Quantify the opportunity cost of choosing one investment over the best alternative by comparing compounded future values.
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Decision Analysis
Opportunity cost is the difference in future value between the option you chose and the best alternative you gave up. This calculator compares two investment paths over a time horizon to show the real cost of your decision.
Every financial decision has a hidden price: the return you could have earned from the next-best alternative. Opportunity cost makes this trade-off explicit and measurable.
Choosing a savings account at 4% instead of an index fund averaging 10% means each year’s difference compounds. Over 10 years on a 50,000 investment, the gap grows substantially.
Future values compared using compound growth.
Opportunity Cost = PV × (1+r_alt)ᵗ − PV × (1+r_chosen)ᵗ
PV = investment amount, r_alt = alternative return, r_chosen = chosen return, t = years.
Assumes constant annual returns, which never happens in practice. The alternative return is often estimated, not guaranteed. Does not account for risk differences between the two options.
Frequently asked questions
No. Time, career opportunities, and personal wellbeing all have opportunity costs. This calculator focuses on the financial dimension, but the concept applies broadly to any decision with trade-offs.
Not necessarily. Higher returns usually come with higher risk. A savings account at 4% is virtually risk-free; an equity index at 10% can lose 30% in a bad year. The opportunity cost calculation should inform — not dictate — the decision.
Use historical average returns for the asset class (e.g. ~10% for US equities, ~5% for bonds, ~4% for savings). Be conservative — past returns are not guaranteed.
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