Here are 3 ways to close the investment timing gap

• When they should be buying, investors are selling — and vice versa.
• Investors did better in lower-cost funds.

We can all be accused of bad timing on occasion: walking in at the wrong moment or telling an inappropriate joke at a family gathering.

Yet when it comes to investing, most individuals are consistently bad at timing market moves, although there are signs they are getting slightly better.

With few exceptions, individual investor returns consistently lag mutual fund performance. It's a bugaboo for millions investing in such places as 401(k) plans and discount brokerages. The gap is mostly caused by investors jumping in and out of funds at inopportune times. When they should be buying, they are selling — and vice versa.

RJ Sangosti | The Denver Post | Getty Images

In a recent study of the gap between reported fund performance and investor returns, Morningstar found that individuals are slowly getting better. The company looked at investor returns across the world — from the U.S. to countries like Singapore and Australia.

All told, the investor gap was fairly universal across the globe, according to Morningstar, a Chicago-based financial information and management company. The shortfall ranged from a negative 1.4 percent in Singapore to a positive 0.53 percent in Australia. Americans had a 0.37 percent gap, the study found, which tracked returns over the past five years through the end of last year.

Why did some investors do better than others? Russel Kinnel, director of research for Morningstar Research Services, found that regular investors who ignored ongoing market conditions probably fared better than those who timed their contributions — or pulled out.

Although Kinnel cautions that his study isn't conclusive, some powerful factors are at play:

Costs matter

Investors did better in lower-cost funds on a relative basis.

"The gap is smaller in low-cost funds," Kinnel said.

That may be because the lowest fund expenses tend to be for passive index funds, which hold large chunks of the stock and bond markets. Since these investors are less likely to trade, which is costly, they tend to have better overall performances with this strategy.

"When sorted on fees, investor returns declined as funds rose in cost, often by more than the difference in costs, suggesting that behavior of investor and manager alike in high-cost funds was poor," Kinnel said.

Regular investing improves performance

Rather than making individual decisions on when to invest, those contributing automatically every month tend to do better. That could be why Aussie investors consistently investing in that country's "super-annuation" funds did better on average than the rest of the world.

Diversification pays off

If you don't have to do constant homework and make decisions on how to mix your portfolio between stocks, bonds and cash, it will improve your performance. Any investments that are already diversified will not only reduce volatility, they may be better performing. Kinnel says investors in pre-set "target date funds," which are diversified by professional managers, "are really boring, but one of the best ways to diversify."

Another surprising insight from the Morningstar study was that the fewer investing decisions you made, the better your returns. Kinnel created diversified, static "do-nothing" portfolios to see how they'd stack up against typical investor returns.

"The typical diversified stock-fund investor [in the U.S.] would have had a return of 5.31 percent in a do-nothing portfolio, topping the 5.15 percent average fund return and 4.36 percent average investor return" based on five years through the end of 2016, Kinnel said.

"For U.S. bond funds, the do-nothing return was 4.3 percent compared with 2.9 percent for the average investor and 3.72 percent for the average fund return."

While the improved returns for do-nothing investors don't sound like much, over time they can significantly boost your nest egg. You could improve your performance by 1 percentage point by adopting a static, low-cost portfolio and putting your contributions on autopilot.

Let's say you started out with $50,000, were earning a 6 percent return and contributing $500 a month. Your nest egg would hit $1 million by 2050. What if you boosted your return to 7 percent? You'd hit seven figures three years sooner. Of course, you'd do even better if you lowered fund expenses and saved more.

There's a fly in the ointment, though: To reap the higher returns, you may have to short-circuit your own brain and stop trying to guess whether the market is too high or too low. You'll need to adopt a "dollar-cost averaging" strategy that invests equal amounts every month.

That way, you're buying at a broad range of market prices — and getting lower prices (and more shares) — when the market dips. You can do this with any stock, mutual fund or retirement account.

This may sound counterintuitive, but if you keep your long-term investing cheap and simple, you'll be a lot richer down the road. Less is more when it comes to achieving better returns.