Mutual funds for my higher education

I will be starting my job this month. I want to save for my higher education abroad. I will go for higher studies after three or four years. How should I invest my income?

- Sumit Singh

Subir Jha, founder, Buckspeak, a financial planning firm based out of Hyderabad, responds:

If you are not in the high tax-paying slab (taxation is less than 10% of your income), you should stick to recurring FDs. Do it for a year and then you could renew it for another two-three years (assuming there is a decent hike in rates or else renew only for a year). We expect the interest rates to go up from here (no guarantees though).

However, if your tax liability is going to be more than 10% of your income, you could invest 50% in FDs ( in the above-stated strategy) and 50% in debt funds: Kotak Corporate Bond Fund and IDFC Banking & PSU fund.