The nightly news almost always includes a mention of what the S&P 500® and Dow Jones Indexes did. While those broad benchmarks have a role to play in evaluating investment returns, the truth is that most investors fall far short of “market” performance. Independent research firm DALBAR estimates that the average stock investor trails the stock market by nearly four percentage points annually. One key reason: bad timing.

Investors as a whole tend to buy investments that have been rising and sell those that have been falling, as fear and greed get the better of them. That amounts to buying high and selling low, a sure-fire recipe for underperformance.

The antidote: a disciplined investment process to avoid the harmful effects of emotional decisions. Research has shown that asset allocation is a key driver of portfolio returns. But only about half of do-it-yourself investors have an asset allocation that is roughly on track for their age, according to data from 401(k)s and other workplace savings plans.

That’s where a financial professional can add so much value by helping you identify the right asset mix to help you reach your goals in light of your timeframe, financial situation, and stomach for risk. But setting an asset allocation goal is not enough; you need to stick with it through good times and bad. That discipline helps you buy low and sell high.

“Most of us experience similar feelings when the market is falling, but acting on our emotions may not always produce the best financial results,” says Joe Steeves, senior vice president in Fidelity’s Private Client Group. “An experienced professional can offer a steady hand during stressful times and help you stick to a plan that’s right for your situation.”

Source:  Fidelity Investments