Question 1

What is opportunity cost?

Accepted Answer

Opportunity cost is the value of what you give up when you choose one option over another. When you spend money instead of investing it, you lose not just that amount but all the potential returns it could have earned over time. Our calculator makes this abstract concept concrete.

Question 2

What annual return rate should I use?

Accepted Answer

A commonly used benchmark is 7–10% per year, which approximates the historical long-term average return of broad stock market indexes like the S&P 500 (inflation-adjusted ~7%). For safer investments like bonds, use 3–5%. The default of 10% represents an optimistic but historically achievable rate for equity investing.

Question 3

Is this a real investment calculation?

Accepted Answer

No — this is a hypothetical scenario for educational purposes. It applies simple compound interest at a fixed rate, ignoring taxes, fees, inflation, investment risk and market volatility. Real investments fluctuate and returns are never guaranteed. This tool is designed to illustrate the concept of opportunity cost, not to provide financial advice.

Question 4

How is the result calculated?

Accepted Answer

The formula is: Future Value = Amount × (1 + Rate)^Years. For example, $1,000 invested for 10 years at 10% annual return = $1,000 × (1.10)^10 = $2,593. This is the power of compound interest — your gains also earn returns over time.

Question 5

Is this calculator free?

Accepted Answer

Yes, completely free. No registration, no download, no hidden fees. Works instantly on all devices.

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