My friend was much hassled when I called her last evening. Her husband, like most men, had called a bunch of his friends over, for "chai-naasta" and insisted that she turn out her specialty Chinese bhel. The poor woman was chopping, grinding and mixing to feed her guests. Of course, she would be delighted when they announce at the end of the mini-meal that no one made Chinese bhel like her! She did ask what I was doing, and I told her how I was beginning to write a column on mutual funds for investors. She asked me what I would have done if I had to turn out food like her. I nonchalantly replied "I would have ordered from the corner chaat-cafe to send the stuff home!"

Just as I returned to this piece of writing, I suddenly realised how similar the two situations are: Mutual Fund and bhel-puri. We have the choice of doing it all by ourselves, or simply buying a readymade product, mixed to suit our taste. What we do with bhel is exactly what we can do with our investments. We put in the basic "good profit making" companies for the base; add new "fast growing" companies for crispiness and zing add the "upcoming sector" for spice and top it with favorites and fads to have a nice bhel-puri called the portfolio. In it are all kinds of investments, which could be "boring" or "tikha" alone, but do wonderfully, if mixed together in the right measure. We have what investment experts call a diversified portfolio, an investment bhel with a mix of investment choices.

The advantages are so similar. The bhelwala does it for a profession, day in and day out. So he would know what he is doing and how to do it well. (Which was the last time you heard kids says "Oh, mom, you can't make it like that guy on the roadside?") The fund manager is the professional who knows the markets and the mix, and will obviously do a faster and efficient job, apart from dishing out a standard taste and quality. He is also not happy with few courteous guests who say, "This is great!" He has to get it right every time and have a large and regular client list, who buys from him. In the interest of being in business he has to do well, distinguish himself and earn the trust of clients. The same is true for mutual funds.

The costs are lower for the bhelwala. He buys a sack of murmura and half a sack of onions. You can't get the same price when you buy 250gms of onion and 200gms of murmura. That is exactly why it costs more to buy and sell shares in the market, while it costs the fund only a fraction of this cost, to do so. You buy for Rs. 10,000; the fund buys for Rs. 500 crore! The bhelwala is a convenient option. You don't have to stock up, cut or plan. Pay Rs. 5, and get your bhel in 2 minutes. The same is the case with the fund. You need not read, analyse and study what you have to buy. Simply invest in the fund - minimum amounts can be Rs. 5000 upwards, and you will be served the fund of your choice. Just as you cannot buy all the ingredients for Rs. 5, the fund is the readymade mix, which you cannot put together by yourself, in Rs. 5000! But it is so convenient that you can buy it anytime you like!

That is all there is to the basic idea of the mutual fund. It is an efficient, low cost, ready made choice to make your investments. Just like all the other choices you make, from buying your clothes to admitting your child in the school; you have to make choices with your money and savings. Since it is your hard earned money and you have sacrificed you're spending to be able to save it, you have to learn to make an informed choice. You can decide to make your own portfolio, just like making the bhel yourself. But if you decide to choose a ready option, then you can always buy the fund.

Simple, isn't it?