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By Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management May 28, 2013 05:30 PM
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.