Mutual funds are the ideal investment option for funding retirement and children's education. However, they must form only a part of such portfolios. Here's why. Capital protection is one of the foremost requirements of a retirement or education fund. If you are 27 years old and plan to retire at 60, you can invest the bulk of your portfolio in equity oriented schemes. This is true for planning children's education as well. If your child is 16 years old and you need the money in two years, you should completely avoid equity funds.