It is one of the worst-kept secrets of the investing world.   Self-directed investors consistently generate investment returns that are far worse than those of the mutual funds they invest in.  Lack of self-control, impatience and impulsive, emotional reactions all work to their detriment.

Morningstar recently published their 2013 annual review of investor performance.  According to Morningstar, the 10-year gap between mutual fund returns and what investors actually earned rose to 2.5% in 2013 compared with just 0.95% in 2012. Put another way, the typical fund investor gained 4.8% over a 10-year period, whereas funds enjoyed an average return of 7.3%.

Most investors focus on trying to pick the “right” mutual funds to invest in, and they apparently do a fairly decent job of this.  But poor “market-timing” is largely what determines their poor results.

You can read a recap of the Morningstar results at ThinkAdvisor.com here.