Sir I've recently sold a plot of land and received 35 lakhs. I want to use this amount to fund my 10-year-old daughter's higher education in India or maybe abroad 10 years from now. I already have a PPF account with 6 lakhs. Should I invest this corpus in mutual funds via STP from a liquid fund, or go for FMPs and hybrid funds? What is the best investment strategy to beat inflation yet ensure safety?

Ans: You have taken a wise step by planning for your daughter’s future.
Rs.?35 lakhs is a good corpus already.
You also have Rs.?6 lakhs in PPF.
You want to cover her education in 10 years.
You seek safety and inflation beating growth.
Let us now build a structured, 360?degree plan.

Understanding Your Goal Clearly
This is a goal-based investment scenario.
The aim is a 10?year horizon.
Education costs can rise faster than inflation.
Especially if she studies abroad.
You need a strategy that balances growth and safety.
Debt-only investments will not beat inflation.
Equity-only will involve volatility.
Hence, a mix is required.
We will align allocation to risk and timeline.
Your daughter’s education is a priority goal.

Appreciating Your Existing Setup
You already have:

Rs.?6 lakhs in PPF

Lock?in is 15 years

Currently earning around fixed rates

You also now have Rs.?35 lakhs more.
That’s a total of Rs.?41 lakhs.
This is a strong starting capital.
You show good financial intention.
PPF adds tax, safety, and discipline.
We can now diversify further from this base.

Risk Profile and Time Horizon
You have a 10?year horizon ahead.
A balanced mix of equity and debt suits well.
Risk should be moderate.
You seek stability and some growth.
You cannot take unreasonable risk at this point.
Portfolio must be resilient to market corrections.

Investment Options at a Glance
Let us assess key instruments:

Systematic Transfer Plan (STP) from liquid to equity

Fixed Maturity Plans (FMP) or closed?ended debt funds

Hybrid mutual funds (balanced funds)

PPF alone (already partly used)

We must evaluate each for safety, growth, tax, and alignment.

Why Not FMPs Only
FMPs are debt?based, with fixed maturity.
They offer moderate returns.
But those returns may not beat inflation over 10 years.
They also lack liquidity before maturity.
Plus taxation on gains is as per your tax slab.
This reduces realised benefit.
So FMPs alone won’t serve education goal well.
They can only be used as a small portion.

Why Not Hybrid Funds Only
Hybrid funds invest in both equity and debt.
They reduce volatility somewhat.
But their equity exposure is limited.
Typically 20–35% equity only.
This may not generate sufficient long?term growth.
To outperform inflation, higher equity part is needed.
Half-in?hybrid and half-in?balanced equity are better mix.
Hence we need separate allocations.

Why Not Liquid Funds Alone
Liquid funds offer stability and liquidity.
But returns are low.
They barely beat inflation.
They are good short?term homes but not enough for 10-year goals.
Hence only part of corpus should go to liquid funds.

The Case Against Index Funds and Direct Funds
You did not mention index or direct funds.
But it is important to highlight:

Index funds follow the market passively

They lack downside protection in corrections

No active management means no tactical risk management

They suit long?term, risk?tolerant goals

But here we need intelligent management for balance

Therefore, actively managed funds work better

Direct funds save commission but:

Miss expert monitoring

Lack discipline in asset allocation

No professional rebalancing

Hence regular plans via Certified Financial Planner are better.
They provide advice, review, and support.

Proposed Investment Allocation Strategy
Here is a broad allocation based on your needs:

Equity Mutual Funds via STP – For growth over 10 years

Hybrid Funds – To balance volatility and debt exposure

FMP or Short?Duration Debt – For stable returns on short?term portion

Liquid Funds – For initial parking and systematic deployment

Let us now detail each component and staged implementation.

Equity Mutual Funds via STP from Liquid
Why STP?

STP helps spread market risk.
You invest lumpsum in liquid fund first.
Then monthly move small amounts to equity fund.
This avoids market timing risk.
It also gives tax efficiency.
You get equity exposure without shock.

How to implement:

Park Rs.?15–20 lakhs in liquid fund initially

Set STP of Rs.?1 lakh per month to equity fund

Continue for 15–20 months

Use actively managed mid?cap / multi?cap funds

This gives both growth and risk management

Let this grow for full 10 years.
You will get market beating potential.

Hybrid Mutual Funds
Why include them?

Hybrid funds give both equity and debt exposure.
They suit investors seeking balance.
They reduce volatility versus pure equity.
They also provide regular portfolio stability.

How to invest:

Allocate Rs.?8–10 lakhs

Use monthly SIP of Rs.?50,000 for 20 months

Choose balanced or conservative hybrid funds

These hold approx. 50–60% equity

This will diversify your corpus wisely.

Fixed Maturity Plan Allocation
Why small portion?

