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I am 38. My husband (39) and I run a business together. We have two daughters aged 11 and 5.

Our monthly expenses are Rs 40,000, which includes home loan EMI of Rs 15,000.Our current outstanding is Rs 8 lakh. After meeting all commitments, we have a surplus of Rs 10,000 a month.

We have the following goals (all given in present value).

We need Rs 25 lakh for each child for their graduation and post-graduation at 18 and 21.

For each child's marriage, when they turn 25, we would require Rs 15 lakh .

We wish to buy a holiday home for Rs 50 lakh where we intend to live post-retirement.

How much do we need to save for our retirement, considering we could live till 80, if we retire at 60?

We would also like to accumulate some funds for travelling after retirement. This would entail spending Rs 1.5 lakh every year .

We own a few plots, totally worth around Rs 50 lakh. Is it a good strategy to sell these and buy a flat to earn rental income?

Investments:

Our present equity portfolio of Rs 30 lakh consists of blue chip and midcap stocks.

Our mutual fund portfolio is worth Rs 60 lakh.

We have FDs for Rs 12 lakh and Rs 3 lakh in PPF and gold ETFs and coins for Rs 10 lakh.

Every month we invest in SIPs of Rs 30,000 in six diversified mutual funds. Please suggest your choice of funds. Balance fund investments are to the tune of Rs 3,000 a month.

Every quarter we invest Rs 25,000 in PPF and FDs. Besides we invest Rs 1 lakh in gold.

We can take high risk for our investments.

My husband has a term plan of Rs 75 lakh and we have a family floater health policy of Rs 3 lakh. We have emergency fund of Rs 2 lakh. — B. Shweta

The self-employed need to have liquidity to meet emergency needs either for business or for medical reasons . So, it is of paramount importance to have proper asset allocation.

Consider this: within the MF allocation of Rs 60 lakh, you can increase the exposure to midcap and sector funds to earn higher returns. But you need to spend time to monitor and also profit-booking is mandatory in an aggressive portfolio. Failing to do so will harm to your portfolio returns.

Goals and investments: With your current investments and asset allocation, you can reach all the goals. But fix return targets for your investments and book profits.

For your elder daughter's education, when Rs 15 lakh is inflated at seven per cent for the next 7 years it will be Rs 24 lakh.

In your MF investment if you earmark Rs 10.9 lakh and manage a return of 12 per cent, you can reach the target. If due to volatile equity markets, you achieve superlative returns in any particular year, you need to take profits and shift the proceeds to debt.

Alternatively, follow the current investment pattern of pooling of funds, but ensure portfolio return of 12 per cent .

Property: Rental yield on residential property, at best, will be in the band of 4-5 per cent. Whereas the land value is expected to appreciate faster . Since you have surplus to meet all the goals, we suggest you retain the land .

Managing holiday homes is very difficult and that too buying now for retirement is not a good choice. Since you are holding a plot it will hedge any increase in the cost of the land over the years. So, accumulate the construction cost and sell your plot at retirement and avail capital gains by buying property. Since property will be new, maintenance cost will not eat into your retirement income.

Investment strategy: Retain all the existing schemes barring HDFC Growth and invest the proceeds in the existing folio of Franklin India Bluechip. Already your portfolio is over weight on mid cap schemes, if you wish to go aggressive and invest in sector funds, dilute HDFC Prudence. Continue your debt investment in the same proportion and invest the monthly surplus in direct equity.

Insurance: If you do not increase your liability, existing term insurance is sufficient. However; you need to increase your medical claim. Utilise the Top- up option offered by the insurer to buy a cover for Rs 5 lakh; this will ensure that you will have higher cover with lesser premium out go.