Every formula, constant, and assumption behind the calculator — laid out in full, so you never have to just take the numbers on faith.
Every category (Car, House, Subscription, Other) compares two things: an invested value — what your money grows to if put into the market instead of spent — and a reference value — what you'd actually have to show for the purchase itself. The gap between the two, adjusted for inflation, is the "opportunity cost" figure shown throughout the tool.
This is the rust-colored line in the chart — never inflation-adjusted, left in plain nominal dollars, matching how a real price tag would look at that future date.
Roughly 15% depreciation per year, floored at 8% of the original price so an old car is never modeled as worthless.
Roughly 3.8% annual appreciation — the long-run U.S. national average home price growth rate.
A subscription has no resale value, so this line tracks the running total of everything paid in so far, instead of "worth now."
A one-time purchase with no resale value and no financing option — the reference line is simply the flat amount spent.
When a purchase is financed, the tool runs a standard amortized loan calculation — the same formula used by virtually every bank and lender:
Cash purchase — the whole price invested as a single lump sum today:
Subscription — no lump sum; the same monthly amount is invested every month instead of paid to the subscription (future value of an ordinary annuity):
Financed Car/House — assumes perfect discipline: the down payment is invested today, and every monthly loan payment is invested in its place, the month it would have been paid. Once the loan term ends, the balance keeps compounding with no further contributions.
Every invested-value calculation produces a nominal figure — the literal number on an account statement in year y. That figure is discounted by inflation to show its worth in today's purchasing power:
This real(y) figure is what's shown in the "if invested (today's $)" row, and it's the number used for the headline figure.
The headline number, and the bottom row of every breakdown card:
Both sides of the comparison are discounted by inflation the same way, so it's a fair, apples-to-apples comparison rather than mixing nominal and real dollars. The result is floored at zero — this tool never displays a negative "opportunity cost," even in extreme edge cases where the underlying math could technically favor buying. That keeps the story simple and consistent, though it means the displayed number can slightly understate how favorable buying looks under unusual assumptions.
If you turn on the wait comparison, the model works in two clean phases:
Neither the lump sum nor the monthly contributions are ever used to fund the purchase itself — they're kept completely separate from the buying decision, which is why this comparison can sometimes show waiting coming out significantly ahead.
The chart plots every year from 0 to your chosen horizon. The three breakdown cards use checkpoints picked automatically at roughly one-third, two-thirds, and the full horizon — a 30-year horizon shows 10/20/30; a 15-year horizon shows 5/10/15.
| Input | Range | Default |
|---|---|---|
| Market return (nominal) | 4% – 14% | 10% |
| Inflation rate | 0% – 8% | 3% |
| Years to project | 5 – 50 | 30 |
| Down payment | 0% – 100% | 20% |
| Loan rate / term (Car) | 0–15% / 2–8 yrs | 7.0% / 5 yrs |
| Loan rate / term (House) | 0–15% / 10–30 yrs | 6.5% / 30 yrs |
The 10% market return default reflects the S&P 500's long-run historical average annual return before inflation — a common stand-in for "the market." Every one of these defaults is editable, and none of them are guarantees about future performance. This tool is for illustration only and isn't financial, tax, or investment advice.
Every default assumption in this tool is grounded in published data from an authoritative source, not an arbitrary guess. Here's exactly where each one comes from:
The S&P 500's long-run compound annual growth rate, dividends reinvested, has been approximately 10–10.6% since the index's modern 500-stock structure began in 1957 — figures published directly by S&P Dow Jones Indices, the official index provider, and corroborated by the widely-cited historical return dataset maintained by NYU Stern's Aswath Damodaran.
U.S. consumer-price inflation, as measured by the Consumer Price Index (CPI), has averaged close to 3% per year over the long run — published monthly by the U.S. Bureau of Labor Statistics, the federal agency responsible for official U.S. inflation data.
U.S. home prices have appreciated at roughly 3.5–4.5% annually over the long run, according to the FHFA House Price Index — the Federal Housing Finance Agency's repeat-sales index built from tens of millions of transactions dating back to the mid-1970s — with a similar long-run trend confirmed by the independently-run S&P CoreLogic Case-Shiller National Home Price Index.
The U.S. Bureau of Labor Statistics has published annual vehicle depreciation rate data showing new automobiles depreciating at roughly 12% per year on average, with individual years ranging from about 5% to 24% depending on the vehicle's age. Industry sources including Kelley Blue Book commonly cite a steeper initial drop followed by a leveling of roughly 15% annually in the years after — the figure this tool uses as a simplified, single-rate approximation across a car's full lifespan.
These are long-run historical averages, not predictions — actual future returns, inflation, and appreciation rates can and do differ, sometimes substantially, from historical trends. Individual vehicles, homes, and local markets can also differ significantly from national averages.