Funds 2.57% S&P 12.22%

If you still need motivation to dump you funds, here's more data. According to Dalbar, Inc., a research and rating firm, the average equity mutual fund investor earned a paltry 2.57% annually over the last 19 years compared to the S&P 500 index earnings of 12.22% annually over the same 1984 to 2002 period. Source: Active Value Investing by Katsenelson p. 19

Why does this happen? In April of 2007, with the bull market still roaring, Canadian investors put $2.51 billion into mutual funds. In April of 2008, after market setbacks, and with prices much more realistic, only $560 went into funds. And, according to the Investment Funds Institute of Canada, the lion's share went into money market funds. Balance funds and bond funds were also popular. People think bonds are safer, but in a bond fund they are not because you lose your guarantee of getting you money back on maturity. Equity funds, in April 2008 saw net redemptions of just over one billion dollars. People can't control their behaviour. They buy when prices are high (in 2007)and sell when prices fall (in 2008). And they pay fees on average over 2.5% to do it. What a world!