Sorry, I don’t know – is the answer I give. Quite disappointing, innit ?

People ask me this question more often than you think. Every second person I come across who wants to start investing wants to know one or two best mutual funds where they can invest.

It’s not that I can’t answer them but it’s just that I really don’t know how to. To me, the question itself is incomplete. How can one answer an incomplete question?

Please let me explain you with an analogy. If I ask you a question over the phone – I want to go somewhere. Tell me the best way to get there? – Would it be possible for you give me the right answer? If you really want to help me, you would ask me many follow up questions like

• Where do you want to go exactly ?
• Where are you right now ?
• When do you have to get there ?
• What’s your budget ? etc etc

There are more, but you get my point. And if I do not know the answer to these questions, will you be in a position to help me ? I doubt that. Yet, many advisers who are affiliated with some asset management company or people who recommend you to invest when you enter a bank, seem to have the answer.

The most common answer is “Sir, you invest in this XYZ fund which has given over 18% returns. And if you can take more risk, you can invest in ABC fund which has given over 25% returns. Both are 5 star rated funds sir. But sir, this is good for long term”. It is like you giving me an answer to “Take an aeroplane” to my analogical question.

One of friends invested 3 lacs of her savings into an aggressive Hybrid fund (the fund that has a minimum equity exposure of 65%) because her adviser told her that the fund will give 10% guaranteed return in 3 years’ time.  Her belief was strengthened by an old man filling up the same form standing next to her. I had a tough time explaining her that there was no guarantee in such funds. Eventually I gave her the AMC customer care number to call and confirm. And to her surprise, it turns out that I was right.

People love the idea of having an objective & clear answer when they ask “any” question, be it right or incomplete. They don’t like to be cross questioned. And I am the one who gets the look when I say “Sorry, I don’t know”.