Opportunity Cost Calculator

Your details

The lump sum you are considering spending instead of investing.
The yearly percentage return you expect from the investment you would otherwise make. A broad stock-market index has historically averaged around 7-10% per year before inflation.
%
How long you would have kept the money invested.
years
The tax rate applied to your investment gains. In the US, long-term capital gains are typically taxed at 0%, 15%, or 20% depending on income. Set to 0 if you invest in a tax-advantaged account such as a Roth IRA.
%
The expected annual rate of inflation. This adjusts the result to show what your gains are worth in today's purchasing power. The US long-run average is around 3%.
%
Currency
Opportunity cost (inflation-adjusted)Significant opportunity cost
$1,913.42

After-tax gain in today's purchasing power, the real amount you forgo by spending instead of investing.

Opportunity cost (after-tax, nominal)$4,291.06
Total savings after tax$9,291.06
Gross investment gain (pre-tax)$5,048.31
Tax on gains$757.25
Gross gain (pre-tax)$5,048.31
Tax on gains$757.25
Net gain (after tax)$4,291.06
Real gain (inflation-adjusted)$1,913.42

By spending $5,000 now you forgo $1,913 in real purchasing power over 10 years.

  • In real (inflation-adjusted) terms, investing $5,000 for 10 years at 7% would have grown your purchasing power by $1,913.
  • Inflation reduces your nominal after-tax gain of $4,291 by $2,378, highlighting the importance of beating inflation with your return.
  • Tax on gains costs $757. If you invest in a tax-advantaged account (Roth IRA, 401k), you keep that amount and your real opportunity cost rises accordingly.
  • Opportunity cost is the most powerful argument for investing early: the longer the time horizon, the larger the gap between spending and investing the same dollars.

Next stepTo reduce your opportunity cost, consider a tax-advantaged account, a higher-return asset class, or a longer time horizon. Even small increases in return rate compound dramatically over decades.

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