Risky business.

Am I taking too much risk? To answer this question, we'll often look at our portfolio, focusing on the mix of stocks and conservative investments.

But just because some investors have a heftier allocation to stocks doesn't mean they're taking more risk than other folks with less aggressive investment mixes. Instead, we need to look beyond the mix of stocks and conservative investments--to the rest of our financial lives.

Consider two hypothetical investors. Both are age 40 and both have $200,000 portfolios. His portfolio consists of $100,000 in bonds and $100,000 in a diverse collection of stocks. Her portfolio consists of $75,000 in bonds and $125,000 in a similarly diverse mix of stocks.

At first blush, she seems to be taking more risk. But to figure out whether her overall finances are truly riskier, we may want to ask some additional questions.

How secure is your job? She might be a government employee with a steady paycheck. He may run a small business with fluctuating income and uncertain prospects.

How much debt do you have? She might be debt-free, while he has $100,000 in debt. In fact, if you subtract his $100,000 in debt (which is costing him interest) from his $100,000 in bonds (which are paying him interest), his net bond position is effectively zero.

Will you receive a pension when you retire? Her government job will pay her a pension when she quits the work force. He isn't nearly so lucky. The bottom line: While her portfolio is more aggressive, her overall finances appear to be more conservative--and maybe she can afford to take a little more risk with her investments.

INVESTMENT PRODUCTS: NOT FDIC INSURED •NO BANK GUARANTEE • MAY LOSE VALUE

The information provided is solely for informational purposes. It is not an offer to buy or sell any of the securities, insurance products, investments, or other products named.

Asset allocation and diversification do not assure a profit or protect against loss.

Bonds are affected by a number of risks, including fluctuations in interest rates, credit risk and prepayment risk.

Investments are subject to market fluctuation, investment risk, and possible loss of principal.

The hypothetical scenario above is for informational purposes only, and is not based on actual clients or specific experiences.

© 2011 Citigroup Inc. Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. ("CGMI"), member SIPC. CGMI and Citibank, N.A. are affiliated companies under the common control of Citigroup Inc. Citi and Citi with Arc design are registered service marks of Citigroup Inc, or its affiliates.