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How do you measure opportunity cost?

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RayAndré

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I've realized some of my analysis paralysis comes from weighing opportunity cost. With a few different ideas of what to do, I keep thinking about the potential of each one, and how if I pick and focus on one it will put the others on hold...which leaves me going nowhere.

For example, if I'm thinking between 1) invest in real estate, 2) learning copywriting to start offering it as a business, or 3) creating a new physical product/widget.

Of course, everything has pros and cons, but when faced with a few entirely different choices, how do you choose? How can you measure the opportunity cost of picking one and not the others?
 

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Merging Left

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Well... you can do an EV analysis, right? Those three ideas are not the same. They will take a different initial investment, have a different return, and require a different amount of time, and contain a different amount of risk of failure/loss. Thus, the expected value of each of your ideas is likely quite a bit different. If you're emotionally indifferent to which one you run with, just pick the highest EV. Where will you get the most bang for your buck?

Billy at foreverjobless wrote a really great article on how to think about EV, in case you're not familiar with it.

Expected Value: Millionaire's Math
 
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RayAndré

RayAndré

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That's a great article @Merging Left , thank you!
I've definitely been making many -EV choices...but with some +EV ones here and there :D
I'll think this through, thanks!
 

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