Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen.
Any time you make a decision, and have to choose between two things there is an opportunity cost.
Because you didn’t choose the other.
Imagine you’re making a decision on what to buy.
You can choose to buy a precious medal like gold or you can choose to buy part of an ETF.
If you choose to buy gold you can’t buy the ETF.
Gold typically increases in value 1-2% a year, whereas a standard index fund like the S&P 500 increases about 7-15% fairly consistently each year.
This is because businesses are creating value, a bar of gold is not.
If you invest in gold there is an opportunity cost of missing the opportunity to make potentially more income with your money.
This is a common perspective famously held by Warren Buffett and many others.