a student loan. Student loans can be used to pay for anything relating to your education. It can help you afford your textbooks, equipment such as a new laptop, software for required courses, and school supplies. You can also use your student loans for room and board should you decide to study on campus.
As beneficial as student loans are, there is the drawback of paying back the debt. You do have a six-month grace period where you don't have to pay anything for the time being. It gives you plenty of time to find a position as an investment banker. However, why pay such a high cost when you don't have to? Rather than work to pay off debt every month, you can apply for a scholarship instead. A scholarship is a government-regulated form of financial aid that's designed to help students further their education at no additional cost.
Scholarships are often regarded as exclusive rewards given to star pupils. However, that's only half true; the truth of the matter is everyone can obtain a scholarship by applying for one through an online search and application platform. These websites are also government-regulated, so you don't have to worry about being scammed. One thing to note before you search is you need pay extra attention to your options. Not all of them cover the entirety of your degree program. There are those select few that only finance up to half the price.
Understand the Different Types of Investment Banking
There are two types of investment banks: industry and corporate. If you opt for working in the industry portion, you'll be put inside a small team that's designed to tackle certain markets. Corporate investment banking works a bit differently. Instead of splitting off into teams, you'll work separately to figure out ways you can raise capital. You'll be expected to analyze various companies and their equity, how much they have in stocks, deal with potential mergers.
As for the places of employment themselves, investment bankers typically work in one of three categories: boutique, middle market, and bulge bracket banks. A boutique bank helps clients manage their investments through personal or specialized means. Middle market banks are firms that aim to assist companies, governments, and non-profits that have at least $50 million in revenue. Bulge bracket banks are what people use to handle transactions in the billions. They're the biggest multi-national banks around, so it's highly competitive. You need to be at the top of your game before applying.
The Downsides of Being an Investment Banker
Where there are pros, there are also cons and investment banking is no exception. Before you can make a definitive career decision, it's critical that you know what the drawbacks are. Investment banking can be an extremely rewarding career, but it's also one of the most demanding. The first con you need to know about is how repetitive the work can get. As an investment banker, you'll be doing almost the exact same tasks, like filing reports and analyzing potential risk factors every day. The results may differ, but the steps and processes involved will start to blend together.
The next con is having difficulty finding a work-life balance, which is a top priority today. Traveling the road to retirement can be long and no one's life should ever be solely about their job. Not having anything else to do after a long day of work can cause plenty of issues. That's not to say investment banking is a lifetime commitment; you can still have a life outside of it. However, investment banking is very demanding work, so you might find it increasingly difficult to find time to indulge your favorite pastimes.
The Pros of Being an Investment Banker
Now that you know the challenges you'll be facing, let's get into what makes being an investment banker so rewarding. First off, you'll be privy to an amazing benefits package. In addition to receiving an average annual salary of $70,000, you could receive commission bonuses, get comprehensive insurance plans, and even have access to stock options. The second pro involves increasing your professional network and contacts. Investment banking are filled with established professionals who have been in the field for years. You can learn a lot from them and even use them as credible references should you aim for an even higher position.
