whenever you think about the highest paying jobs in the world you probably think of CEOs
or Hollywood actors the you guys make tens of millions of dollars a year and really the only
way to surpass their incomes would be a star your own business but there's actually a job that pays
much higher than these which is being a hedge fund manager that top hedge fund managers in the world
actually make several billion dollars a year but a high-level hedge fund managers still often makes
hundreds of millions dollars a year but the top 25 hedge fund managers averaging six hundred and
fifteen million dollars in 2017 granted these guys are the 25 best hedge fund managers in the world
but the point still holds as they make far more than the top fortune 500 CEOs who didn't create
their company for instance Tim Cook made fifteen point seven million Satya Nadella earned forty
two point nine million Jamie Dimon made thirty one point five million and so on and so forth
the only CEO that even comes close to hedge fund managers is sundar Pichai who makes over
two hundred million dollars a year so what the hedge fund managers even do and why are they paid
so much but before we jump into that let's get a better understanding of what a hedge fund actually
is so a hedge fund is simply a pull of money that has been created using contributions from several
wealthy investors and/or institutions this pull money is then invested by the hedge fund manager
and his team into various assets to try to make a return the reason these pools of money are called
hedge funds is that originally hedge funds would be structured in a way to hold both long term
and short term investments this way investors are hedged to reduce risk in other words even
if the long term investments performed poorly the short term investments could provide a return and
vice-versa as average people also have a similar option to invest in which are mutual funds the
premise of mutual funds is nearly identical except they don't have minimum salary and net
worth requirements for investors like hedge funds do so basically hedge funds are just mutual funds
for rich people but the barrier for entry into the average hedge fund isn't too extreme generally
hedge funds were required income of 200 to 300 thousand dollars with a net worth of at least 1
million dollars while a lofty requirement with the right job and good saving and investment
habits it's not too far off for the average person however the top hedge funds are only accessible to
a handful of people along with big institutions taking a look at Bridgewater associates which
is the largest hedge fund in the world with 160 billion dollars in assets under management led
by the famous Ray Dalio requires investors to have at least 7.5 billion dollars and investable assets
to participate in the fund so clearly top hedge funds take in tens of billions of dollars but how
much of this actually goes a hedge fund managers well the general rule for hedge fund managers is a
standard two-and-twenty this means that hedge fund managers get 2% of a net worth of the assets per
year along with 20% of the returns that produce above a certain threshold you can see how this
could lead to a lot of money very quickly even if you're controlling a small hedge fund of a
hundred million dollars just by meeting the return threshold you'll be making 2 million dollars a
year if you move up to managing a mid-level fund of a few hundred million dollars or a few billion
you'd be making 10 to 30 million dollars a year which is the average amount top CEOs make and
though it's hard to become a hedge fund manager it is significantly easier than becoming a CEO there
are only 500 fortune 500 CEOs in the world but there are 10,000 to 15,000 hedge funds to manage
as a result being a hedge fund manager is much more attainable than many other top paying jobs
so how exactly does one even go about becoming a hedge fund manager well if you have some sort of
a large-scale reputation a financial world you can open your own hedge fund but that would be
opening in business rather than getting a job so if you pursuit the job pathway you would
probably start off with a degree in finance or a reputable College followed up by a couple of
years of experience as a finance analyst given good performance you can generally land a job
as a hedge fund analyst in your late 20s which already pays $175,000 with the five to seven
years of experience you can jump up to being a senior analyst and make 500,000 to 1 million
dollars a year and finally with 7 to 10 years of experience as a senior analyst you can usually
become a portfolio manager who makes several million dollars a year this is the only job in the
world that allows you to start off with a college degree and quite reasonably work your way up to
millions of dollars a year by the time you're 50 with that being said aside from the money this
is a pretty terrible job hedge fund managers generally work at least 70 hours a week and as
you're working off the corporate ladder he'll often find yourself working over 90 hours not
only are the hours extremely long but the hours will be extremely stressful as well the financial
industry is one of the most stressful industries as you can imagine given the large amounts of
money and high levels of return they're targeting but that's just a reality of any high paying job
and that's why hedge fund managers make so much if you thought this video explained how hedge
funds work well then make sure to drop a like and consider subscribing in fact the more questions
just like this one logically answered but until then I'm Hari I'll see you guys on the next one