You may want part of the corpus in debt-only instruments.
We are nearing 10-year goal, so add stability.

How to allocate:

Allocate Rs.?5–7 lakhs

Invest in FMPs maturing 3–5 years

These will provide moderate, predictable returns

Lock?in is acceptable as you have liquid assets elsewhere

This secures part of your corpus away from equity volatility.

Liquid Fund Holding – Deployment Base
Purpose and timing:

You may not want to invest entire Rs.?35 lakhs at once

Liquid fund is initial parking and fallback

It also funds STP and hybrid top?ups

Plan:

Invest Rs.?5–7 lakhs in liquid fund

This covers STP monthly transfer needs

And acts as buffer

You may hold for 6–12 months only

Move rest promptly to equity and hybrid.

PPF Role and Continuation
You already have Rs.?6 lakhs in PPF.
Continue PPF contributions if you can.
It gives safety and tax benefits.
But PPF is locked for 15 years.
This works well beyond a 10-year target.
So keep it, but do not over?allocate more now.
PPF remains a core debt component in your portfolio.

Asset Allocation Summary (Approximate)
Your corpus of Rs.?35 lakhs can be structured like this:

Liquid Fund: Rs.?7 lakhs (initial deployment)

Equity Funds via STP: Rs.?18–20 lakhs

Hybrid Funds: Rs.?8–10 lakhs

FMP / Short?Duration Debt Funds: Rs.?5–7 lakhs

Continue PPF contributions in parallel.

Tax and Withdrawal Planning
The 10?year horizon allows holding equity long term.
On redemption:

LTCG on equity above Rs.?1.25 lakh taxed at 12.5%

STCG taxed at 20%

Debt fund gains taxed as per slab

Plan redemption smartly:

Use withdrawal in parts

Use STP or SWP to reduce tax

Exclude index or direct fund exposure

Only actively managed funds will be used

Certified Financial Planner will help time payout.

Regular Monitoring and Review
Your portfolio must be reviewed regularly:

At least every six months

Check if equity is above target allocation after run?up

Rebalance by moving excess equity to hybrid or debt

Adjust STP rate if needed

Tune hybrid SIPs based on performance

Professional supervision is important.
Regular plans help you in rebalancing.

Inflation and Growth Expectations
Education inflation in India is around 8–10% annually.
Equity funds can deliver 12–15% long?term post-tax.
Hybrid can deliver 9–12%.
Debt instruments around 6–8%.

A combination ensures you beat inflation consistently.
Also gives portfolio safety in down markets.

Contingency Planning
If any shortfall or delay in goal arises:

Use liquid funds to bridge cash gaps

Adjust STP or SWP rates

Re-schedule hybrid fund SIPs

Delay overseas portion till later

Senior?faculty support or scholarship can help

PLanning ahead keeps you flexible.

Risks and Their Mitigation
Even with this plan, risk remains:

Equity market fall

High debt market interest rate risk

Tax changes

Sudden expenses

We mitigate them via:

Diversification across asset classes

STP spreading and discipline

Hybrid stability cushion

Liquid fund buffer

Regular monitoring

Tax planning and redemption structure

This creates cushion and flexibility.

Advantages Over Other Instruments
Let us compare for clarity:

Equity STP: potential high growth, manageable risk

Hybrid Funds: stability and inflation buffer

FMP: predictable returns on partial corpus

Liquid Fund: ensures cash availability and flexibility

PPF: tax-saver, long-term debt part

Each component supports another.
Together they form a balanced, goal-based plan.

Simple Action Plan to Begin
Keep Rs.?7 lakhs in liquid fund

Start STP of Rs.?1 lakh monthly to equity funds

SIP Rs.?50,000 monthly into hybrid fund for next 20 months

Invest Rs.?5 lakh lumpsum in FMP

Continue PPF contribution

Setup regular review schedule

Adjust withdrawals at goal?time (after 10 years)

You may start gradually over 6?8 months.
But do not delay equity deployment unnecessarily.

Financial Discipline Tips
Invest through Certified Financial Planner

Select regular fund plans, not direct

Avoid index funds and direct products

Track goal progress yearly

Rebalance as per market

Adjust for tax implications

Keep documents and nominations ready

Review asset allocation posture as goal arrives

Do not mix new insurance policies now

Final Insights
Your plan has a good base now.
You have capital, intention, and timeline.

To summarize:

Equity STP gives long-term growth potential

Hybrid funds act as buffer and steady returns

FMP gives fixed-income part

Liquid funds give flexibility

PPF gives tax shield and stability

Together they can beat inflation and provide safety.
Strategically combining these gives financial security and growth.
Use expert help from Certified Financial Planner.
Monitor portfolio annually.
Stay disciplined.
Your daughter’s education goal is fully achievable.

Best Regards,

K.?Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment