“Just wait for a few years, your bro would zip past by you in a red Ferrari,” Nash excitedly shared his future dream with his friend, Avinash.
“And you would drive down to my sea-facing grand mansion, and you will park your red Ferrari next to my blue Jaguar,” replied Avinash with the same zest.
“Avi, once each of us gets a job, we will go for a Europe trip. I so want to see the Manchester United home ground,” said Nash in a dreamy voice.
“Yes Nash, and we will go to Spain and play Tomatina.”
In their second year of college, the two friends sat in the college canteen and dreamt about a fabulous future. Though uncertain, they were quite sure that their future would be full of riches – after all, they would start earning in a few years.
“O.M.G! You guys are dreaming again, wasting time,” exclaimed Eldrina, as she marched towards her two friends.
“What Eldi, you ruined our daydreaming,” said Nash irritably.
“Yes Eldi, you ARE a buzz kill,” complained Avinash.
“And what are you two lazy bums? Do you really think that you will achieve all your dreams by sitting here, dreaming?” chided Eldrina.
The three of them were close friends since the first year. Avinash and Nash were famous in the college for roaming about aimlessly and making bizarre plans for the future. Eldrina, however, was totally different from her friends. She was a disciplined, focused and pragmatic girl. She believed in working hard and enjoying the rewards of hard work.
“Oh, we will pass the exams, and get a great job, don’t you worry about it,” said Nash nonchalantly.
“Oh yes, we know our future riches depend upon the job. We are not going to screw that up!” Avinash chimed in.
With a long, resigned sigh, Eldrina asked, “Do you guys seriously think that you will get rich once you get a job?”
“Of course!” chorused Avinash and Nash.
“Then, my friends,” said Eldrina with a dramatic pause, “You guys would remain poor all your life.”
Infuriated by the bitter words, both the friends fumed.
“So, you are an astrologer, too,” mocked Avinash.
“Ha! Pauper, my foot,” Nash joined in the rebuke.
“Not an astrologer. A financial literate,” said Eldrina with pride.
The confused look on Nash and Avinash’s faces made Eldrina laugh uncontrollably.
When she recovered, she asked rhetorically, “Do you think that when you start earning, you wouldn’t have any expenses?”
Avinash and Nash didn’t like to be rudely jolted from their pleasing dreams of the future, but they were curious. They had not thought of the expenses.
“Also, do you think that your starting salary would be so high to afford you expensive cars or houses or foreign trips?” Eldrina continued puncturing their dreams with her pragmatic speech.When she had their complete attention, Eldrina told her friends that to realize their future dreams, they must get their acts together now.
“Now? But we are still in college and have no earning,” said Nash incredulously.
“You have the greatest wealth in the world,” Eldrina said teasingly.
The two boys exclaimed in surprise.
“Time,” said Eldrina with a serious face.
She knew she was going to be late for her next class, yet Eldrina stayed on to help her befuddled friends. “Okay, I will explain to you from the beginning.”
Eldrina explained to her two friends that to lead a grand lifestyle, they first need to accumulate wealth. And they can’t expect to attain wealth by spending on things they don’t need.
“The rich are financially disciplined. They don’t spend money, they invest it,” she said with passion.
She told the boys that they can start following a financially disciplined life by cutting down all unnecessary expenses on eating junk and buying expensive clothes and save a little from their pocket money each month.
“Come on, even if we save a little every month, we can’t possibly accumulate a lot of money in a few years,” said Avinash dejectedly.
“This is because you don’t know about the power of compounding in mutual funds,” said Eldrina smilingly.
“Dear friends, the famous proverb, ‘Time is money,’ is true after all,” she chuckled.
Eldrina explained to her friends that a mutual fund is a pool of money collected from thousands of investors. A qualified financial expert, or the Fund Manager, invests this pool into various shares, bonds, and other instruments.
“The good part is,” she said, “you can invest in mutual funds through SIPs or Systematic Investment Plans each month; as low as Rs 500!”
Eldrina told them that money invested in mutual funds earns a compounded rate of return. So, if invested regularly for a long period, say over ten years, the money invested in mutual funds can grow significantly and even if you stop investing then, the portfolio would still keep growing.
As the sun slipped down the horizon, Avinash and Nash basked in a revelation that would change their lives forever.
The story doesn’t end here. Eldrina introduced her friends to her father, who was a famous financial consultant. He spoke to Avinash and Nash and penned down their financial goals, after which, he guided them to start SIPs in good plans.
Financial discipline, as Avinash and Nash realized, might not fulfill their bizarre dreams of buying Ferraris and grand mansions in the near future, but it will certainly help them attain financial freedom. The freedom to choose a profession they like, without worrying about pay cheques.