Quote 14.7%?!?
That’s a little high for a conservative estimate, don’t you think?
Which company is that? I’ll offer them a deal. They guarantee me 10% over that 30 years, they can take that excess as a fee. (That type of estimate is what has been getting all those pension funds into trouble, by the way. They estimate those types of returns and as a result woefully underfund the pension.)
As to the OP’s point: most people don’t even give this type of trade-off thought. Once you see the effect, you must come to terms with the fact that eliminating all luxury or indulgence from your life completely, deferring it to 30 years from now, is expensive in a different way.
14.7%?!?
That’s a little high for a conservative estimate, don’t you think?
Well, it is considered a relatively conservative growth fund (if such a thing exists) but even at about 11.5% it is still nearly 6 million
Quote 14.7%?!?
That’s a little high for a conservative estimate, don’t you think?
Which company is that? I’ll offer them a deal. They guarantee me 10% over that 30 years, they can take that excess as a fee. (That type of estimate is what has been getting all those pension funds into trouble, by the way. They estimate those types of returns and as a result woefully underfund the pension.)
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But we are really getting off topic here. The fact is Tri’s are far more expensive than most of us give them credit for. And this doesn’t even count the most valuable stuff (like missed family/friend time/events)
I am not sure who you are directing this at, but I’ll try and help just the same.
Opportunity cost is basically the cost of the forgone opportunity. So if you had a choice between Ice cream and a candy bar, and you chose Ice cream, then your opportunity cost is the candy that you lost in favor of the Ice cream.
Or, if you took a job in Denver, instead of the one in new Jersey, than the opportunity cost would be any positive things that could have happened in New Jersey (finding a wife, future promotions, winning NJ Lotto) but you weren’t there to receive them.
I am not an Econ professor though, so kindly excuse my simplistic definition.
VERY simply put…the thing(s)you give up in order to have something else.
For example, the cost of a new bike vs those dollars used for something else
OR …it can also be time…the time you spend training vs what else that time could be used for.
Someone raised this in a different thread, and I think its an interesting question.
A 30 year old buys a $5000 bike and recoups none of it.
What is his opportunity cost for that bike over the next 35 years, assuming that S&P500 mutual funds keep gaining at 10% or so?
Ok! We also have to consider any decreased (or increased) health costs.
AND, shouldn’t one subtract inflation from the interest or capital gains.
AND, what other, less useful thing might one buy with that money. One can’t assume that all of that will go into an investment.
Of course the clothes, food, replacement parts all need to be considered as well.
All in all, I think my bikes are worth it. My wife disagrees.;^)
I promise you that the opportunity cost of blogging all day about opportunity costs is more costly than any triathlon cost. My time is worth about $200 per hour…If I blog in some tri forum for just two hours per week, that’s 104 hours per year…or $20,000 roughly in lost income per year! Add that up over 35 years!..this short reply has cost me $4.16.
I promise you that the opportunity cost of blogging all day about opportunity costs is more costly than any triathlon cost. My time is worth about $200 per hour…If I blog in some tri forum for just two hours per week, that’s 104 hours per year…or $20,000 roughly in lost income per year! Add that up over 35 years!..this short reply has cost me $4.16.
Best reply yet!
Don’t buy the $5000 bike, save your money, and end up with $100,000 30 years later only to die of a heart attack due to lack of exercise. How much of that money are you going to be able to spend in the grave.
Simply put: buying a bike (and other associated gear) is an exercise plan. If spending money on triathlon keeps you motivated, and living 10 years longer, then it is worth more than millions.
i have had so much freaking fun on my bike that if the dude at the bike shop said it was $10k I would put down the money again. i don’t have a gym membership so that’s how i justify my expensive bike. Cap X vs OP X… i hope to get 5-8 years out of my bike… my gym membership was $70 per month, x 12 months x 5 years is $4200. almost a push with my fuzzy math…
Applying a present value formula to the cost of a bike to get opportunity cost because there’s not a financial pay-back at the end of the bike’s useful life is a bit misleading. Unless you’re a pro and using the bike to earn money, the utility you get from owning the bike is all non-monetary; to get a sense of the real opportunity cost of the bike, you’d have to offset the dollar price you paid for it with some measure of the cost of the hours you’d be sitting around being miserable instead of riding had you not bought it. Since my time in general is pretty valuable, and since my time on a bike is even more valuable, there’s a pretty high cost associated with NOT owning a bike which the PV formula for opcost doesn’t capture.