Which is the best way to invest a lumpsum?

My friend has a corpus of Rs 5 lakh from a land deal which he needs to park for three years. I have suggested liquid funds, and asked him to start an STP option for three years.
1. Is the strategy correct?
2. If yes, which is the best AMC for this and what funds?
3. If this is not a good strategy, what is a better option to create wealth with moderate risk appetite.
-- Amit Pande

Ankita Tanna Narsey, Oaktree Financial Advisors, responds:

When you have a lumpsum to invest, parking the money in liquid funds and doing an STP is the best option to invest systematically in equity mutual fund schemes.

Considering an average risk appetite and a time horizon of three years, you could consider doing an STP into multicap fund and balanced fund.

Below are my recommendations:

Multicap fund
1. Aditya Birla Sun Life Equity Fund
2. SBI Magnum Multicap Fund

Balanced Fund
1) HDFC Balanced Fund
2) ICICI Prudential Balanced Advantage Fund

However, I would like to highlight the benefit of the advantage of staying invested for a longer tenure to earn better returns on your investments.