As you may know, next to the blog posts I have been podcasting (is that an actual verb?) since October of 2019. This has led to a nice and interesting series of conversations you can all listen for free in your favorite podcast app. Below are the direct links :
Now, some of my amigos I reached out to expressed a wish to be interviewed in writing, which is why I will also sometimes have these blog post form interviews. And today we will have the pleasure to talk to Damian from Banker on FIRE.
How are you doing today Damian?
Let’s just say I’m doing well and making the best of the lockdown! Nothing like some sunny weather and extra time with the kids to keep me happy.
Where are you from and where do you live?
I have been living in London, UK for the past ten years. Prior to that, I’ve spent a long time living and studying in North America. As a first-generation immigrant, I moved around quite a bit in my life so along the way I have also had a chance to work and study in Germany and Brazil.
Your website name says it all, you are a Banker I take it? Have you been in the profession for a while? What is your specialty or area of expertise?
Yes, I am an investment banker. I specialize in M&A (mergers and acquisitions) and capital markets transactions for large corporations in Europe and the Middle East. I’ve been doing it for roughly a decade, having joined the industry after completing my MBA degree in the US.
You can read more about my journey here.
When I think of bankers, I think of bankers dealing with gigantic transactions like mergers and acquisitions of large firms earning them a fat commission. Is that image correct? Is everyone making good money?
That’s certainly the public perception of investment bankers out there and it’s probably true to a certain extent. The reality is that it is probably a bit more nuanced when you take a closer look. Some bankers specialize in massive deals that generate $5m+ commissions. Others choose to focus on specific sectors or smaller transactions.
When you start out, you typically support the more senior bankers on the deals they bring in. It pays well but the work can be truly backbreaking. As you progress up the ranks, you get your own team of “support staff” and your focus turns to cultivating clients and transactions of your own.
There are real superstars in the industry who can bring massive deals on their own and make tens of millions a year. Andrea Orcel is one example. Blair Effron is another.
However, there aren’t that many of them. Investment banking is a team sport and large banks have been disincentivizing “lone hunter” performance since the financial crisis. I would say the vast majority of investment bankers will never clear $1m a year in compensation. Getting to seven figures a year is reserved for senior directors or managing directors in large banks, which represent a small percentage of the overall banker “population”.
So yes, investment bankers do well but it is not a job that allows you to retire after a couple of years in the industry. Even more striking, bad saving and/or spending habits often mean that some bankers have nothing to show for the years of hard work they put in.
Bankers suffer a negative image by the public since the 2008 crisis, do you still feel that today?
I felt it much stronger when I first started in the industry. It was the aftermath of the financial crisis and people would look at you funny when you told them what you do for a living.
Since then, the public perception has changed. First of all, the worst offenders have left banking for greener pastures such as tech start-ups. Not entirely surprising you keep hearing about culture issues at some of those places!
Secondly, the industry has done well to police itself and guard against a culture of excess. Therefore, investment banking is a very different place today than it was before the financial crisis.
You still have some real characters, but mostly it’s just very intelligent, motivated and hard-working people.
If you want to find out what investment bankers are really like, you may want to read this (Seven Popular Misconceptions About Investment Bankers).
– Commercial break –
Last year I (Jonathan) read the book “Swimming with sharks” from Joris Luyendijk.
I thought it gave a good introduction into the world of banking in “The City”. If you are interested in learning more, I highly recommend it. And now back to the interview.
You have been blogging for one year, congratulations on your anniversary! Why did you start writing in the first place?
At the time I started the Banker On FIRE blog, I had been working in the industry for about 9 years. While I enjoy what I do, I felt the need for a creative outlet, a place where I can just be left alone and at peace with my thoughts and ideas. Blogging seemed the perfect choice. I’ve always liked writing. I used to design websites when I was much younger. And it’s a hobby that allows me to refine my investing skill set.
In my mind, you couldn’t ask for a better combination!
You mention that you want to help others on their journey to Financial Independence, that is great, where are you yourself on that path?
