I am 37 years old and have three dependants: my wife, 3-year-old son and 1-year-old daughter. I have the following goals (all in present value).

I would require Rs 20 lakh for my son's graduation and Rs 15 lakh for his master's degree. For his marriage, I would require Rs 15 lakh in 2035.

For my daughter's MBBS, I would need Rs 26 lakh and Rs 20 lakh for her marriage after 23 years.

I need Rs 40, 000 a month for our present standard of living.

My net monthly income is Rs 1.5 lakh and in addition, I receive an annual bonus of Rs 4 lakh. I expect my income to rise by 10 per cent on an average. My current monthly expenditure is Rs 60,000, inclusive of rent. I have a monthly surplus of Rs 64,000.

I have a term plan for Rs 1 crore and I have an ULIP with cover of Rs 40 lakh. The annual premium paid is Rs 16,000. We are covered by a group health policy.

I own a flat and have let out for Rs 11, 000. SB account balance is Rs 16 lakh earmarked for purchase of a second house. I have an FD for Rs 2 lakh at 9.25 per cent, maturing in 2014.

PPF value is Rs 2 lakh and annual contribution is Rs 40,000.

Gold in ETF and physical forms is at Rs 3 lakh and my direct equity exposure is Rs 9 lakh. I have risk profile that is above average.

I have SIPs in five schemes for Rs 26,000 a month. There is another SIP that I intend to start for retirement with monthly saving of Rs 15,000 for 20 years. My EPF balance is Rs 7 lakh and monthly contribution is Rs 12,000 .

Will my current investments address the first three goals? Do I need to change my investment strategy? How much do I need to save for retirement after factoring my EPF? I am planning to buy a house for Rs 75 lakh in 2014 with a loan of Rs 50 lakh. Will I have a surplus to buy a second house? If need be, I can mortgage my house for down-payment.

— S. Dheer

We often come across individuals willing to take high risk. But when markets correct they lose their heart, change their risk tolerance and book losses to get out of the market. Very few adopt a buy-and-hold strategy. Since you have adopted this strategy for the past seven years, we suggest an aggressive portfolio for all your goals, except for buying the second house. You need to maintain an asset allocation proportion for more stable returns. Having sufficient surplus and all goals are being long term, we recommend a 70:20:10 portfolio in favour of equity, debt and gold. Such a portfolio can easily achieve a return of 13 per cent (same return applied for all calculations). By constructing such a portfolio you will generate a higher surplus.

Education

When children are at kindergarten level, deciding on their graduation may be a tad too early! But it is good to make some provision. For your son's graduation, you will need Rs 51.5 lakh. This is arrived at by inflating the present cost at seven per cent (same rate applied across all calculations). To reach the target, you need to accumulate a sum of Rs 10,930 every month for the next 12 years. His post-graduation, being 18 years hence, save Rs 5,940 monthly to the reach goal.

Your daughter's graduation will need Rs 82 lakh. For this you must save monthly, a sum of Rs 11,100.

Both your children's marriages are scheduled in 2035. For you son's marriage expenses, you will need Rs 71 lakh and for your daughter's, Rs 94.8 lakh. To reach the target you need to save monthly a sum of Rs 9,700 for 23 years.

House

You will have a surplus of Rs 55,000 that can be accumulated for the next two years. Your current savings in SB can be shifted to an FD. This, along with your savings, you can help you meet 35 per cent of the property value. If you take a loan for Rs 50 lakh with a tenure of 15 years, at 10.25 per cent, your EMI will work out to Rs 54,500.

Retirement

The present living cost of Rs 4.8 lakh will be Rs 21.26 lakh when you turn 59. To meet your annual household expenses at retirement, you need to have a corpus of Rs 4.2 crore and it should earn inflation adjusted return of one per cent till you turn 80. Your current accumulation in EPF and future savings will help you meet your retirement needs without any additional savings, provided EPF continues to deliver 8.5 per cent return. If EPF fails to meet the return target, ULIP proceeds and direct equity investments will bridge the shortfall.

Your children's marriages are going to take place post retirement. So, save more for this goal once education and home loan commitments are completed. To protect all your goals increase your risk cover by another Rs 1 crore.

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