Gold investing questions to know now

Before making any new investment decision, it pays to understand the details of your overall portfolio and how the investment can help you reach your goals.

Gold is one investment option that, given today's inflated prices, concerns over recent bank failures and ongoing risk of a potential recession, may be top of mind for Americans. Because it's often seen as a hedge against inflation, many turn to gold during periods of uncertainty to add some stability. 

To help you decide if gold is right for you, we've outlined a few questions it could be good to have the answers to.

If you're considering investing in gold, then review your options with a free information kit here.

3 gold investing questions to know now

Here are three questions to ask yourself before you invest in gold.

What assets are in your portfolio?

A great reason to add gold to your investment portfolio is diversification. 

Over time, gold prices tend to perform well during periods of inflation and when the price of the U.S. dollar goes down, making it a good diversifier from some other common asset classes. Using 2022 as an example, gold prices actually showed a marginal rise while the S&P 500 fell overall. 

While that won't happen every year, diversifying with gold can help you during periods of loss.

Most investors will benefit from a diversified portfolio. Choosing diverse investments for yourself — which may include a mix of stocks, bonds, mutual funds, real estate, gold or other asset types — can potentially help you weather periods of downturn or uncertainty while maximizing gains and keeping up with your risk tolerance.

Explore your options for investing in gold today.

How much risk are you willing to take on?

Assessing your risk tolerance is a smart way to determine whether an investment is right for you.

But how you judge that assessment can vary and depends a lot on your individual situation. For example, if you're close to retirement age or already retired, gold may offer a more reliable return and can be seen as a safer store of value. Even still, gold isn't as safe as putting your money in very stable options like certificates of deposit (CDs) and there's always some risk involved when you're investing. 

Younger people, on the other hand, may have a much higher risk tolerance. With decades before they need to tap into retirement funds, younger investors may be more willing to take on riskier investments that can have potentially higher returns.

If you're not sure about the best path for you or how much risk you're comfortable with, consider talking with a professional before you decide.

How much stability vs. growth are you looking for?

Just like it's important to diversify and assess your risk, part of your decision before investing in gold should be how much of your portfolio you want to dedicate to more stable assets and how much you want to maximize growth potential.

Stocks, for example, have higher risk but could also potentially grow more over time. Gold may be more stable, but while gold prices have increased over time, the returns are not as eye-popping as some riskier options. 

Gold investing may not see the same high returns as stocks will but they may not be as risky, either. Diversifying some of your assets to gold, then, could be a good hedge against market volatility.

The bottom line

Plenty of investors choose to add gold to their portfolios as a diversifier, a hedge against inflation and for its long-term performance. Right now, gold prices are up and a looming recession could make investing in gold worthwhile. Before you make the choice for yourself, it's worth taking stock of your current portfolio and financial goals to make sure the decision is right for you.

To learn more about investing in gold today, compare your options using the chart below.