If suffering builds character, mutual fund investors have developed a lot of character in the past decade.

Two soul-searing bear markets have sent investors reeling and have severely tested the notion that the average person can save and invest enough to retire on her own.

It has not worked out well this past decade with the two burst bubbles that we have experienced, says Karen Sandler, 62, of White Plains, N.Y. I have less than I thought. I am working several years longer than I thought I would before retiring.

Still, many investors remain remarkably cheerful.

Bill Reininger, a teacher in Green Lake, Wis. says even with the two bear markets, he has more money now than he did a decade ago. But it was a lot more until recently.

What can you learn from this kidney stone of a decade? Save as much as you can. Always make sure to get as much of your company’s 401(k) match as you can. Stay away from company stock and faddish funds. And don’t bail out of the market entirely.

The bad news

The average stock mutual fund has gained 22.0% the past decade, or an average 1.11% a year, despite a 32% gain in 2009. Investors who bought stocks for the long run are finding out that the long run can be a long, long time.

Just about anything beat the average stock fund the past 10 years: gold bullion (275%), government bond funds (70%), Treasury bills (30.5%). Even the consumer price index, the government’s main gauge of inflation, stomped the average stock fund.

One exception: The average stock fund beat the Standard & Poor’s 500. And that’s unfortunate, because funds that track the S&P 500 became some of the most popular funds in the universe at the start of the last decade. Investors poured an estimated $15 billion into the largest S&P 500 index fund, the Vanguard 500 Index fund, in 1999 alone. The fund is down 9.8% the past decade, according to Lipper, which tracks fund performance.

Nevertheless, the S&P 500 held up far better than many of the largest stock funds of 1999 which are the funds most likely to be a choice in 401(k) plans. Fidelity Magellan fell 21% the past decade, American Century Ultra dropped 31%, and Janus Fund shed 31%.

And the 10 funds that investors poured the most money into during 1999 mostly high-octane growth funds were down an average 23%. Fidelity Growth Strategies, which saw an estimated net inflow of $9.3 billion in 1999, plunged a shocking 67% the past decade.

What the 2000-02 bear market didn’t shred, the 2007-09 bear market savaged. Both bear markets were larger than the 1973-74 bear market, previously the worst bear market since the Great Depression .

My portfolio is still down 20% from its high point, which is very disappointing, says Chris Calano, 51, from Anaheim, Calif. It’s particularly dispiriting, Calano says, because he does what all the experts say: He steers clear of credit card debt, saves regularly and generally lives below his means.

The valuable lesson learned is that even when you are rolling along doing everything right, the markets can still come crashing down and put a serious dent in your retirement portfolio, Calano says.

And that’s the conundrum facing many U.S. workers. They have to save for a certain event retirement by using an uncertain mechanism: mutual funds. Companies have been dropping pensions in favor of defined-contribution plans, such as 401(k) plans, for decades.

A defined-contribution plan is the primary retirement vehicle for 67% of workers with a retirement plan, according to the Employee Benefit Research Institute. Just 30.9% said a pension was their primary retirement plan, down from 46.3% in 1998 and 56.7% in 1988.

The good news

Despite wretched returns, fund investors did get some rewards for their investments the first one being diversification. Had you put all your money into Microsoft the S&P 500’s largest stock in 1999 you’d be down 35%, even with dividends reinvested. General Electric. Down 60%. General Motors. Nearly 100%. By owning a slice of a diversified portfolio, you cushioned some of your losses.

Most investors didn’t put all their money in stock funds, and that also cushioned the blow. The average balanced fund, which is typically 60% stocks and 40% bonds, has gained 75% the past 10 years.

And many investors ended the decade with more money in their retirement accounts than when they began. Funds can’t claim credit for that: Most investors add money to their funds regularly. But it shows the advantages of systematic investing.

Although I suffered a big dip, 30% earlier this year, I basically stayed the course and am a little ahead of where I started at the beginning of the year, says Marilyn Musielski, a consultant in Madison, N.J.

For example, if you started 1999 with $10,000 invested in the Vanguard 500 Index fund and added $100 a month, you’d have about $21,300 in your account now, according to Lipper. Although that’s $700 less than you’d have if you had stuffed your money into a mattress, it’s still $11,300 more than you started with. And, because you’d been pushing money into your account all along, your account took a big jump when the bull market returned. Your balances would have leapt from $15,998 the end of 2008 to $21,198 by the end of November.

What other lessons can we learn from the most wretched decade for investors ever? Other investors have advice that most experts would agree with:

Make a plan. Go with the investment mix prescribed by your management service, says minister William Simmons of St. Louis. It is too easy to chase the big returns and become overexposed to much more risk than you should.

Don’t follow the herd. Stay away from trendy sectors and speculation unless you have money to burn, says Mike Kornblum, a communications executive in Natick, Mass. It’s a lot easier to lose money than to make it.

For example, the hottest fund in 1999, Embarcadero Small-cap Growth formerly Van Wagoner Emerging Growth looked for stocks of companies with soaring earnings, mostly in technology stocks. The fund has lost an astonishing 24.6% a year for the past 10 years.

Make the match. If your company matches your contributions, make the most of it. A 50% company match can make up for most bear markets. And you should never turn away free money.

Keep socking money away. Put away more than you think you can afford, says Pam Lee, an administrative assistant in Mount Holly, N.C. You can always reduce the amount you are saving, but I would guess within a paycheck or two you won’t even miss it.

If you can, start a Roth IRA in addition to your 401(k). If you open the Roth at a discount broker or large fund family, you’ll probably get more investment choices than you would through your 401(k). And if taxes rise in the future, paying taxes now will look smart.

Just because the stock market was wretched the past decade doesn’t mean it will be wonderful the next. But if you keep a diversified portfolio of stocks, bonds and money market funds, the odds are good that you’ll have more in 2019 than you do today.

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