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Q: I can invest Rs 10,000 per month. My goal is Rs 35-40 lakh in a time period of six years, I have an insurance of approximate Rs 20 lakh cover and I have PPF funds worth Rs 4,000-5,000 per month. How should I allocate the money?

A: Firstly, if you invest Rs 10,000 a month even with a very aggressive allocation you should keep in mind that over a six year horizon it will be difficult to accumulate a corpus of Rs 35-40 lakh without taking too much risk. You are looking at a corpus that is closer to Rs 15-20 lakh even if your allocations were very aggressive and the market did very well.

Your allocations to funds should be pretty aggressive so I would recommend you take about 60% of this amount and invest it in large cap equity funds specifically HDFC Equity or DSP Equity. IDFC Premier Equity is a good fund where you could park another 20% into midcap equity funds to give you some kick in the portfolio. Then save about 15% to allocate to gold; you can allocate to a gold fund like the Goldman Sachs Gold ETF, the former Benchmark Gold ETF - that would be my broad advice.

Q: I want to invest Rs 5,000 per month. I have started an SIP of Rs 5,000 in 2000 each in HDFC Prudent Fund and IDFC Premiere Equity Fund. Please suggest the best Gold ETF for a timeframe of five years with the maximum returns?

A: As far as Gold ETF goes, it�s an important part of your portfolio so you should certainly allocate to it. I think you are allocating about the right amount because between your SIPs and Prudents and Premier Equity, with Rs 5,000 planned in gold, you will have about 60% in equity and 30% in gold, which is a good allocation. Among Gold ETFs, the best one is the Goldman Sachs Gold ETF, this was formerly called Gold Bees by Benchmark Mutual Fund. It is one of the largest and oldest ETF. It tracks the gold prices more closely than any of the other ones. The fees and the management cost are also the lowest so it�s got a very good history behind it. So that would certainly be the one I would recommend.

I would suggest against investing more in prudents. I would look at another fund, either a balanced fund or an equity fund. The reason is that both prudents and Top 200 have got very large overtime and performance is likely to suffer in the next couple of years as the funds get too large for their capacity. So I would look at Birla Frontline Equity or a DSP Equity Fund which also have a great track record but are smaller in size.