You can look at liquid or ultra short-term category mutual funds. These can help you to get about double the returns than the normal savings bank account though please keep in mind the taxes. For the purpose you mentioned, equity mutual funds are not recommended since they fluctuate in the short term and are ideal only for investing over 5 years. You should try very hard that you save at least 20% of your take home income. Setup the monthly Systematic Investment Plan (SIP) to get into a disciplined saving. Also, it's best you define a goal linked to these savings.

To avoid paying 30% tax on the interest earned on fixed deposits, I invested Rs 5 lakh each in Franklin India Prima Plus Direct Growth & FranKlin India High Growth Companies Fund Direct Growth around 7-8 months back. The valuation of both the funds have come down. Please advise whether to continue with these investments -- Parveen Sahu

Choosing a fund purely to save tax is not a good idea. 8 months is too early to judge your funds. The funds you have invested are doing decent but they should be suitable to your risk appetite and goals. An ideal portfolio has an exposure to debt funds as well. Considering that you still have 3-4 years, it may be ok to continue with these funds, given the outperform expectations from the equity markets in next few years, but keep in mind that the stock market outcomes are not guaranteed.

A 3-month-old boy who lost his father in an accident has received compensation of Rs 50 lakh. Needs regular income for 25 years. Are MIPs good for this? Suggest a few -- Vipin

MIPs may not be a good idea as regular income is not assured plus their dividends are post tax, anyway. You can do a bottom up calculation and find out how much out of Rs. 50 Lakhs needs to be committed to a regular income avenue and assign the remaining part, if any, to long term diversified equity mutual funds for his education goals. To generate the regular monthly income, given the situation, an instruments like Postal Monthly Income and Fixed Deposit seems more appropriate, to keep things simple. 1-2 good banks each from public and private sector may be chosen for placing FDs. Keep in mind that there would be a reinvestment risk since most banks take FDs for about 4-5 years. The alternate option would be to look at tax free bonds with tenor of 20 years. If you are able to carve out a surplus part for long term investing in equity MFs, then the same pool can also be used to support the regular expenses via Systematic Withdrawal Plan (SWP).