Hi Hemant, I am writing this to seek your advice for my close relative. He is 39 yrs old and currently running his own business. He has some lumpsum amount of Rs.10 lakhs and he would like to invest it to generate the good returns. His primary goal is secure his family future particularly for his 2 sons aged 9 and 13. It would be great if you suggest suitable investment option to align his goals. Looking forward your valuable suggestions and thanks in advance Thanks Rajesh

Ans: At age 39, your relative is still early in his wealth journey.
He has two clear strengths—business income and Rs 10 lakh lumpsum ready for investment.
His goal is noble—securing a stable future for his two young sons.
Let’s explore a structured and 360-degree plan to use this Rs 10 lakh wisely.

Understanding the Family’s Financial Foundation
He is 39 years old and self-employed.

He has two sons, aged 9 and 13.

His primary aim is long-term wealth for his children’s future.

He has Rs 10 lakh lump sum available now.

He is likely to have fluctuating income due to business.

This situation calls for a mix of safety, growth, and goal-linking.
He must invest where returns are inflation-beating and risks are controlled.

Long-Term Goals and Time Horizon
Let us first map the major goals:

Elder son will need college funding in 5 years.

Younger son will need it in 9 years.

He may also need funds for weddings or business expansion later.

Retirement planning should also start now.

Right now, he wants to focus on his children’s education first.
We’ll plan based on that time frame.

Step-by-Step Approach for Rs 10 Lakh Investment
This Rs 10 lakh should be split wisely.
Every rupee must carry a purpose.
Let us break it down with strategy and logic.

Avoid Real Estate and Traditional Products
Real estate may seem attractive, but it is illiquid.

It locks funds and adds maintenance burden.

Also, it doesn't generate regular returns or help in education funding.

Traditional insurance plans also don't help here.

If he has LIC, ULIP, or investment-cum-insurance policies, surrender them.

Reinvest in mutual funds through regular plans.

Avoid real estate and low-return insurance traps.

Why Mutual Funds Are Better Here
Mutual funds offer growth, flexibility, liquidity, and tax efficiency.

They are well-regulated and available in different risk-return profiles.

He should always invest through regular plans via a CFP-led MFD.

Direct plans give no guidance, no alerts, and no human help in tough times.

In his case, professional help is essential.

Suggested Allocation of Rs 10 Lakhs
Rs 6 Lakhs – Long-Term Growth for Education (8–10 years horizon)

Invest in 2 well-managed actively managed equity mutual funds.

One should be a diversified flexi-cap fund.

Second could be a large-and-mid cap or multi-cap fund.

These give high potential growth if held 8–10 years.

Prefer growth option in regular plan through CFP/MFD.

No need to touch them until child’s college expenses start.

Rs 2 Lakhs – Medium-Term Needs (4–6 years horizon)

Use for elder son’s college expenses.

Choose a conservative hybrid or balanced advantage mutual fund.

It balances equity and debt.

Safer than full equity but better than FDs.

Helps beat inflation and keep capital safe.

Invest as lump sum. No need for SIP for this corpus.

Rs 1.5 Lakhs – Emergency Reserve

Invest in a liquid mutual fund or ultra short duration fund.

This is for family emergencies or business shortfalls.

Keeps cash ready without locking in a bank FD.

Also allows easy redemption in 24 hours.

Keep this untouched unless true emergency happens.

Rs 50,000 – Child-Linked SIPs

Start two SIPs of Rs 1,000–1,500 monthly in child’s name.

Prefer child-oriented mutual fund or any long-term equity fund.

These SIPs build habit and remind goal every month.

It shows intent and creates legacy.

Use Only Actively Managed Mutual Funds
Do not use index funds.

Index funds follow the market blindly.

They fall hard in market crashes and offer no downside control.

Actively managed funds are smarter and protective.

They select better-performing stocks.

They skip risky sectors during downturns.

For family protection, active funds via regular plan are safer.

Tax Rules and Strategy
Equity fund profits above Rs 1.25 lakh are taxed at 12.5%.

Short-term equity gains taxed at 20%.

Debt or hybrid fund gains taxed as per income slab.

Redeem smartly over multiple financial years.

Take help from CFP for tax harvesting and rebalancing.

What About SIPs Going Forward?
His lump sum will serve immediate purpose.

But future investing should not stop.

He can add monthly SIPs from business income.

Even Rs 2,000–Rs 3,000 per month will make a big difference.

SIPs must continue for long-term education and wedding funds.

Insurance Protection Is Important
If he does not have term insurance, get one today.

Cover should be Rs 50 lakh minimum.

It will cost very little per year.

Do not buy endowment or money-back plans.

Only pure term insurance is useful.

It protects family even if something unfortunate happens.

Keep a Goal-Based Approach
Every rupee should have a goal tag.

Split investments by purpose, not just by return.

Keep long-term money away from temptations.

Use short-term money only for actual need.

Track each goal every 6 months with your MFD/CFP.

What Should Be Avoided
Don’t invest everything in FD. Returns are too low.

Don’t invest in gold or real estate. They are not liquid.

Don’t use index funds. They don’t protect capital.

Don’t go for direct mutual funds. No support is given when markets fall.

Don’t buy insurance as investment. Low return, high cost.

Extra Tips for Children’s Education Planning
Invest in child’s name only if control is needed.

Otherwise, invest in parent’s name for tax benefits.

Shift equity to liquid funds one year before goal.

Don’t wait till last moment to redeem.

Start preparing college fund withdrawal by 12th class time.

What He Is Doing Well Already
He has Rs 10 lakh ready to invest. That shows discipline.

He is not rushing into random choices.

He is thinking about children’s future early.

He is willing to plan, not just save.

These things show maturity and vision.

What Needs To Be Done Immediately
Allocate the Rs 10 lakh in a structured way.

Open SIPs and automate at least Rs 2,000 monthly.

Build emergency fund using mutual fund, not bank account.

Get term insurance cover if not already taken.

Partner with a certified CFP for future steps.

Finally
This Rs 10 lakh is not just an amount.
It is a foundation for his family’s future.

By using actively managed mutual funds through a CFP, he gets expert care.

Avoid direct funds, index options, and insurance traps.

Divide money across short, medium, and long-term needs.

Use SIPs to build consistency.

Track progress every 6 months.

Most importantly, stay patient. The power of compounding needs time.

His children’s dreams can be funded with smart and structured investing.

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