Bobby Bonilla’s $1.2 million payout is a huge boost for investors

Bobby Bonilla’s $1.2 million payout is a huge boost for investors

Bobby Bonilla is trending on Twitter early Friday as it tends to this time of year because July 1 marks the annual $1.2 million payday for the former third baseman, an event that has attracted interest from average Americans, even some who don't know anything about baseball.

Bonilla and his agent Dennis Gilbert engineered a contract payout that has become one of the most talked-about feats of finance in sporting history.

On Friday, Bonilla, now 58, will collect a check from the New York Mets for $1,193, 248.20, as he has since July 1 and will run through 2035, according to ESPN.

Commentary: How do you have your own Bobby Bonilla Day?

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

The net payment for Bonilla and his agent will be about $30 million when the baseball player turns 72. If you are lucky or smart enough to score it, that is a heck of a retirement plan.

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We have written about this time and time again, but it is worth it to repeat, because compounding is a key concept for investors, including the Dow Jones Industrial Average DJIA, the S&P 500 index SPX, and the Nasdaq Composite COMP, even with stocks falling in recent months due to inflation and rising interest rates.

It depends on if a recession happens, according to Wells Fargo Institute.

Bobby Bonilla Day: This retired baseball player's contract is a perfect example of the power of compounding.

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

See: Money lessons from Bobby Bonilla's steal of a multimillion-dollar deal.

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