Bobby Bonilla was trending on Twitter early Thursday because July 1 marks the annual 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 Thursday, Bonilla, now 58, 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 details.
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 it can have a powerful impact on money over time.
The net payment for Bonilla (and his agent) will be about $30 million when the baseball player hits 72. That amounts to a heck of a retirement plan if you can get it.
Commentary: How to have your own Bobby Bonilla Day
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 even in such stock benchmarks as the Dow Jones Industrial Average
DJIA,
the S&P 500 index
SPX,
and the Nasdaq Composite
COMP,
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 loved or hated Bonilla, and of whether you envy him today.
See: Opinion: Money lessons from Bobby Bonilla’s steal of a multimillion-dollar deal
Check out: The Mets are paying Bobby Bonilla over $1 million a year because of Bernie Madoff
