What is Opportunity Cost?

opportunity cost
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 1 min read

📣What separates good investors from great investors? Understanding opportunity cost 💰

Opportunity cost is what you give up by choosing one investment over another 🤔

🏡 💹 For example, if you invest in real estate, you may miss out on potential gains from investing in an index fund. And if you choose an index fund, you may miss out on potential returns from a tech stock 🚀 🚀

We all intuitively understand opportunity cost, even if we don't think of it as such.

Great investors understand how to balance opportunity cost and risk. It's also important to know when to look for outside advice.

Xillion's Portfolio Analyzer helps you optimize for opportunity cost. To give a simple example, you might be invested in an index fund with high fees, when a lower fee index fund with comparable assets is available. That's opportunity cost!

Get started with a free Xillion account today!

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