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How much money can a quant ACTUALLY make?

Connor Whelan

New Member
I'm interested in finding out how much a quant can actually make nowadays. Obviously you can throw out names like David Shaw and Ken Griffin who made billions from their hedgefunds, but they got started awhile ago when quant finance was still up and coming. Are the talented quants nowadays just destined to make the six figure salary until they've worked 10+ years at the same hedgefund and maybe start getting a 1 or 2 million dollar bonus. It seems to me the only way to be making 8 or more figures a year in quant finance is to be a hedgefund founder and manager. Or is it actually quite possible to climb the ranks so high in an already existing fund that you start making 8 figures a year?

Another question I have that stems from this one, what are your opinions on how hard it is to start a hedgefund compared to a tech/software start up, are VC backed startup hedgefunds even a thing?
 

financeguy

Active Member
Making 8 figures is not something you do by simply being good, or great, at your job and climbing ranks. To make 8 figures, you either have to own the place, or be personally responsible for 9 figures of profit for the firm as a revenue generating producer on the investing side, whether its via quant methods or otherwise. Doing quant work without a pnl to your name will never get you 8 figures (okay I should never say never, but basically). It should be said, making 8 figures is extremely rare no matter what you do. Making 7 figures is rare enough. Heads of quant groups at investment banks and premier hedge funds are making low 7s. Reasonably experienced quants at brand name shops who are not doing the investing themselves, but are doing derivatives modeling and quant support for trading desks or investors, are anywhere from mid to high 6s. This all assumes you're at a solid place and are really good. There are certainly plenty of people in the low 6s. All of this can vary, to be sure, but the one thing that is definitely true is that you should absolutely not go into this expecting 8 figures to be a reasonable possibility.

Starting up a successful hedge fund is fairly straightforward, if you have access to a couple hundred million dollars. If you were a VC, why would you give some dude seed money when you can just give that money to an established hedge fund with a track record? Maybe you could come up with an answer to that, but it would definitely involve taking lower fees and allowing for more investor liquidity... which probably means you need even more money to make the operation worthwhile.
 

financeguy

Active Member
I sort of understand why he's asking, even if it is asked in kind of a douchey manner. He wants to know the potential money he can make from different career paths. To further expound on this, no matter what you do, you won't just drift over time into making over a million a year anywhere, in any job. That sort of money you only see if you're at the top of your industry, and if your industry is one that actually pays a few people that sort of money. Financial services, being a quant included, is one such industry. But that doesn't mean you'll necessarily see that money, even if you work for 30 years in it.
 

Four

Member
Don't mean to revive a dead thread, but if your end goal is to become as rich as possible, is going into quant finance even worth it (when you factor in the amount of effort and competition out there)? Or is it easier to become wealthy by starting your own company and eventually selling it? I have heard that becoming an entrepreneur is the best way to become rich, but have no idea how it compares to working as a quant.

I think many people are thinking about this as the quant field matures and we look at the intensity of competition and amount of effort necessary just to even break into the industry (much less excel in it)!
 

alain

Older and Wiser
Don't mean to revive a dead thread, but if your end goal is to become as rich as possible, is going into quant finance even worth it (when you factor in the amount of effort and competition out there)? Or is it easier to become wealthy by starting your own company and eventually selling it? I have heard that becoming an entrepreneur is the best way to become rich, but have no idea how it compares to working as a quant.

I think many people are thinking about this as the quant field matures and we look at the intensity of competition and amount of effort necessary just to even break into the industry (much less excel in it)!
start your own business. Even better, start your own bank. The probability of failure of a bank in US now-a-days is less than 1% (any bank - I'll find the link and post it here)
 

Steve Wu

Member
start your own business. Even better, start your own bank. The probability of failure of a bank in US now-a-days is less than 1% (any bank - I'll find the link and post it here)
But the bigger question is : how to start a bank? LOL
 

alain

Older and Wiser
But the bigger question is : how to start a bank? LOL
That is easier than you think, at least in a Caribbean island. 10 years ago you only needed 50k in Cayman island and you were in business.
 

Daniel Duffy

C++ author, trainer
"According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. "

Something to think about..
 
Last edited:

alain

Older and Wiser

financeguy

Active Member
Career advice here is always so interesting:)
I don't think there's a correct answer to your question. There's trade-offs for any career decision, and it's never as simple as "what will get me the richest quickest". If you can start up a successful company and either run it or sell it, then sure, generally that has always been the most straightforward path to getting super rich, tech boom or not. But it's not like that's easy to do. Becoming a quant is a much easier, not by a small margin. If you choose the entrepreneurial path, you're much more likely to just be broke for an extended period of time. On the other hand, if you're working as a quant, it's incredibly unlikely that you'll be broke, ever. There's much more middle ground to be relatively successful and comfortable in life as a quant than there is in entrepreneurship. The way to be hugely financially successful as a quant is to work for a quantitative hedge fund, being a front office, market facing quant and designing the trading strategies. At some stage, you could start your own quant fund. There are parts of quant finance that are less well-paid now than they used to be (e.g. modeling quant for sell-side derivative trading desk), but quants who actually produce revenue, rather than support revenue generators, will always get paid. Of course, that's a very challenging path for any quant, few actually achieve that level of success, and it certainly is not a quick buck (>10y plan, optimistically). But, hey, if you don't, you still have a nice income and are able to support a family. At the end of the day it all comes down to what you're good at and what you want to do. If you have a great idea for a start up and the fire in you to build a business, then maybe give that a shot. If you intrinsically enjoy quantitative work, are passionate about financial markets, and have the drive to produce revenue using your skills, then being a quant is a great choice.
 

Connor Whelan

New Member
I don't think there's a correct answer to your question. There's trade-offs for any career decision, and it's never as simple as "what will get me the richest quickest". If you can start up a successful company and either run it or sell it, then sure, generally that has always been the most straightforward path to getting super rich, tech boom or not. But it's not like that's easy to do. Becoming a quant is a much easier, not by a small margin. If you choose the entrepreneurial path, you're much more likely to just be broke for an extended period of time. On the other hand, if you're working as a quant, it's incredibly unlikely that you'll be broke, ever. There's much more middle ground to be relatively successful and comfortable in life as a quant than there is in entrepreneurship. The way to be hugely financially successful as a quant is to work for a quantitative hedge fund, being a front office, market facing quant and designing the trading strategies. At some stage, you could start your own quant fund. There are parts of quant finance that are less well-paid now than they used to be (e.g. modeling quant for sell-side derivative trading desk), but quants who actually produce revenue, rather than support revenue generators, will always get paid. Of course, that's a very challenging path for any quant, few actually achieve that level of success, and it certainly is not a quick buck (>10y plan, optimistically). But, hey, if you don't, you still have a nice income and are able to support a family. At the end of the day it all comes down to what you're good at and what you want to do. If you have a great idea for a start up and the fire in you to build a business, then maybe give that a shot. If you intrinsically enjoy quantitative work, are passionate about financial markets, and have the drive to produce revenue using your skills, then being a quant is a great choice.
Thanks man, this is definitely one of the best responses. I started this thread because I wanted to see if anyone else has been in the same position I'm in. I'm not money crazed or anything but I do want to be at least a millionaire and have that freedom. I'm in college still studying Applied Math and Physics so I think I have the background to get into quant finance, but also know how to make web and mobile apps and will always be thinking of ideas for one. I'm trying to figure out the path to take to be super successful in quant finance, what that life would be like compared to being a serial tech entrepreneur.
 
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