Mutual funds for a dummy

I think my friend was right when he called me a fool... in fact he called me a damn fool. He was giving me a lecture on the need for investing my hard-earned money.

He patiently went on explaining all the possible options. Stocks, Mutual Funds, Pension Plans, Insurance Policies...

Pension and Insurance stuff were discarded out right as even he admitted my argument that an investment for say 20 years is something not worth trying at all. He wrote on a scratch pad the amount I will have to pay per year, the quarter term and mid term returns and the final amount that I would get. For our sample 1 lakh rupee invested, we got a profit of around 1.5 times that, but for a period of 20 years. Since my facial expressions suggested that I was not too interested in earning a profit of say 10000 Rs per year, that too after taking all the pain of finding the money to do all this investment stuff.

Then he went straight to Mutual Funds. He asked me if I knew what Mutual Funds were.... Cant really blame him. After seeing my reactions to the pension plans, he should have started asking whether I was familiar with a concept called ‘banking’ where I can put my money for safekeeping. He went on explaining all the advantages. He went from site to site. Terms like risk, dividend, profit, shares etc floated in the air.

At last he started doing the computation. “Ok...Suppose you invest 10000 or say 5000 per month...wait wait.. tell me how much you save every month..”

I said “like... saving means... at the end of the month, my account balance comes to around 1000 Rs. :_)”

“Whaaaaat” was his reaction.

After a slight pause “Do you send money home?”

“No”

“Do you invest anywhere else?”

“No”

“Then what do you do???”

“I mean... I... like... party on weekends....trips... buy some cloths.... food....dunno how... at the end of the month, it comes to that magical figure of 999”

He took 3 minutes before he offered this “You are gone man, you are completely gone”. Then he continued, “Ok. So lets say you save 1000 Rs per month.”

I interrupted “Wait..wait... its not 1000 Rs every month. Its like rotational. Next month, this 1000 gets used up and a 1000 from next month gets saved”

He didn’t respond for the next 2 minutes. Then came this arrow.

“How many affairs do you have?”

“None sir... you know... a steady relationship is a pain in the unmentionable parts. So... nice to have more girl friends and no affairs at all”

“You... you are really mad... you are foolish. I know you have opted for a lesser paying company because you thought it would catapult you into I don’t-know-what. And you are telling me that you don’t have a steady girl friend. You don’t do any investing. All you have is Rs 1000 at the end of every month. You are a fool. A damn fool”

“Thank you sir :_D”