Gold (GC=F) futures opened at $3,444.30 per ounce Wednesday, 0.1% higher than Tuesday's close of $3,439.20. Wednesday's opening price is a record high for the precious metal, which last peaked at $3,444 on June 13.

Gold's new peak price comes as the August 1 reinstatement date for reciprocal tariffs approaches. On Tuesday, President Trump announced trade deals with Japan, the Philippines, and Indonesia with import levies ranging from 15% to 19%, plus a 40% tariff on foreign goods routed through Indonesia. The U.S. does not yet have trade deals with the EU or India. Meanwhile, the U.S. dollar (DX=F) is down 10% for the year, which can indicate global concern about the U.S. economy. Historically, a weaker dollar is associated with higher gold prices.

Learn more: How the dropping dollar could scramble Trump's agenda

The opening price of gold futures on Wednesday is 0.1% higher than Tuesday's close of $3,439.20 per ounce. Wednesday's opening price marks a gain of 3.1% over the past week, compared to the opening price of $3,341.20 on July 16. In the past month, the gold futures price has gained 2.3% compared to the opening price of $3,365.90 on June 23, 2025. In the past year, gold is up 43.8% from the opening price of $2,395.80 on July 23, 2024.

24/7 gold price tracking: Don't forget you can monitor the current price of gold on Yahoo Finance 24 hours a day, seven days a week.

Want to learn more about the current top-performing companies in the gold industry? Explore a list of the top-performing companies in the gold industry using the Yahoo Finance Screener. You can create your own screeners with over 150 different screening criteria.

As we’ve been saying all week, investing in gold is a four-step process, and today, we’ll explore step 3, choosing a form.

Once you define your target gold allocation, you must choose a form of gold to hold. Your three options are:

Physical gold

Gold mining stocks

Gold ETFs

Physical gold includes jewelry, gold bars, and gold coins. The advantages of physical gold include:

Readily accessible for use. If you keep your physical gold at home, it is easily available for you to use as a medium of exchange in an economic emergency.

No added volatility or ongoing fees. Gold mining stocks tend to rise and fall with gold prices, and business-related factors enhance their volatility. Gold ETFs charge administrative fees in the form of expense ratios.

Learn more: Take a deeper dive into the gold sector

The disadvantages of physical gold include:

Risk of theft or loss. Physical gold must be properly secured. Whether you store it in your home or with a depository, gold can be stolen.

Lower liquidity. Physical gold is less liquid than stocks or ETFs. If you are not using the gold as a medium of exchange, you may need to locate a dealer and pay a markup on the sale.

Owning shares in gold mining stocks provides indirect gold exposure. The advantages of mining stocks over physical gold include:

Greater liquidity. Large-cap gold mining stocks like Barrick Gold Corporation (GOLD) and Franco-Nevada Corporation (FNV) generally enjoy a narrow bid-ask spread, which is a sign of liquidity. The bid-ask spread is the difference between what buyers will pay and what sellers will accept.

Easy to store. Stocks live in your brokerage account and do not consume physical space. In normal times, this is an advantage. In an economic catastrophe, this could be a disadvantage if brokers or the stock market are temporarily shut down.

Learn more: The top performing companies in the gold industry

The disadvantages of owning gold mining stocks include:

Greater volatility. Since 2000, gold mining stocks have risen and fallen faster than gold spot prices. And in recent years, gold mining stocks have trended down even as gold has gained value.

No utility as a medium of exchange. Gold mining stocks can appreciate, but they have no direct utility as a medium of exchange.

Gold ETFs are funds that invest in gold mining stocks or physical gold. Their advantages include:

Easy to store. Like gold mining stocks, ETF shares are essentially digital assets with no storage requirements.

Greater liquidity. Shares of the most popular gold ETFs, like SPDR Gold Shares ($GLD), are heavily traded which implies good liquidity.

Tied directly to gold prices. ETFs backed by physical gold can be less volatile than gold mining stocks or gold mining ETFs.

The disadvantages of gold ETFs include:

Fund fees. Funds charge fees, which dilute returns over time. For context, the expense ratio of SPDR Gold Shares is 0.40%. This translates to $4 in fees annually for every $1,000 invested.

No utility as a medium of exchange. As with gold mining stocks, you probably cannot use ETF shares to trade for food in an economic emergency.

Whether you’re tracking the price of gold since last month or last year, the price-of-gold chart below shows the precious metal’s steady upward climb in value.

Historically, gold has shown extended up cycles and down cycles. The precious metal was in a growth phase from 2009 to 2011. It then trended down, failing to set a new high for nine years.

In those lackluster years for gold, your position will negatively impact your overall investment returns. If that feels problematic, a lower allocation percentage is more appropriate. On the other hand, you may be willing to accept gold's underperforming years so you can benefit more in the good years. In this case, you can target a higher percentage.

