Each time you undertake an activity, you also forego something you did not take up. That is called the opportunity cost. The opportunity cost of doing X activity is that you did not do Y activity. It is from this concept of opportunity cost that the idea of trade off comes about. Because, everything has an opportunity cost, every action has to be a trade-off. Essentially, a trade off is a compromise between two contrary things. For example, when you invest you get returns but investment also entails risk. You need to take higher risk to earn higher returns but for every level of returns you also need to minimize your risk. That is a trade-off.

Likewise, investing is normally a trade-off between present liquidity and future wealth creation. You can either have more liquidity today or you can have more wealth tomorrow. If you keep all your money in liquid funds then they may be absolutely safe and liquid but you can never create wealth in the long run. For that you need to take the risk of equities. Investing is also a trade-off between quality and returns. Be it bonds or equity, there is some quality sacrifice you need to make. High quality may be good businesses but they may be bad investments. There are a plethora of such contrary factors that come into direct conflict with one another when you make an investment decision. Any financial activity; be it spending, saving, investing, divesting, rebalancing, they all have a trade-off.