Originally Posted by TeeKay
Okay finance brahs...I could use some advice if someone would be so kind.
I owe 26k in undergrad debt at an interest rate of 6.50%
Next year my fiancee will be starting a job with access to a 403b and a starting salary of 51k. If she contributes nothing, the university automatically puts in 5% of her gross income. If she contributes 3% of her pay, the university puts in additional 5% for a total of 10%
My question is does it make more sense to contribute that 3% of her income 51k salary to her 403b, or would that money be better spent helping pay off my loans?
Do not listen to anything either of these knuckleheads in the thread have said regarding advice.
403b is tax advantaged, any money contributed reduces your income tax burden for the year. She should absolutely contribute the first 3%, separate from any investment returns that she expects to accrue, that is immediately earning a 166% return, since the account will increase by 8$ for every 3$ you invest pre-tax. That decision is separate from the free 5% contribution they are giving you, which is extremely generous.
The decision becomes more difficult after that. First of all, you should refinance your student debt: http://www.sofi.com/refer/5/11352 (this is a referal link where I would make some money if you used it). You can get a fixed rate for less than 6.50% and potentially consolidate loans if you are paying multiple servicers now. Also, if you really plan to pay off in the next 2 years, you might as well take a floating rate loan, while rates are going to rise a bit, possibly as soon as September, based on global interest rates, I wouldn't expect a return to the historical average for another 3-5 years, given no further financial crises. These guys also sent me a free Everlane Dopp kit after I closed the loan, ha.
After that it is probably a coin flip on which is the better option regarding additional funds, but you won't be making a critical mistake to do either, or a little of both.
Regarding sell side M&A, it doesn't get "easier" the higher you get up the chain to MD. Sure you make money, but you are responsible for driving revenue for the bank, if you don't you are gone. The reason they hire analysts to make the presentations and do the shitty work is basically a pipeline to future senior bankers. Someone is unlikely to come from outside banking and be a great MD/senior investment banker.
Regarding quantitative analysis, much if it is less glorious than you would think, but you are right in principal regarding the primary strategies. A lot of it has to do with providing liquidity (bid-ask spread) to make a tiny profit, or implementing a position while generating the least market impact (VWAP participation strategies, Implementation Shortfall strategies, etc). Maybe the dudes at Renaissance or whatever are doing something different, but most of it basically related to pattern recognition.
Qualitative analysis, in this context, is of an individual business, think microeconomics. You are analyzing the company's details, such as competitive position, suppliers, customers, management, products, pipeline of new products, prospects for growth, competitors, strengths, weaknesses, risks and their mitigants.
Happy to clear up any other financial misunderstandings if need be.