The precious metal has been in the news lately, and many analysts are bullish on gold. In May, Goldman Sachs Research predicted gold would reach $3,700 a troy ounce by year-end 2025. That would equate to a 40% increase for the year, based on gold’s January 2 opening price of $2,633. Rising demand from central banks, along with uncertainty related to changing U.S. tariff policy, are the factors driving the increase.

If you are interested in learning more about gold’s historical value, Yahoo Finance has been tracking the historical price of gold since 2000.

With increasing financial uncertainty, people are jumping into gold (GC=F). And gold is responding with recent all-time highs. However, if you've started tracking the price of gold, you'll see it drop just as fast as it spins up.

Gold prices are notoriously volatile. If you want to invest in gold, you need to get comfortable with it.

Gold does not behave like cash, stocks, or bonds — and that is exactly what you're looking for in an alternative asset. Let's explore what you need to know by explaining the gold investing process in four steps.

Read more: What to know before buying gold, silver, or platinum from Costco

Gold's headlining characteristic is its ability to hold its value, or even appreciate when other assets are falling. Investors often use this behavior as a stabilizer. They rely on gold's strength in tenuous climates to limit unrealized losses in equities and inflation-related reductions in purchasing power of cash deposits.

Gold is also a widely recognized store of value. As such, the precious metal can potentially stand in as a medium of exchange if the dollar collapses. In this respect, "gold is an insurance policy" against economic calamity, according to Scott Travers, author of The Coin Collector's Survival Manual and editor of "COINage" magazine.

Learn more: How to start investing in 2025: A step-by-step guide

Given gold's historic behavior, three suitable investing goals for a gold position are:

Diversification into an asset that moves independently from stock prices

Protection against inflation-related loss of purchase power

Backup source of value and wealth in an unlikely economic collapse

Allocation is the composition of your portfolio across different types of assets, such as stocks, bonds, and gold. Setting a target allocation for each asset type helps you control risk over the long term. This is because asset values change over time. Stocks appreciate, for example. Unless you periodically rebalance your holdings to restore the target allocation, the appreciation can leave you over-concentrated in equities.

Travers recommends holding 5% to 15% of your net worth in gold. Other experts advise going as high as 20% if you are risk-tolerant. A review of gold's historic behavior in light of your risk appetite should help you identify the right allocation percentage.

Learn more: Track gold’s historical price here

Historically, gold has shown extended upcycles and downcycles. The precious metal was in a growth phase from 2009 to 2011. It then trended down, failing to set a new high for nine years.

In those lackluster years for gold, your position will negatively impact your overall investment returns. If that feels problematic, a lower allocation percentage is more appropriate. On the other hand, you may be willing to accept gold's underperforming years so you can benefit more in the good years. In this case, you can target a higher percentage.

The precious metal has been in the news lately and many analysts are bullish on gold. In February, Goldman Sachs expected gold to gain another 8% in 2025, after surging more that 40% in 2024. It's already blown past that 8% mark. Worries about tariffs and their impact on the U.S. economy are a primary factor.

Yahoo Finance video: Gold investing: Why ETFs can be the best way to go

Remember, too, that your target allocation includes the value of the gold you already own. Travers recommends checking your jewelry box before buying more gold. Given gold's sharp rise in value over the past 12 months and more, your gold jewelry may be worth more than you think.

Travers warns against selling your jewelry to buy gold coins because you will pay dealer fees on both transactions.

Once you define your target gold allocation, you must choose a form of gold to hold. Three options are physical gold, gold mining stocks, and gold ETFs.

Physical gold includes jewelry, gold bars, and gold coins. The advantages of physical gold include:

Peace of mind. If you keep your physical gold at home, it is available for you to use as a medium of exchange in an economic emergency.

No added volatility or ongoing fees. Gold mining stocks tend to rise and fall with gold prices, but business-related factors enhance their volatility. Gold ETFs charge administrative fees in the form of expense ratios.

Learn more: Take a deeper dive into the gold sector

The disadvantages of physical gold include:

Risk of theft or loss. Physical gold must be properly secured. Whether you store it in your home or with a depository, gold can be stolen. In October 2024 , a federal jury found Robert Leroy Higgins guilty of fraud charges after $50 million worth of precious metal disappeared from his business, First State Depository.

Lower liquidity. Physical gold is less liquid than stocks or ETFs. If you are not using the gold as a medium of exchange, you may need to locate a dealer and pay a markup on the sale.

Owning shares in gold mining stocks provides indirect gold exposure. The advantages of mining stocks over physical gold include:

Greater liquidity. Large-cap gold mining stocks like Barrick Gold Corporation (GOLD) and Franco-Nevada Corporation (FNV) generally enjoy a narrow bid-ask spread, which is a sign of liquidity. The bid-ask spread is the difference between what buyers will pay and what sellers will accept.

Easy to store. Stocks live in your brokerage account and do not consume physical space. In normal times, this is an advantage. In an economic catastrophe, this could be a disadvantage if brokers or the stock market are temporarily shut down.

