It was a little bit of national prestige, but the primary benefit of colonial possessions is spatial in the sense of military projection. They provided bases for local power projection, which otherwise would have been obviously impossible.

It is not a coincidence that almost every colonial possession was associated with naval and military bases. The British took Egypt not because it was valuable economically, but because it gave them control over Suez which was a crucial line of communication for their fleets between the Home Islands and the Indian Ocean/Pacific.

Examples exist in abundance. Lieutenant Colonel Kanji Ishihara and Colonel Seishiro Itagaki as one example. These two officers of the Japanese Army had fixated upon the annexation of Manchuria by Japan in 1931, as an answer to Japanese economic woes during the Great Depression. 

However, as written by Radhey Shyam Chaurasia: "Financially, the provinces of the north would afford a market for Japanese goods a lucrative field for the investment of Japanese capital and would thus to a certain extent relieve the economic difficulties of Japan. In this connection it should be noted that the Manchukuoan (Manchurian) adventure did not yield the financial results which Japan had expected. The cost of defending the new state and policing it against internal troubles was very great, so instead of an asset, it was a liability." - Radhey Shyam Chaurasia, "A History of Japan," pages 144-145 

The total costs of colonies exceeding revenue was noticed as early as Adam Smith towards the end of the eighteenth century. Even before him, it was noticed by Voltaire during the Seven Years' War. In 1758 Voltaire observed in his famous novel, Candide; 

"You know that these two nations are at war about a few acres of snow somewhere around Canada, and that they are spending on this beautiful war more than all Canada is worth." - Voltaire, "Candide," chapter 23

It is unlikely that even India was worth the expenditure of British finances in schemes to defend it from French or Russian initiatives, which included, besides the maintenance of an expensive local army and navy, the acquisition of strategic (but economically worthless) buffer territory like northwestern Pakistan, Burma, Ceylon, and the failed attempts at the incorporation of Afghanistan. Added to this was the cost of defending India against Japan during the Second World War. After all, did not the East India Company go bankrupt because costs had long since exceeded revenues? Even by taxing the population of India the Company could not remain solvent and had to transfer all of its holdings to the British Government.

Similarly, the Cambridge Economic History of India points out that defence absorbed a third of the Raj's expenditure, which was a result of the serious threat to India posed by the rebellious natives internally, and externally the Russians, strategic forays into the mountains of Afghanistan and Persia, into the jungles of Burma and Siam, and for the defence of outer posts like Aden and Singapore to which India's security was intimately attached. India's wealth was consumed in the necessity to defend the country, and as the Raj consistently spent more than it earned, it was forced to turn to the metropole for assistance (see the table on "The Cambridge Economic History of India: Volume II," page 926, which shows the period from 1900-1947, for the entirety of which expenditure exceeded revenue).