I am aged 38 and my wife is 30. Both of us are medical practitioners, working in a college. We have a one-year-old daughter . We may plan to have another child. Our combined monthly net salary is Rs 1.3 lakh, after deduction of TDS and EPF of Rs 780 each by our employer.

In addition to my employment, I am also a partner in a nursing home, and my capital in the venture is Rs 20 lakh. I receive 12 per cent interest on my capital every year, and also a share on profit to the tune of 15 per cent. I reinvest all the money received back into the nursing home to expand it. We don't have any loans or liabilities. Our combined monthly surplus is Rs 75,000 and expense is Rs 57000. I am investing Rs 5000 in the five-year postal recurring deposit and it will mature in 2015. My wife started an RD in a bank two months ago for 10 years at an interest of 9.25 per cent, and another with a 5-year term at 9.5 per cent with monthly deposits of Rs 5000.

Goals : We would like our children to do post-graduation in engineering or medicine, for which I need to save a sum of Rs 75 lakh each in today's value. However, recently, I have opened one PPF account in my daughter's name and plan to contribute Rs 70,000 per annum.

For the marriage of our children, I may require Rs 15 lakh each in present value. To lead a retired life from 58, I may require monthly Rs 35,000 in present value. We expect our life expectancy to be 70 years.

We have a plot measuring 17 cents, which has been gifted by my mother, and it is vacant. We could not promote anything there, because it will cost Rs 2-3 crore. In an adjacent plot of approximately 10 cents, we have built a house measuring 4000 square feet.

Guide us, so as to reach all the above goals. For investments, we can take moderate risks .

— Mahesh T. Bhat

Even without a proper financial plan, you have a well-built portfolio. What is more, you are also having a roadmap for long-term goals. If you invest your surplus in proper a portfolio with appropriate asset allocation, you can not only lead a comfortable retired life, it will also help you leave an estate to your legal heirs.

Since your children's education, marriage and your retirement goals are distant targets, it may be ideal to build a portfolio with higher allocation to equity based on your risk appetite.

In your current portfolio, due to inheritance, you have a higher weight to real estate. Hence, for your future savings, do concentrate on equity, debt, gold and if you are open, with professional advice, include commodities as well. To protect all your goals and health, you need to buy an insurance cover.

Education : The present value for completion of higher education of Rs 75 lakh will be Rs 2.5 crore by 2033, if the inflation is 7 per cent. If you have one more child within the next few years, the requirement will roughly be the same.

To reach the sum, you can build a portfolio with asset allocation in the ratio of 60:30:10 (equity, debt and gold). These should earn returns of 15 per cent, 9 per cent and 8 per cent respectively, giving a weighted average return of 12.5 per cent. Even assuming a conservative return of 12 per cent, you need to save a sum of Rs 34,500 per child.

Do split the investment into two portions, one for graduation and the other for post-graduation. For graduation save Rs 20,850 for 192 months, and for post-graduation, save Rs 13,650 for 240 months. For the marriage of your daughter, the present value of Rs 15 lakh inflated at 7 per cent for the next 23 years, would be Rs 71 lakh. To reach the target, save monthly, a sum of Rs 4870 till 2034.

Retirement : To reach your retirement corpus, earmark all your current investments barring the PPF in your daughter's name for this goal. The current annual living cost of Rs 4.2 lakh, if inflated at 7 per cent, will at your retirement in 2031be Rs 16.3 lakh. To receive such an income, your retirement corpus has to be Rs 3.2 crore. Your current investments, balance in EPF and its future accumulation will help you to reach Rs 3 crore. The likely shortfall will be Rs 20 lakh. If you save a sum of Rs 1500 per month at 12 per cent return for 240 months, you can comfortably meet the shortfall.

To meet all your goals, you need to save monthly a sum of Rs 75,400. With your current surplus, there will be a shortfall of Rs 400. Since the life expectancy is improving, we have done calculations till your age of 78.

Insurance : To protect all your goals, you need to buy a term insurance cover for Rs 2.7 crore for 20 years, and your premium outgo will be Rs 40,000. If you wish to hedge your risk with the plot, then buy term insurance for Rs 1 crore, and the premium outgo will be Rs 16500. To protect your family, buy a floater health insurance cover for Rs 5 lakh, for which annual premium outgo will be Rs 14000.

Investment : Invest in the following funds — HDFC Balanced, IDFC Premier Equity, Franklin India Bluechip and HDFC Equity, while having the asset allocation ratio mentioned earlier in mind.

For the calculation, we have not factored in the future earnings from the nursing home, and not accounted for the marriage expenses of the other child.

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