Learn more: The top-performing companies in the gold industry

The disadvantages of gold mining stocks include:

Greater volatility. Since 2000, gold mining stocks have risen and fallen faster than gold spot prices. And in recent years, gold mining stocks have trended down even as gold has gained value.

No utility as a medium of exchange. Gold mining stocks can appreciate, but they have no direct utility as a medium of exchange.

Gold ETFs are funds that invest in gold mining stocks or physical gold. Their advantages include:

Easy to store. Like gold mining stocks, ETF shares are essentially digital assets with no storage requirements.

Greater liquidity. Shares of the most popular gold ETFs, like SPDR Gold Shares ($GLD), are heavily traded which implies good liquidity.

Tied directly to gold prices. ETFs backed by physical gold can be less volatile than gold mining stocks or gold mining ETFs.

Two disadvantages of gold-backed ETFs over physical gold are:

Fund fees. Funds charge fees, which dilute returns over time. For context, the expense ratio of SPDR Gold Shares is 0.40%. This translates to $4 in fees annually for every $1,000 invested.

No utility as a medium of exchange. As with gold mining stocks, you probably cannot use ETF shares to trade for food in an economic emergency.

After selecting the size and form of your gold investment, consider your investment timeline as a final suitability check. Gold can be volatile. It has also demonstrated extended periods of decline. Those behaviors are not acceptable if your timeline is short. The risk is too great that gold's price will be down when you need to liquidate.

An extended holding period also provides greater potential for reaching your goals. As an example, hedging against stock market declines or inflation is a long-term effort. These outcomes will continue to be risks as long as you own stocks or cash deposits. Holding gold as insurance against an economic calamity requires you to keep the asset until you need it.

A small gold position can act as a stabilizer for your stock portfolio and your purchasing power. If you choose physical gold stored at home, it can also stand in as currency in the worst of economic crises. Just know that gold has underperformed stocks in the past, so choose your target allocation accordingly.

The next time you go to Costco (COST), you may want to pick up some gold with that rotisserie chicken. Gold prices have been on a run lately, and what more convenient place can you find to buy a commodity?

In fact, the club store sells gold bars, silver coins, and platinum bars — three precious metals that many investors use to diversify their wealth.

The club store first offered gold bars in 2023, then added silver and platinum over the next year or so. Meanwhile, gold is hanging around its all-time high. Both gold and silver are up more than 30% in 2024. Platinum is lagging by comparison, roughly flat on the year and well below its peak price reached in 2008.

Intrigued by Costco's precious metals offering? Read on to learn key considerations for precious metals investing, the details of the Costco selection, and tips for managing your new investment.

Learn more: How to invest in gold in 4 steps

Investors view gold, silver, and platinum as stores of value, meaning they maintain their purchasing power over time without depreciating. However, the three metals have somewhat different characteristics. Those differences may influence how much of each you should own.

Gold is a "monetary metal," according to Vince Stanzione , CEO and founder of investment publisher First Information. Because gold prices often rise when the value of the U.S. dollar falls, many central banks hold gold to hedge against inflation and promote economic stability.

Recent economic worries, including the impact of tariffs on the U.S. economy, combined with ongoing demand from central banks, contribute to a generally positive medium-to-long-term outlook for gold.

Silver and platinum have greater industrial uses relative to gold. Silver is used in consumer electronics, electric cars, and solar panels, for example. Platinum is used in automotive applications such as catalytic converters and in the production of glassware, among other things. Due to the industrial demand, these two metals are more dependent on the economy than gold. This can encourage volatility in the short term.

Learn more: How to start investing in 2025: A step-by-step guide

Costco's precious metals selection includes:

1. 24-karat gold in 1-ounce bars

2. 20-count packs of 1-ounce silver coins

3. 999.5 pure platinum in 1-ounce bars

Costco’s precious metals pricing varies and is only visible online to members. However, reports indicate that Costco takes a markup of roughly 2% above gold's spot price.

It is normal for dealers to sell gold above the spot price. Markups can range from 1% to 30%, depending on the services the dealer provides. Relative to that range, Costco's 2% markup is reasonable.

As of November 7, 2024, you could buy Costco's silver coins for $699.99, and the platinum bars debuted in October at a price point of $1,089.99.

To buy precious metals from Costco, you must have an active Costco membership. And, since the metals are often out of stock, you must also have good timing. All purchases of gold, silver, or platinum must be made online at Costco.com. Also, Costco does not sell gold, silver, or platinum in Louisiana, Nevada, and Puerto Rico.

Costco limits buyers to one purchase per membership and a maximum of five units. At current prices, this caps your gold purchase at about $14,000. Silver and platinum buyers can only spend about $3,700 and $5,500, respectively.

