Analyzing Opportunity Cost Time Value of Money

If there is no such thing as opportunity cost, then there's no such thing as opportunity. Opportunity cost is essentially opportunity in reverse; it's the negative impact of that missed opportunity. In our exploration of this, we've used Truth Concepts Calculator to illustrate just that.

Opportunity Cost Illustrated

In our detailed examination using the calculator, we made some assumptions:

• 9% net of fees and taxes during the accumulation phase.
• A more conservative 5% towards the later stages.

Calculations & Results

We discussed a hypothetical scenario using Truth Concepts Calculator, considering factors like income, taxes, and lifestyle. Here's a look at some significant figures derived from the analysis:

1. From 35 years old to age 60, the potential earnings are $5.2 million with a simple accumulation without factoring in cost of living increases. With a 4% cost of living increase, this could rise to $11 million.
2. Opportunity cost calculated alongside salary yielded almost $25 million potential when a 5% net earnings rate was assumed.
3. 30% tax impact showed a steep decline from a potential $24.7 million to $17.3 million—a difference of $7.4 million due to opportunity cost.

Income as An Asset

The analysis emphasizes that our ability to earn an income is, in fact, our greatest asset. Often, individuals don't realize how much money truly flows through their hands during their working life, making strategic planning even more crucial.

Why Look at Opportunity Cost?

• Understanding the value of your lifetime income.
• Making educated investment decisions that consider more than immediate costs.

Potential Impact of Risk and Return

Watch the Full Tutorial:

Learn more about handling opportunity costs and maximizing your potential by watching our detailed tutorial video.

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