Lowering Risk, Improving Odds

Time, risk, and goals are critical factors in asset allocation. Here are three scenarios for investors aged 32, 42, and 52. The 32-year-old earns $80,000 a year and has $475,000 stashed away. The 42-year-old makes $120,000 and has $650,000; and the 52-year-old earns $150,000 and has $1 million.

They're invested heavily in tech stocks, but wish to be better diversified. Their risk preferences closely mirror their ages.

All three would like to retire at age 67 on $120,000 a year, or 62 if possible. We asked Financial Engines Inc., a Web-based financial planning firm, to suggest asset allocations for each that would improve the odds of the investors reaching their goals with less volatility in their portfolios.