For many investors, these amounts are too low to satisfy a diversification requirement or ensure long-term wealth. For context, Brandon Thor, CEO of The Thor Metals Group, recommends investing 10% to 20% of portfolio assets in gold to mitigate the risk of loss in a financial crisis. The well-known “All Weather Portfolio,” designed by billionaire investor Ray Dalio, includes a 7.5% gold position.

Precious metals do not need to be monitored the way stocks do, but you must safeguard your investment. Know that most standard homeowners insurance policies will not cover the full value of precious metals. Your carrier may allow you to add coverage for a fee, but the cost will dilute your returns.

With or without insurance coverage, you will need safe, secure storage. A safety deposit box may be an option, as is a hidden safe you keep at home.

Once your precious metal is locked away, you need only wait. Physical gold, silver, and platinum are long-term assets to hold until you need to use them. Historically, all three metals have demonstrated positive and negative growth periods in the short term. Committing to a longer holding period minimizes the chances you will need to sell when values are down.

Alex Ebkarian, COO and co-founder of precious metals dealer Allegiance Gold, explains, "If you look at gold through the lens of three to five years, then there will be less volatility and more meaningful growth."

Although Costco's purchase limitations are restrictive in terms of diversification needs, you may have good reason to include precious metals in your next Costco.com purchase. First, Costco's markup is reasonable. Second, physical gold, silver, or platinum held safely in a home safe can provide peace of mind. You will know that if an unlikely crisis degrades the U.S. dollar or stock prices, your precious metals should be holding value — if not appreciating.

A high-yield cash savings rate might outpace inflation, but you won't get rich from your monthly interest earnings. If you are committed to a wealthier future, adding an investment program to your savings strategy is the way to do it.

Use this step-by-step guide to establish a sustainable, profitable, and long-term investing habit that helps you realize your financial goals.

Investing involves the risk of financial loss. It also consumes cash that may be better used for other purposes, such as paying bills or repaying debt. For these reasons, it's wise to get your finances in order before you put money into appreciable assets like stocks or real estate.

Two important issues to address are high-rate debt and cash savings.

Average credit card interest rates usually run higher than 20%. That is roughly double the long-term average annual return of the stock market. It is also several times greater than real estate's long-term average annual appreciation.

The takeaway? Credit card debt costs more than you can realistically expect to make investing. This is especially true in the short term when asset performance can stray from the averages. If you have high-rate debt, pay it off before you invest.

Learn more: The best 0% APR credit cards

Cash savings functions like an insurance policy for your investment portfolio. With enough cash on hand, you should not need to reach into your investment account to cover unexpected expenses. You can instead leave your capital invested to reach its full potential.

Many experts recommend accumulating enough cash to cover three to six months of your living expenses. With this balance, you can hopefully withstand a layoff, health scare, car accident, or other expensive emergency without selling your investments.

Over time, cash loses purchasing power due to inflation. You can minimize that effect by storing your emergency funds in a high-yield savings account.

Before investing in a taxable format, make sure you are taking full advantage of tax-advantaged retirement accounts. The tax perks you get in a 401(k) or IRA are valuable and expedite your wealth production.

Learn more: 401(k) vs. IRA: The differences and how to choose which is right for you

A 401(k) is typically available through an employer, though you can set up a Solo 401(k) if you are self-employed. There are two types of tax treatments for 401(k) contributions, called traditional and Roth. Your 401(k) may offer one or both contribution types.

Traditional 401(k) contributions are taken from your paycheck before income taxes are calculated. They reduce your taxable income. Taxes on the investment returns are deferred until you make withdrawals. Withdrawals are taxed as income.

Roth 401(k) contributions are made with after-tax funds. They do not reduce your taxable income. However, you pay no taxes on the annual investment returns, and qualified withdrawals in retirement are tax-free.

Learn more: What is a 401(k)? A guide to the rules and how it works.

Whether you opt for tax-deferred or tax-free investment growth, your account balance appreciates faster relative to taxable investing. In a taxable account, your real return is the gain minus the taxes you pay on those gains. Many investors must withdraw funds from the account to pay those taxes, which reduces the invested balance and gain potential. Investing within a tax-deferred account, on the other hand, postpones the tax liability so your full balance can remain invested, compounded, and growing over time.

Many 401(k)s additionally offer employer-matching contributions, which also accelerates wealth. Experts recommend taking full advantage of employer-matching contributions before any taxable investing.

Learn more: How a 401(k) match works and why you should seek it out

IRAs are widely available from financial institutions and some smaller employers. IRAs also allow for traditional and Roth contributions, but not in the same account. You would deposit traditional contributions to a traditional IRA and Roth contributions to a Roth IRA.

IRAs, relative to 401(k)s, usually have more diverse investment options. IRAs also have lower contribution limits unless you are contributing to a SEP IRA through a business you own. Additionally, Roth IRA contributions are subject to income thresholds. If you earn a high income, you may not be eligible.

You can invest outside of your retirement accounts independently or with the help of an advisor. If you decide to seek outside guidance, you can choose from a robo-advisor or a full-service financial advisor.

