Compound interest

What is the Bobby Bonilla day? This demonstrates the magic of compound interest, on the one hand.


Bobby Bonilla was all the rage on Twitter early Thursday, as July 1 marks the former third baseman’s annual payday, an event that is increasingly attracting interest among average Americans, even those unfamiliar with it. nothing in baseball.

That’s because Bonilla and her agent, Dennis Gilbert, engineered a contract payout that has become one of the most talked about financial feats in the history of the sport.

On Thursday, Bonilla, now 58, will receive a check for $ 1,193,248.20 from the New York Mets, as he has and will do every July 1 since 2011 and through 2035, as ESPN reports. .

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

The net payout for Bonilla (and her agent) will be around $ 30 million when the baseball player hits 72. That equates to one hell of a retirement plan if you can get it.

Remark: How to have your own Bobby Bonilla Day

Of course, we’ve written about this time and time again, but it’s worth repeating, as composition is a key concept for investors, including those who invest in stocks or even stock indexes such as the Dow Jones Industrial Average DJIA,
+ 0.68%,
the S&P 500 SPX index,
+ 0.64%
and the Nasdaq Composite COMP,

Read: Bobby Bonilla Day: Retired Baseball Player’s Contract Is The Perfect Example Of The Power Of Funding

The lineup is true whether you’re a Mets fan or love or hate Bonilla, and envy her today.

See: Opinion: Money lessons from Bobby Bonilla’s robbery of multi-million dollar deal

To verify: Mets pay Bobby Bonilla over a million dollars a year because of Bernie Madoff