Monday, April 21, 2008

Mama, let your babies grow up to be hedge fund managers

If you really want to "make it" in the U.S., what profession should you pursue? As someone who has worked with many students who will be the first in their families to go to college, this question has floated through my mind occasionally. The stereotypical answer, and one that many parents encourage, is doctor. Some evidence points to this being a wise choice. This Forbes article profiles the top 25 best paying jobs on average; 13 of the top 15 are medical specialists.

This data, however, is quite misleading, due to the vagaries of the words "job" and "average." Consider two categories: CEO (#10) and financial manager (#25). While an anesthesiologist is an anesthesiologist (the #1 "best paying job" with a mean salary of $184,340), a "CEO" could be the guy who owns the local hardware store or the guy who runs Home Depot. A financial manager could be your local stockbroker, or John Paulson, a hedge fund manager who earned $3.7 billion (that's with a b, and those were his personal earnings, not what he made for his investors) in 2007. Indeed, it turns out that fund managers and CEOs are some of the top earners in the U.S.

Granted, you will probably not end up running a huge multinational corporation or a wildly successful investment vehicle. But consider that if you aim for that type of position, even falling a bit short will make you quite financially secure. The odds are great that you will make far more in your lifetime than if you specialized in putting people to sleep.

Hands down, then, if you are good at school, willing to work hard, and it is important to you to maximize your earning potential, choose an economics or mathematics major at a selective undergraduate college - a place that you love, with excellent teaching, so you can keep your energy up and master the math. Then seek a job as a financial analyst and then business school. Who knows, you may end up one of the Superclass.

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