Private equity and investment banking are great careers to choose from. But are these the right fit for everyone? You may have the desire to make a huge income, but you also need to remember that both professions may be exciting and lucrative careers, but you need to be knee-deep.
People often have the wrong notion stating private equity and investment banking to be similar. However, there’s a huge difference between these professions. Let’s us try and debunk the mysteries that differentiates them.
What is private equity?
A private equity firm collects high-net-worth funds and then looks out for investments in other businesses. In private equity, investors generally receive distributions throughout the life of their investment career. Private equity firms can also trade their shares publicly if needed.
What is investment banking?
Whereas, this is a specific division of banking concerning the creation of capital for governments, companies, and other entities. Investment banks help in underwriting new debts as well as security for all sorts of corporations or the sale of securities with the help of mergers and acquisitions. In addition to this, they also provide consulting to the issuers looking for guidance in the placement of stock.
You can also find job roles such as banking analysts, capital market analysts, research associates, trading specialists, and consultants in the investment field.
Investment banking vs Private equity: which job role to choose?
- Career Prospects – Landing a job in this field prepares you for bigger opportunities and makes you the center of business wherever yougo. This field will never go out of demand. Great compensation, fat paychecks, and extra-ordinary vacation opportunities are what this job role is entitled to.
- Salary compensation – Surprisingly, investment bankers are making more money than private equity professionals. For a start, you could be making $150-$185k per annum but they do not pay much for a private equity associate.
- Work-culture – Investment banking is certainly not for those looking for a 9-5 job. If you’re looking for work-life balance, then choosing another profession other than investment field could be an ideal choice. This profession is best suited for those who can put their heart and soul into the profession. There’s no limitation to how much an investment banker can earn. No wonder why most business professionals are keen on taking up this profession.
- Career Prospects – There is not much where one can do as a private equity associate, you may not be in the limelight as the investment bankers.
- Salary compensation – Salary expectation is not as much as the investment bankers. In the first year, an associate may be able to earn around the US $100k-$220k per annum which is slightly lower if compared with the investment banking associates.
- Work-culture–The life of a private equity associate will have a saner life than an investment banker. Most of the professionals working in a private equity firm tend to spend 8-12 hours at work, unlike investment bankers where there’s no time limit. Work-life can be balanced however there might be times when you’ll require to put in extra hours.
It is now for you to decide which profession to choose. But if you thrive to sell the business and look for a profile that will keep you in the limelight, then perhaps an investment banker would be an ideal profession. You can now grow your career with some of the best investment banking certification program that is available online.
Ultimately, it all depends on the work and the lifestyle that you desire. However, for those of you looking for a long-term career prospect, a profession as an investment banker will put you at the center of the capital market providing exposure to broader exposure in the market.