No one can predict the financial markets - Invest smart

Ray Dalio, the creator of the renowned investment firm Bridgewater Associates, is considered a superstar of the stock market. But, back in 1971, he learned that no one can know for certain what the future holds.

That year, President Nixon had taken the United States off the gold standard, a move that resulted in the value of the dollar plummeting. Everyone, including Dalio, expected the stock market to take a tumble as well – but it didn't. It soared. And from that moment on, Dalio knew that it was impossible to ever predict anything with absolute certainty.

 You need to search for investment options that will result in the least amount of investment fees and taxes. This may lead you to look at index funds over mutual funds. Index funds don't have managers who charge expensive investment fees.

Instead, they're composed of stocks from an index such as the S&P 500, which includes successful companies like Apple and Microsoft. These stocks are only traded to reflect changes in the composition of the S&P 500, meaning that the shares are held for longer, thereby enabling you to avoid the higher short-term tax rate on gains.

A diverse portfolio will help protect you against changing trends and market crashes. There are four ways you can diversify: across different asset classes; within asset classes; across different markets, countries and currencies; and across time. Adding more than one asset class to your portfolio is a great way to diversify, as is making multiple investments in the same asset class.

Also, remember that the financial markets are global and you should feel free to look beyond your country's borders.

Finally, diversifying your portfolio across time means that you should always be adding capital to your portfolio, whether you do this monthly or yearly. The market is always fluctuating, and you can improve your chances of latching on to a new trend by adding new assets on a regular basis. Look out for investment fees.

Investment fees can be treacherous. 

In fact, if you're not careful, they can end up eating up two-thirds of your earnings. Take an average investment fund, for instance, which charges its clients a 2-percent yearly fee. Now, say that on average the fund delivers a 7-percent return on your investment over 50 years. This means that, after 50 years, every dollar will be worth nearly 30 dollars. With a yearly fee of 2 percent, however, your return is not 7 percent, but 5, and fifty years down the line, each dollar will only be worth just over 10 dollars, instead of 30. This illustrates how disproportionate the impact of investment fees can be! x