A robo-advisor is a managed investing program. Investments are selected for you based on a stated risk profile and strategy. You may have access to a human advisor, or you may not.

Robo-advisors generally cost less than human advisors, but the investment programs may be too generic to serve your needs.

Learn more: Robo-advisor: How to start investing right away

Full-service financial advisors can tailor an investing strategy to your situation. Many will also guide you on other financial strategies, such as budgeting, debt repayment, and insurance.

Investment managers normally have higher fees than robo-advisors. Some earn trading commissions, while others charge an annual fee based on how much money they manage for you.

Learn more: How much does a financial advisor cost?

If you decide to invest on your own, your next step is creating an investing strategy that aligns with your goals, timeline, and risk tolerance. Your strategy can take different forms, but many investors express their approach as a target asset allocation.

Asset allocation is the composition of your investments across asset types. Because each asset type responds differently to market conditions, the way you combine them shapes your portfolio's overall risk level and performance.

Five common asset types are described below.

Stocks are ownership positions in companies. The most accessible stocks are those that trade on public exchanges, such as the New York Stock Exchange or the Nasdaq. Stocks are available for purchase within many taxable brokerage accounts and some IRAs.

Stocks can gain or lose value from one year to the next, but they tend to appreciate over the long term. Some stocks additionally provide cash income by way of dividends.

Read more: Check out the latest stock market news

Bonds are debt securities. The bond issuer is the borrower, and investors, called bondholders, are the lenders. Bonds are most readily accessible to individual investors through mutual funds and exchange-traded funds (ETFs).

Bond values can rise and fall with interest rate changes, but the terms of the debt do not change. If a bond promises to pay a fixed rate of 2% monthly and then repay you $1,000 when the debt matures, those things will happen — unless the issuer defaults.

Bonds provide stability and income within an investment portfolio.

Precious metals include gold, silver, and platinum. You can invest in these metals physically by purchasing coins or bars. You can also invest in funds that hold precious metals on behalf of their shareholders.

Learn more: What to know before buying gold, silver, or platinum from Costco

Precious metals appreciate over long timeframes, but they can be reactive to economic conditions. Gold, for example, tends to rise in value when investors are feeling uncertain about the stock market. For this reason, gold is often held as protection against stock market downturns.

The downside is that gold can remain flat or negative when stocks are performing.

Read more: How to invest in gold in 4 steps

Cryptocurrency is decentralized digital currency. Decentralization means no bank or government agency oversees or regulates transactions. The most popular cryptocurrencies are bitcoin and ethereum.

Cryptocurrencies can be volatile and unpredictable. As an example, bitcoin lost more than two-thirds of its value between late 2021 and early 2023. It then set record highs multiple times in 2024.

Some investors hold cryptocurrencies to diversify their investment holdings. Others use these currencies to make private, low-cost money transfers around the world.

You can invest in real estate directly or indirectly. The direct method is to purchase real property to resell or rent. If you prefer to be less hands-on, you can buy securities that invest in real estate. These are more volatile than physical property because they can be traded quickly. Their market values, therefore, can be more reactive to financial market conditions.

Investors purchase real property for appreciation potential and rental income. The long-term average annual appreciation for real property underperforms the stock market, but home prices are less volatile than stocks.

Real estate securities are popular as diversification assets.

You can amplify your results by investing regularly, and a budget helps you do that. Choose an amount you can funnel into your investment account monthly without impacting your ability to pay bills. Assuming you are maxing out available retirement contributions, you can start small — say, $50 monthly. Plan on raising the amount as you build your investing skills and confidence.

You can stay on track by automating the funds transfer into your investment account. If possible, automate the trades as well. Doing so removes emotion from your trading decisions and establishes investing as a habit.

Even if your portfolio is simple, it will require some maintenance. Tasks to consider annually include evaluating results, validating your strategy, and rebalancing.

Check the performance of your holdings against their peers. For example, if you have an S&P 500 index fund, verify that it is performing on par with other S&P 500 funds.

Review your target allocations and the portfolio's overall performance. Consider whether you need adjustments to lessen volatility or improve growth potential.

Rebalancing is the process of restoring a targeted asset allocation.

Say you like the moderate growth profile of a portfolio with 60% large-cap stocks and 40% U.S. Treasury securities. Even though you make ongoing investments in this ratio, your portfolio likely reflects something different. This is because stock values can rise or fall, but bonds remain relatively stable. Usually, you will end up with a higher-than-intended stock percentage, which increases your risk. To rebalance your 60/40 allocation, you would sell some of your stock positions and use the proceeds to buy U.S. Treasurys.

You will not need to rebalance if you use a robo-advisor or a human advisor. Also, human advisors should periodically initiate conversations to evaluate results and validate the strategy.

