How this calculator works
The alternative to spending is a single investment at a constant effective annual return. Positive gains are taxed once at the end at your supplied rate; losses receive no tax credit. Inflation discounts the after-tax ending balance into today's purchasing power. The total forgone future balance includes the original amount, while forgone earnings show only growth. This is a simplified scenario, not a Canadian tax calculation.
Formula
F = P(1+r)^t; gain = F - P; tax = max(gain,0) × q; after-tax savings = F - tax; real savings = after-tax savings/(1+inflation)^t.
Worked example
Spending $10,000 instead of earning 10% for two years forgoes $12,100 before tax. A 20% tax on the $2,100 gain leaves $11,680 after tax. At zero return, spending $500 forgoes exactly $500 before inflation.
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Frequently asked questions
Is opportunity cost only the interest?
It depends on the comparison. This page shows both forgone earnings and the entire future savings balance, so the original principal is explicit.
Does the tax input reproduce Canadian capital-gains rules?
No. Enter an effective tax assumption for this scenario. Inclusion rates, exemptions and annual taxation are not modelled.
Can savings earn a negative return?
Yes. The model allows losses while keeping the annual growth factor positive. It does not grant a tax benefit for those losses.