$1.19 mil dropped in his acct this morning
9:15a, 7/1/17
That was a pretty impressive move the Mets made as goofy as it sounds for a guy to still be getting paid who's been out of baseball for more than a decade.
10:41a, 7/1/17
He'll collect just over a million each year until he's 72. I hope his agent has been well compensated, because that has to be the best retirement package ever.
11:57a, 7/1/17
Was actually a good deal for the Mets until Madoff blew up in their faces, and even then only when they were forced to shell out millions to compensate other investors.
1:23p, 7/1/17
Quote:
If Bonilla had accepted the $5.9 million in 2000 and invested the entire amount at 8% interest, the original investment would have grown to $104.1 million by 2035*. If instead, Bonilla takes his annual payment and invests that with an 8% annual return, he would have $95.2 million by 2035.
https://www.google.com/amp/ftw.usatoday.com/2015/07/new-york-mets-bobby-bonilla-contract-2035-deal/amp
8:10p, 7/1/17
In reply to Farmer1906
I agree, and the lump sum probably wouldn't have been invested correctly anyway. I just thought it was an interesting way at looking at the deal.
9:50p, 7/1/17
In reply to Farmer1906
I don't think there's a 30 year window where the s&p hasn't had an annualized 8% rate.
But something tells me most professional athletes aren't throwing it in an index fund.
aggie1906 said:
Not always easy to get 8%
I don't think there's a 30 year window where the s&p hasn't had an annualized 8% rate.
But something tells me most professional athletes aren't throwing it in an index fund.
7:46a, 7/3/17
8% CAGR is virtually impossible over that long of a time horizon, not even considering the 2008-2010 market drop. And, that future value calculation assumes that the $5.9 MM would be left untouched with no disbursements for 30 years, which is a ridiculous assumption.
8:19a, 7/3/17
In reply to TangoMike
With a sports organization, this million dollar annuity is practically risk-free. Even if something were to happen and the franchise/league goes under, as the oldest contract on the books, he likely has seniority.
So the comparison should be 1) against the risk-free return over that time period 2) against the additional return a lump sum investment in a fund could provide. 1) will show the free money (arbitrage) he receives, and each investor would look at their risk and determine if the additional return was worth the total risk of the market.
Assuming no withdrawals (except for dividends) and no dividend reinvestment, he would have seen 8.3% CAGR since '85... in 1985 the 30-year treasury rate was over 10%...
None of this even touches on the tax situations of each option.
The real issue so many people face isn't the return side of things. Sure, the S&P may give 8%, and may provide for pretty large withdrawals. But people don't think about risk.Tribe2013 said:
8% CAGR is virtually impossible over that long of a time horizon, not even considering the 2008-2010 market drop. And, that future value calculation assumes that the $5.9 MM would be left untouched with no disbursements for 30 years, which is a ridiculous assumption.
With a sports organization, this million dollar annuity is practically risk-free. Even if something were to happen and the franchise/league goes under, as the oldest contract on the books, he likely has seniority.
So the comparison should be 1) against the risk-free return over that time period 2) against the additional return a lump sum investment in a fund could provide. 1) will show the free money (arbitrage) he receives, and each investor would look at their risk and determine if the additional return was worth the total risk of the market.
Assuming no withdrawals (except for dividends) and no dividend reinvestment, he would have seen 8.3% CAGR since '85... in 1985 the 30-year treasury rate was over 10%...
None of this even touches on the tax situations of each option.