Learn more: 5 questions to ask your financial advisor

If you are making regular retirement contributions, adding a modest taxable investment program is a wise addition to your wealth plan. Whether you opt for professional help or independent investing, learning about asset types and allocations will make your wealth journey more rewarding — and potentially, more profitable.

An investing strategy aims to guide confident, effective trading decisions. Without a strategy in place, investors are more likely to overtrade, let emotions take over, or inadvertently change their risk profiles. Any of those outcomes can limit long-term growth potential.

Whether your objective is generating gains or income, having a defined approach provides the best chance of success in the stock market. Fortunately, you do not have to be an investing whiz to create a strategy that works for you.

You can develop a solid, personalized investing framework in three steps.

Learn more: How to start investing: A 6-step guide

Risk tolerance describes how much volatility you will accept within your investment portfolio. Your appetite for, or aversion to, risk should influence every aspect of your investing strategy.

Note, too, that risk and reward work together in investing. Higher-risk assets have greater growth potential, and lower-risk assets have lesser growth potential. The relative risk and reward of investing in stocks versus cash demonstrates this.

Learn more: What is a financial advisor, and what do they do?

Since risk tolerance is a foundational element of your strategy, it is wise to define it in writing. With that documentation, it should be easier to review and validate your approach periodically. If your risk appetite has not changed, your strategy is likely still on point. Or, if your defined risk tolerance no longer suits you, it is probably time for a strategy overhaul.

The simplest way to clarify your risk tolerance is to consider portfolio-decline scenarios. Could you handle a 10% dip in your investing account? What about 50%?

Your maximum capacity for unrealized losses can indicate where you fall on the risk tolerance spectrum. You incur an unrealized loss when a stock you own declines in value. Losses are realized only when you sell a stock for less than you paid for it.

Learn more: Robo-advisor: How to start investing right away

An example of what your risk tolerance spectrum might look like:

If 10% is your limit, you are risk averse.

If you can accept dips in the 20% range, you have a moderate risk appetite.

If you can accept dips of 30% or more, you are risk-tolerant.

With a higher risk tolerance, you can comfortably own stocks that have greater growth potential — stocks like Nvidia, for example. Ayako Yoshioka, portfolio consulting director at independent asset manager Wealth Enhancement Group, notes that Nvidia stock (NVDA) has gone through multiple periods when it’s down more than 50%. The stock, therefore, provides a useful thought experiment for investors. If a stock you own loses half its value, would you panic and sell or be willing to wait for a recovery?

Asset allocation is the composition of your portfolio across different types of assets. Setting asset allocation targets helps you manage risk according to your tolerance.

For example, conservative investors might target 50% exposure to stocks and 50% exposure to bonds. In this mix, the stocks provide growth potential along with volatility. The bonds provide stability in repayment value and income.

A portfolio with a higher percentage of stock could deliver larger gains but with more risk. That is why aggressive investors who can handle risk prefer heavier stock exposure, up to 90%.

You can also break your targeted stock exposure down into smaller categories, such as growth stocks, value stocks, small caps, mid-caps, large caps, and international stocks.

You might also cap your relative exposure to any single stock. This is particularly important for volatile growth stocks, which can reprice quickly and dramatically. Holding each stock to, say, 5% or less of your portfolio keeps you from being too reliant on any one position.

Learn more: How much should I have saved in my 401(k)?

Your allocation targets guide your initial portfolio construction and ongoing trading decisions. For example:

As a stock price appreciates, that position’s holding value becomes a larger percentage of your portfolio. The position could eventually exceed your single-stock exposure cap. That would be a cue to sell some of your shares to reduce your exposure and take profits.

A dip in price could leave you with room to increase your position. If you still believe the stock has an upside when that happens, it may be time to buy.

Michael Kodari, CEO of wealth manager KOSEC Securities, recommends setting target buy and sell prices to manage risk.

Target buy prices can be based on formal or informal estimates of the company's intrinsic value. Formal methods to establish value include dividend discount method (DDM) and discounted free cash flow (DCF) analysis.

Learn more: How to invest in gold in 4 steps

DDM quantifies a company’s value by estimating future dividends and adjusting that income to the present value. DCF follows a similar logic but discounts the company’s projected free cash flow rather than dividends. Informal methods for establishing value include peer and historical comparisons.

Note that many investors set their desired buy price lower than their value estimation. This provides a margin of safety from further stock price declines.

Setting target sell prices can be more straightforward. You can base these on unrealized gain percentages or whatever price would cause the stock to exceed your allocation targets. For example, you may want to take profits when the stock price rises 20% above your buy price.

Other data points that can inform your triggers include:

Relative strength index (RSI). RSI is an indicator of momentum that measures the speed and size of recent stock price changes. An RSI of 70 or higher indicates the stock could be overbought and ready for a price correction. An RSI of 30 or less implies the stock is oversold, which can create a bargain price point.

Valuation ratios. Price-to-sales and price-to-earnings ratios quantify how expensive the stock is relative to its revenue and earnings, respectively. These ratios are most meaningful when compared to peers and the company's historical values.

