Opportunity Cost

There is a concept that gets thrown around in economics classes called opportunity cost.  In that context, opportunity cost is simply the fact of life that if you invest in one thing, you are necessarily no longer able to use those resources to invest in another.  If you put ten thousand dollars into buying a car, that’s ten thousand dollars that you can’t use for the down payment on a house.  If you invest 30% of your salary each month in your retirement accounts, that’s 30% that you can’t use now to go on vacation.  A fairly simple concept, really, and it rarely is discussed outside of economics classrooms.