Start Seeing Your Opportunity Cost

It is time to start seeing your opportunity cost. Firstly, what is opportunity cost? Definition states that opportunity cost is the loss of other alternatives when one alternative is chosen. Simply said, it is the cost of giving up something for another.


So basically, it’s not an opportunity cost until you can identify an alternative. To bring it to our context, let’s talk about our money in the bank. Is there an opportunity cost? Definitely!

What are the opportunity costs we aren’t seeing?

To some, money in the bank is better than money in a safe deposit because at least the money is earning an interest while being parked with the bank. To others, money in fixed deposit is better than money in the bank because it earns a higher interest.

It can keep going on and on, money in stocks is better than money in fixed deposit because it has the ability to grow your money at an even faster pace, etc. Where else can you put your money to give you a higher returns than lying around in the bank?

Take time away to think through

There is always an opportunity cost, but have we ever sat down to consider the alternatives available to us? Have we been giving up too much for too little? There is no one-stop solution to finding what the better alternative is as it differs from people to people based on the skills and opportunity that they possess. But the gist of it is to take a really good look at the options you have – Which many of us don’t really bother looking and take what people offer us.

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Using my personal experience, when I first started putting my money into a trust account instead of the bank, I was very contented with getting like $10-20 every month for not doing anything! In fact, I felt that was actually good enough. But I got too comfortable with receiving so little that I failed see my real opportunity cost. It stayed this way for months until the realisation that had I invested the amount in a stable dividend stock, I would have been getting possible $100+ each month instead! Just think about what the additional $80-$100 you could do with!

There is always an opportunity cost, if we look for it! Let us not be too quick to assume that we got the best deal and become contented with it because while we are getting a little bit more, we might become blinded like I was and failed to see my true opportunity cost.

What is your opportunity cost?

Aloysius Lee

Aloysius has been investing in Singapore Equities from the age of 18 and is still madly enthusiastic about it. He strives to sharpen his edge while guiding others along the way to snowball their way to financial freedom!

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