Home Finance Bobby Bonilla Day: Former Mets player illustrates the magic of compound interest

Bobby Bonilla Day: Former Mets player illustrates the magic of compound interest

by CoinNews

If you see Bobby Bonilla popping up all over your social media feeds on Saturday (as it tends to this time of year), it’s because July 1 marks the annual $1.2 million payday for the former third baseman — an event that has increasingly attracted interest from average Americans, even some who don’t know anything about baseball.

That’s because Bonilla and his agent, Dennis Gilbert, engineered a contract payout that has become one of the more talked-about feats of finance in sporting history.

On Saturday, Bonilla, now 60, will collect a check for $1,193,248.20 from the New York Mets, as he has and will every July 1 since 2011 and running through 2035, as ESPN has detailed.

Commentary: How to have your own Bobby Bonilla Day

Some have described Bonilla’s payout as one of the great examples of compound interest, because the baseball player opted to defer a $5.9 million payment in 2000 in favor of spreading payments out over 24 years, starting in 2011, with an 8% annual interest rate. Compounding is when you earn interest on your earned interest, which can have a powerful impact over time.

The net payment for Bonilla (and his agent) will be about $30 million when the baseball player turns 72. That amounts to a heck of a retirement plan if you are fortunate (or smart) enough to score it.

Related: Retirees on edge over inflation and stock volatility can take these 5 steps

To be sure, we have written about this time and time again. But it is worth reiterating, as compounding is a key concept for investors, including those investing in equities or in such stock benchmarks as the Dow Jones Industrial Average
the S&P 500 index
and the Nasdaq Composite
even with stocks getting crushed in recent months as inflation and rising interest rates buffet markets.

Read: Bobby Bonilla Day: This retired baseball player’s contract is the perfect example of the power of compounding

Compounding holds true regardless of whether you are a Mets fan, or if you loved or hated Bonilla.

Opinion: Money lessons from Bobby Bonilla’s steal of a multimillion-dollar deal

Read on: The Mets are paying Bobby Bonilla over $1 million a year because of Bernie Madoff

This article was originally published in July 2021 and has been updated.

Source link

Related Posts

Leave a Comment