The bonus reinvestment simulator compares two career paths: investing your annual work bonus vs spending it. Over 20 years, the difference is dramatic due to compound growth. Enter your salary and career details to see exactly how much wealth you build — or forgo — with each annual bonus decision.
Bonus Reinvestment Parameters
Invest Scenario
Spend Scenario
Wealth Difference
Portfolio Growth: Invest vs Spend Bonuses
Year-by-Year Bonus & Portfolio
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How to Use the Bonus Reinvestment Simulator
Annual bonuses are one of the most underutilized wealth-building opportunities for employees. Unlike regular salary — which often gets absorbed into monthly spending — bonuses arrive as a lump sum. The choice to invest or spend creates one of the most dramatic wealth divergences in personal finance. This simulator makes that divergence concrete.
Setting Up Your Career Baseline
Enter your current annual salary and bonus percentage. A 10% bonus on an $85,000 salary is $8,500/year. With 3% annual salary growth, that bonus grows to $15,300/year by year 20 — dramatically increasing the compounding effect. The simulator models this growing bonus stream rather than using a flat number, making it more accurate for real career trajectories.
The Partial Investment Strategy
The "% of bonus invested" slider lets you model realistic decisions. Investing 100% of every bonus is mathematically optimal but practically difficult. Many people use a 50/50 split: half goes to investments, half to discretionary spending like vacation or home improvements. Even 50% investment gives you roughly half the wealth of the full-invest scenario — still dramatically better than 0%.
Understanding the Opportunity Cost
The opportunity cost displayed is the difference between your investment portfolio value and the scenario where you invest 0%. If your invest-scenario portfolio reaches $450,000 and you spent all bonuses instead, that $450,000 is the opportunity cost. This is wealth that could have existed but doesn't because of spending decisions compounded over years.
Choosing a Realistic Return Rate
The S&P 500 total return index has averaged about 10.5% annually since 1926. After 3% inflation, that's roughly 7-8% real return. A diversified portfolio of 80% stocks / 20% bonds historically returns 6-8%. For a single-year model, 7-8% is reasonable. Bonds-heavy portfolios might use 5-6%. Adjust the return slider to see how sensitive your outcome is to this assumption.
FAQ
Is this bonus reinvestment simulator free?
Yes, completely free with no signup required. All calculations run locally in your browser — your financial data is never shared.
Should I invest my annual bonus or use it for something else?
The math is compelling: a $10,000 bonus invested annually at 8% for 20 years grows to over $494,000. The same amount spent creates zero lasting wealth. The simulator shows the exact opportunity cost of spending vs investing each bonus so you can make an informed decision.
What investment return rate should I use?
The S&P 500 has averaged about 10% annually before inflation, or roughly 7% inflation-adjusted, over the past 90 years. For a diversified stock portfolio, 7-8% real return is a reasonable long-term assumption. More conservative investors use 5-6%. Crypto or individual stocks would vary widely.
What does 'opportunity cost of spending' mean?
Opportunity cost is the wealth you forgo by not investing. If you spend a $10,000 bonus, the opportunity cost after 20 years at 8% return is $46,610 — the investment value that would have grown from that one-time decision. The total opportunity cost shown sums this across all bonuses in your career.
How is the year-by-year salary growth modeled?
The simulator applies your specified salary growth rate to each prior year's salary. If you start at $75,000 with 3% annual raises, year 5 salary is $86,900 and your bonus at 10% would be $8,690. This models how bonus dollar amounts grow over a career.
What if I only invest part of my bonus?
Use the '% of bonus invested' slider to model partial investment. At 50%, half the bonus goes to investments and half is available for spending/lifestyle. The simulator compares this partial investment scenario against both full investment and zero investment to show the full range of outcomes.
Can I export the year-by-year bonus data?
Yes, click Download CSV to export the full table with salary, bonus amount, amount invested, portfolio value, and cumulative returns for each year.