This isn’t an easy question to answer because financial independence means different things to different people.
Some will happily live their entire lives on a pot of $500k. Others (and I know quite a few in this category) can’t imagine life on less than $500k per year. Everyone has a different goal in mind.
As someone who lives in central London and has two young children and little free time, my cost of living is relatively high. Therefore, my FI “number” is also pretty high, though it’s obviously not as silly as passive income of $500k/year. Could I pack it all in today and live a simpler life in a lower-cost location? Most probably yes. Is the stash big enough so that I don’t have to worry about getting laid off and not working for a long while? Yes.
However, I quite like my life at the moment and so I will continue working and making progress towards my “number”.
When did you have your FI lightbulb moment? When did you start getting serious with trying to reach FI?
A few years ago, I took my family on a beach holiday. I had a rough period at work and was really looking forward to a proper break. It was August and things were quiet at work. We got to our destination on Friday morning. On Friday night, one of the biggest clients of our firm mandated us on a deal and we went into full-on execution mode. I worked throughout the weekend and most of the following week. On holiday. In August.
I’ve always been very proactive when it came to saving and investing money. However, this was the experience that really brought the importance of financial independence to the fore. To make things worse, the deal died the day after I came back from holiday, so all the hard work went to waste.
I remember being stuck on a long conference call in my hotel room and sketching a roadmap to FI there and then.
What tips would you have for the readers who are just getting started with their journey to Financial Independence? and is it a good time at all to start during this pandemic?
First of all, I think it’s the best possible time to start. Many of the people who are financially independent today started in the depths of the last crisis. I am sure there are future millionaires being minted as I write these words.
The advice I would give to people is to just start. You don’t need to be perfect and read every book on investing. Just create a budget, put some money aside every month and use it to repay debt or buy index funds. It will become a habit very quickly and you can always refine your approach along the way. People who strive to do everything perfectly never get started.
Do you feel that as professional in the finance industry your colleagues are as aware as you about all personal finance topics? As a Msc in Business Engineering myself, I learned all about corporate finance at university but digging into investing the stock markets, saving money and investing and so on only happened after university. Do you feel it is the same with your colleagues?
This is a great question. As you well know, theory and practice are very different. Some of the smartest, most successful bankers I know are horrible at managing their personal finances. And some people who aren’t even in the finance industry to begin with do an outstanding job. So I would say there’s very little correlation.
Do you have a worst financial decision story?
Indeed I do! Back in 2008, a friend of mine and I decided to start day trading. This is before I knew how high-frequency traders take advantage of retail day traders.
It took me about a month to lose $3k at which point I realized there have got to be more effective ways of building wealth.
If you could advise your younger self about anything – what would you say?
Have a plan, work hard, enjoy life and don’t worry about anything else. Good things will happen. It sounds cliche but it really is true!
And now just like on the podcast, here are the same “Quick FIRE” questions:
- What has been your best investment so far? Our rental property. 18% annualized returns over a decade.
- What is a book you would recommend to anyone? “Power: Why Some People Have It – And Others Don’t” by Jeffrey Pfeffer. A must for anyone who is looking to elevate their position in life.
- What is the best purchase you have made for under £100 ? Not under £100 but I bought a pair of Oliver Sweeney boots for £350. It was five years ago and they give me joy every single time I put them on. Best purchase ever.
Inspiring Interview series – Meeting personalities with unique money stories
With what happened in 2008, it is easy to jump to conclusions and adhere to the common negative image of the “evil bankers”. This is why like in the book “Swimming with Sharks”, I go to talk to one and find out for myself 😉! And to refer to the book with people like Damian in Business, I feel reassured that there actually is a pilot in the cockpit.
Damian, thank you again so much for according us this interview and speak to you on Twitter @bankeronfire!
If you liked this article, do follow us on social media as well for more great content, check our Facebook, Instagram, Twitter, and join our e-mail list. I would love to connect with you!
Disclosure: This post may contain affiliate links. That means I may make a small commission (at no cost to you) if you make a purchase. This will help to support Joney Talks!