Wait. Am I misunderstanding you, are you completely off base, or is opportunity cost really just some handwavy estimation of how much money they maybe could have made in some hypothetical world where they made different investments? The fuck?
You’re not misunderstanding at all. Opportunity cost is that simple.
If I can get 5% guaranteed on a government bond, and my buddy needs some help to get out of a jam (and I’m as sure as I can be he’ll pay me back) and he offers me 3%, if I give him the money I’m not doing a nice thing and making 3%, I’m an idiot that’s losing 2%.
At least according to the people that can only think of more more more.
It doesn’t always have to be greedy though. If you’ve got money you don’t need anytime soon sitting in your checking account doing nothing what your missing out on by not at least putting it in an interest bearing account is opportunity cost.
Wait. Am I misunderstanding you, are you completely off base, or is opportunity cost really just some handwavy estimation of how much money they maybe could have made in some hypothetical world where they made different investments? The fuck?
Yeah, breaks your heart, don’t it?
You’re not misunderstanding at all. Opportunity cost is that simple.
If I can get 5% guaranteed on a government bond, and my buddy needs some help to get out of a jam (and I’m as sure as I can be he’ll pay me back) and he offers me 3%, if I give him the money I’m not doing a nice thing and making 3%, I’m an idiot that’s losing 2%.
At least according to the people that can only think of more more more.
It doesn’t always have to be greedy though. If you’ve got money you don’t need anytime soon sitting in your checking account doing nothing what your missing out on by not at least putting it in an interest bearing account is opportunity cost.