🤔 Opportunity Cost Calculator
Calculate the opportunity cost of choosing one investment or decision over another.
Opportunity Cost in Financial Decisions
Every financial decision has an opportunity cost — what you give up by not choosing the alternative. Paying off a 4% mortgage instead of investing in an index fund that returns 10% has an opportunity cost of the difference in future values. Opportunity cost is why holding cash during a bull market is never truly "free" — you're giving up the potential market return.
People Also Ask
Compare your guaranteed return (debt interest rate) to your expected investment return. If debt rate > expected investment return: pay off debt (guaranteed beat). If expected investment return > debt rate: investing may win mathematically. Also consider risk tolerance, tax deductibility of debt interest, and psychological value of being debt-free.
The direct cost (tuition + expenses) plus the foregone income from not working full-time during college years. At $25,000/year for 4 years in tuition plus $35,000/year in foregone income, the total opportunity cost can exceed $240,000. Compare against the income premium from the degree to evaluate ROI.