Opportunity Cost Calculator
See the after-tax gain and the inflation-adjusted real value you give up by spending a sum now instead of investing it.
Input Data
Results
At a glance:Opportunity cost is the gain you give up by spending now. With monthly compounding: pre-tax gain = M × ((1 + r/1200)^(12t) − 1); tax = gain × tax rate; after-tax savings = M + (gain − tax); real value = after-tax savings ÷ (1 + i%)^t. In Hong Kong, capital gains tax is 0, so the after-tax saving equals the nominal saving.
Formula
Pre-tax gain = M × ((1 + r/1200)^(12t) − 1).
Tax = pre-tax gain × tax rate; after-tax savings = M + (gain − tax).
Real value = after-tax savings ÷ (1 + inflation%)^t.
$$NominalCost = M \\times \\left[\\left(1 + \\dfrac{r}{12}\\right)^{12t} - 1\\right]$$$$RealValue = \\dfrac{NominalCost \\times (1 - tax) + M}{(1 + \\pi)^{t}}$$How to Use
- Enter the amount you would spend now.
- Enter the return, years, tax and inflation rates.
- Read the after-tax savings, real value, nominal cost and tax.
FAQ
What is opportunity cost?
Opportunity cost is the potential benefit you give up by choosing one option over another. Here it means the investment return you forgo by spending the money now instead of investing it — a purchase looks like just the price paid, but it also sacrifices the compound returns that money could have earned.
Should I enter a capital gains tax for Hong Kong?
Hong Kong does not levy capital gains tax, so local investors generally enter 0 for the tax rate. The field is kept for users holding overseas assets or needing to account for other tax situations.
Why adjust for inflation?
The purchasing power of money received in the future is eroded by inflation. Discounting the after-tax savings back to today's purchasing power reveals the true real gain, avoiding being misled by nominal figures.
Is opportunity cost only about money? How do I use it in daily decisions?
It is not only about money — opportunity cost is one of the most practical thinking tools in economics: it is the value of the best alternative you give up. This calculator focuses on the monetary angle (spend vs invest), but the concept applies to nearly every 'limited resources, must choose' decision, and the most precious, non-renewable resource is often time and attention, not cash. A few examples: (1) Time — working overtime for extra pay means giving up rest, family or study; a three-hour commute means giving up what those three hours could do. That is why some pay higher rent to live near work — buying back time with money. (2) Choice — doing a two-year master's costs not just tuition but the salary and experience you would have earned (the easily overlooked 'implicit cost'); starting a business means forgoing a stable salary. (3) Attention — putting effort into project A means you cannot fully do B; a company's resources in one product line means giving up other opportunities. The key mindset: first, see the implicit cost — the true price of many decisions is what you did not earn, not the book expense; second, compare against the second-best option — opportunity cost is the value of the best alternative you gave up, not the sum of all options; third, sunk costs are not opportunity costs — money or time already spent should not affect future choices, only forward trade-offs. Ask yourself 'what am I giving up, and is it worth it?' to make clearer spending, time and effort decisions. This tool is for educational estimation only.
How should I set the return, tax and inflation inputs reasonably?
The result is sensitive to these assumptions, so they must be set carefully. First, the annual return (r) is the most influential — it is the realistic return you would actually earn if you invested, not an over-optimistic number. Reference ranges: conservative time deposits / money funds about 1-3%; a longer-term diversified stock-bond portfolio a long-run historical 4-7% (with volatility and downside risk, not guaranteed); do not use a single stock's short-term spike. Use the return matching your real strategy, remembering higher return usually means higher risk. Second, tax rate — Hong Kong has no capital gains tax, so enter 0; the field is for overseas assets or other tax cases. Third, inflation (π) discounts future amounts to today's purchasing power; reference long-run averages (often 1.5%-3%) and be conservative by setting higher. Overall: these are assumptions, not guarantees, especially return; run optimistic / neutral / conservative scenarios to see a range rather than one number; and do not let 'maximising opportunity cost' override reasonable spending — balance the present and future. This tool is for educational estimation only.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.