Analyst ratings and price targets. Analysts have in-depth knowledge of the companies they cover. They are not infallible, but analysts can quickly identify how recent developments affect a stock's outlook. If you're questioning the outlook of a stock, try reviewing what analysts have to say as a starting point.

Learn more: Read the latest stock market news

A solid investing strategy can transform your investing from guesswork to a productive methodology. Use it to ground your decision making — especially on headline-grabbing stocks like Nvidia or Tesla (TSLA) — for a surer path to wealth creation.

Tariffs may seem like a topic that only matters to economic policy wonks. But these import taxes affect you more than you think, even if you’re not directly cutting the check.

Since taking office in his second term, President Trump has imposed steep new tariffs on nearly all products imported into the U.S., ending decades of free trade policy and setting markets on a rocky course throughout 2025. Trump has made exceptions for certain products and set and extended dealmaking deadlines as his administration negotiates trade agreements with other countries.

Trump says his tariffs will rebalance international trade in favor of U.S. producers and manufacturers.

We’ll walk you through how tariffs work and what they mean for you and your wallet.

Trump has said that tariffs “are paid mostly by China,” rather than by Americans. But that’s not how tariffs work.

The company importing the goods — not the exporting company or country — directly pays the tariff. The duty is collected when the goods clear customs at the importing country’s port of entry.

“When you’re a [company] importing a good from another country, you’re effectively buying that good in that country,” said Michael Coon, an associate professor at the University of Tampa who studies international economics. “So you’re paying whatever price they’re charging in that country. Then it’s your responsibility to get the goods into your country. If you want to get the goods into your country, then you have to pay the import tariffs.”

Read more: 5 ways to tariff-proof your finances

So let’s say the U.S. levied a new tariff on laptops from China, and Amazon imports Chinese laptops. A broker representing Amazon would most likely pay the tax to the U.S. Customs and Border Protection Service when the goods enter the country.

But businesses almost always pass additional costs on to consumers. That means you, the customer buying the laptop, would typically end up paying the tariff, even if you don't know it. The cost would get passed down to you in the form of a higher price.

Soon after Trump enacted tariffs on Canadian goods, Canadian energy company Irving Oil sent a letter to its customers in New England that their heating bills would reflect the increased cost.

Many retailers and trade groups opposed Trump's original tariffs on Chinese goods, saying they’d need to raise prices due to the extra cost. The Footwear Distributors & Retailers of America, a trade group that represents the U.S. footwear industry, estimated that an additional 15% tariff on imported shoes from China would increase the price of a $49.99 canvas sneaker to $60.98, while the price of a typical hunting boot would jump from $190 to $231.03.

Tariffs are often levied in hopes that consumers will substitute domestic products for foreign-made goods. However, a country imposing the tariffs may lack the infrastructure, natural resources, or cheap labor to produce comparable goods at the same cost, so buying local is often more expensive.

“Either we pay the higher price on the Chinese goods with the tariffs, or we pay the higher price to U.S. companies,” Coon said.

The effect of tariffs on jobs is also hotly debated. Tariffs Trump introduced during his first term on steel and aluminum were politically popular. They prompted a few shuttered steel plants to reopen and were credited with creating several thousand jobs in the metals industry.

But the negative effects of tariffs can also spill over to employment. Sectors like agriculture, for example, were hard-hit by tariffs China imposed in response to U.S. tariffs during Trump's first term. For example, soybean exports dropped 63% in the first 10 months of 2018, while exports fell by 20%, according to the Congressional Research Service. The agricultural sector likely experienced some job losses as a result, some economists say. When tariffs are imposed on materials like steel and aluminum, industries that use those materials — like the manufacturing sector — face higher costs, which can negatively impact employment.

The jobs that are saved from tariffs often come at a high cost. The Peterson Institute for International Economics found that every job in the steel industry saved by the 2018-19 tariffs cost American consumers and businesses $900,000.

Tariffs can lead to higher prices, but the effect on inflation tends to be relatively minor.

“Tariffs affect very specific sectors of the economy, and inflation is looking at the economy as a whole,” Coon said. “The price of a few goods going up is not inflation.”

Trump’s original tariffs were in effect well before shock waves from the COVID-19 pandemic caused inflation to soar. The Economic Policy Institute estimated in January 2022 — a time when inflation was still skyrocketing — that removing the tariffs would have offset no more than 7.2% of the run-up in consumer prices.

Read more: What is inflation, and how does it affect you?

During the presidential campaign, Trump’s platform included a call to “stop outsourcing and turn the United States into a manufacturing superpower,” and provide large tax cuts for American workers. Trump suggested that tax cuts could be funded by a 60% increase in tariffs on Chinese goods and a 10% hike on other trade partners. In a meeting with congressional Republicans, he even reportedly suggested eliminating the income tax and replacing it with higher tariffs.

Once in office, Trump moved quickly on tariffs but at more tempered levels. Weeks into his new term, he announced tariffs to take effect beginning Feb. 4 — 25% on imports from Canada and Mexico and 10% on imports from China. Duties on oil imports from Canada would be lower at 10%.

But hours before the Canada and Mexico tariffs were set to take effect, Trump spoke to leaders of both countries and agreed to a one-month pause in exchange for pledges to enhance security at the southern and northern borders. Trump has cited the inflow of illegal drugs as part of his justification for imposing steep tariffs on longtime allies and trading partners.

As the March 4 deadline approached, Trump declared there was "no room left" to negotiate. At 12:01 a.m., the additional 10% levy on Chinese goods, as well as the tariffs on Canada and Mexico, went into effect. All three countries quickly responded with retaliatory tariffs of their own.

But the biggest bombshell was Trump's April 2 announcement of reciprocal tariffs, which are meant to make up for the tariffs and other barriers that countries impose on U.S. goods.

“Reciprocal, that means they do it to us, we do it to them,” Trump said in his announcement.

Trump called for a universal 10% tariff on countries around the world, plus reciprocal tariffs of up to nearly 50% on dozens of trading partners. Canada and Mexico, two of the U.S.'s biggest trading partners, were not affected by the new measures. But they remain subject to tariffs of up to 25% with some products exempted. Chinese goods face a 30% levy.

While exempting some products from tariffs, Trump has also singled out others for high duties including copper and pharmaceuticals.

Trump ultimately imposed a 90-day pause on the sweeping duties to hammer out further deals and calm markets. As that July deadline approached, he pushed it out another month. Only July 8 and 9, he released nearly two dozen letters to trade partners, including a threat of a 50% tariff on Brazil.

What is a simple definition of a tariff?

A tariff is a tax levied on goods imported from a foreign country that’s often used to protect domestic industries and jobs.

What are the different types of tariffs?

There are several different types of tariffs, but the most common are ad valorem and specific tariffs. An ad valorem tariff is a tax that’s levied as a percentage of the imported product’s value. The 25% tariff imposed on steel in 2018, along with many imported Chinese goods, is an example of an ad valorem tariff. A specific tariff is a flat tax charged on each imported good (e.g., $1,000 per vehicle or $50 per mobile device).

Why and how are tariffs used?

Here are a few key reasons countries impose tariffs:

Protecting local jobs and industries: For developed nations, tariffs — also known as customs duties or import duties — tend to be protectionist. That is, they’re intended to give a price advantage to domestic goods, shielding a country’s businesses and workers from cheaper foreign competition. The idea is that if foreign materials and products are more expensive, you’ll buy more domestic goods. For example, Congress passed a sweeping range of tariff hikes, some as high as 60%, after the stock market crash of 1929 under the Smoot-Hawley Tariff Act to protect the farming industry.

Revenue generation: Like any other taxes, tariffs also provide income for the government that levies them. In fact, tariffs were the primary source of revenue for the U.S. government during its early days until the federal income tax was established in the early 20th century. Today, tariffs are a minuscule source of income for many developed countries. Poorer countries often have far higher tariff rates than wealthier countries because their governments depend on them for revenue.

National security: A government may implement tariffs to avoid relying too heavily on different countries for goods deemed critical to security, like military supplies. Trump cited national security concerns when he hiked tariffs on steel and aluminum because both are used for weaponry and military equipment. Though Congress is typically tasked with levying tariffs and taxes, the president has the authority to enact them unilaterally in the name of defense.

Influence other countries’ practices: The World Trade Organization (WTO) largely supports free trade policies, but it allows countries to enact trade barriers like tariffs in response to human rights concerns.

Tariffs can also be used to discourage certain trade practices like “dumping,” which is when companies export products to another country and sell them at artificially low prices to gain a competitive advantage. Former President Joe Biden, who kept most of Trump's early tariffs in place, accused China of dumping practices when he introduced new tariffs on about $18 billion worth of Chinese goods — including a 100% increase on electric vehicles (EVs) and a 50% increase on semiconductors. Biden said in an interview with Yahoo Finance in 2024 that China was “not making any money off them. They’re doing it to put other people out of business.”

Retaliation: Sometimes, when one country imposes a tariff on another country's goods, the exporting country responds with retaliatory tariffs of its own. The Smoot-Hawley Act sparked a trade war as European nations passed retaliatory tariffs, and historians often blame the Smoot-Hawley tariffs for prolonging the Great Depression.

More recently, the U.S. tariffs Trump levied on Chinese goods were met with retaliatory tariffs. In April 2018, the Chinese government introduced tariffs of 15% and 25% on 94 food and agricultural products from the U.S. Meanwhile, China dropped its average tariff rate on imported goods from other countries between early 2018 and 2022. In the current unfolding trade war, Mexico and Canada have both vowed retaliatory tariffs, while China has appealed to the WTO.