top of page

Did I make the right decision?

In our day-to-day world, when we’re faced with decisions, there are two primary methods that our minds utilize to process the information to take the next steps.


The first is where situational awareness or familiarity yields a decision that is usually quick and may be associated with a habit. In medicine, we refer to these mental shortcuts as heuristics or, simply put, ‘going with your gut’ or intuition.  


The second process is when faced with unfamiliar or complex situations, where a more analytical approach to try and weigh out the pros and cons tends to guide our decisions.


As you can imagine, making quick and sometimes rash decisions can lead to more errors. These quick decisions may also be influenced by unconscious bias that can lead us astray. When we spend the time to make an informed decision, we expose ourselves to new information and processing.  This may delay the decision-making process and outcomes, but it can provide the necessary input to make the right decision.


A question one may ask themselves after making a decision is, “Did I make the right decisions? Or what would have been the outcome if I chose the alternative?”


Opportunity costs

As mentioned above, you consider several factors or resources when making any decision. With a finite number of resources (time and assets specifically), we can only make the decision that we feel best fit given the circumstances and the information we have.


Academics across domains observe the rationale around decisions and the opportunity cost of the alternatives. Opportunity cost is the physical, emotional, financial (any asset), and time-associated cost of a specific decision compared to the alternative options. These are calculated utilizing subjective and objective measures and can be quite complicated, but we’ll focus on measuring the objective component in today's discussion.


Let’s look at examples that highlight opportunity cost from two different viewpoints.


Q3 or Q5

Imagine you walk into a new car dealership, and they have two vehicles on the showroom floor that have caught your eye.

Car 1:


Picture Credit –;               

Car 2:               

Example credit: Gal Zauberman


Both vehicles are brand new and check all the boxes.


Great mileage, technologically advanced, can fit one or two car seats (if necessary for your life), comfort, sporty and stylish.


Now comes the time when you sit down with the sales manager and discuss the price.


On the left, the Audi Q3 is listed for (not actual numbers) $35,000; on the right, the Audi Q5 is listed for $42,000. On the surface, the cost difference may sway the decision, but what if that sales manager had another proposition? The sales manager says that if you buy the Q3, he’ll include three years of gas, complete maintenance, and washes, essentially bringing the car's value to $42,000.  So, which car would you choose?


Most would pick the Q3 over the Q5 with this decision and incentives included. This is one way we look at opportunity costs. What else can I do with the money, or what could I gain/lose with this decision? Talking about gains and losses, let’s look at a more analytical view of opportunity costs.


Compound interest and compound loss

Investor A heard from a close friend that he needs to invest.


Let’s say Investor A makes $50,000 coming out of college at 22, and he worked with our financial coaches to come out of university debt-free (woo, who!!!). Now he can save for his emergency fund, then retirement, and his new future home! Let’s dig more into his baby step 4, investing 15% of his income.


To simplify the math, let’s assume there is no wage increase, and Investor A sticks to investing 15% of his income for the next eight years in the four categories we recommend (growth, growth and income, aggressive growth, and international). We’ll also apply a conservative 6% annualized growth rate, though realistically, this should be higher. By the time Investor A is 30, he would have $74,231.01, with nearly $15,000 of just growth!


Then life happens. Job loss, medical emergency, family emergency, or any combination of factors that can shake the tree. In the hypothetical emergency, Investor A takes $45,000 out of his retirement account to support necessities.  If the remaining $30,000 (rounded up) stays in the account for the next 35 years and grows without any future contributions, this account would equal $230,582.60! Yes, without any additional contribution!


What about the $45,000 that was taken out? This is where opportunity cost needs to be discussed. What was the opportunity cost of taking out the $45,000? A whopping $345,873.91! Instead of having $576,402.41 in the account, Investor A only has $230,582.60.


This is precisely why our team never recommends taking out of your retirement unless it is absolutely necessary to cover your four walls (shelter utilities, transportation, food). The compound interest impact on the investments and the opportunity cost are too significant.


To ice cream or not

If I waited in line at my favorite gelato place (Copa Gelato, if you’re from Columbus, OH) for over an hour because they had a sign for free gelato, could I have done something more productive with my time?


Though I may justify the time, opportunity, and wait in line for that first bite, was it really ‘free’? Our resources are finite. Time and money are two of our most important resources and directly influence our decisions. Making decisions is an amalgamation of our habitual/intuitive and rational thinking.


The question is, “How do we make good decisions?” and, more so, “How do I avoid bad decisions?” I believe having the right experiences, exposure, and teacher/mentor on your side can significantly mitigate the risk of making bad decisions. At Whitaker-Myers Wealth Managers, our team approaches every interaction with the heart of a teacher. This means we enter each conversation with kindness, empathy, and compassion, intending to build a long-term, meaningful relationship. If you’re interested in a partner to join your journey, contact one of our financial advisors and schedule some time to discuss your questions. If you’d like to submit a question for me to answer, please use this link and fill out the quick survey.

Opportunity cost: An objective valuation and impact of your decisions

March 4, 2024

Summit Puri

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm.  The information presented is for educational purposes only and intended for a broad audience.  The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed.  Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. 

Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed. 

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

The Phases of Retirement


The Phases of Retirement

Old 401k rollovers - What to do with them


Old 401k rollovers - What to do with them

One metric to rule them all, or not. Part 3


One metric to rule them all, or not. Part 3

Other Posts

bottom of page