Ask us: on investments

Mutual funds are not meant to provide regular dividend options.

Vidya Bala answers: A. How much you can save is not clear. We assume you that you are suggesting you can save about ₹2 lakh a year. Whatever be the sum, starting investments early on for your child gives you distinct advantages. You can start off whatever you can spare by investing in PPF. If you have a girl child, then consider Sukanya Samriddhi Yojana. These two will provide tax deductions as well. Outside of these, invest in simple equity index funds. A. Mutual funds are not meant to provide regular dividend options. We do not know the nature of your funds (equity or debt) and their quality. But considering your situation, it is best you opt for: pension option of Vaya Vandana Yojana from LIC, small savings option of Senior Citizens’ Savings Scheme (in post office or SBI) and Floating Rate Savings Bond from RBI (available in major banks). This will ensure you get regular income. If you are in the high-tax bracket, then consider about 20% in ultra-short term debt funds and do a systematic withdrawal plan. This will be more tax efficient. But choose the options mentioned first before considering mutual funds.