5 Things to Do When Losing Money in Mutual Fund Investment

5 Things to Do When Losing Money in Mutual Fund Investment

As of May 2022, markets are displaying symptoms of major volatility. Nobody can claim to predict the future, and you are probably asking yourself if now is a good time to pull out of investments to hedge losses.

Remember that market highs and lows are as sure as the seasons. If you have invested heavily in equity, you know the advice about market volatility. A longer investment horizon will help you to make good returns.

Those who are new to mutual fund investments, however, may be looking at the present market scenario and feeling worried about it. Is it a good time to pull out?

But wait! Here are 5 things you should do when you are losing money in mutual funds.

5 Things to Do When Losing Money in Mutual Funds

  • Focus on Staying Calm

Let’s get to the emotional reaction you are probably facing right now. Watching an investment portfolio decrease is enough to send anyone into a tizzy. However, stay calm and take decisions backed by logic and not a knee-jerk response. Observe trends and get back to basics.

  • To Redeem or Not to Redeem?

The first response you might have is to redeem your investments and try to invest again when mutual funds start rising. However, remember that you have to pay an exit load and an LTCG tax. So does it really help in capital appreciation when you sell at a loss and buy at a premium? Be careful of your response to redeem the mutual fund investment.  

  • Genuine Hit vs. Personal Investment Failing

First, check to see if you are not the only person affected. Is everyone being hit because of international situations or other economic challenges or is this just a bad choice in the portfolio? In case it is the latter, you need to get back to the drawing board and determine what to do.

  • Have any sector-specific funds?

Check out if your portfolio is not leaning towards a sector that is currently taking a hit. If you have invested in a sector fund and are losing money, it’s time to get serious about pulling out from that sector.

  • Diversify your portfolio

If your mutual fund investment portfolio leans towards one sector or one fund type, it should not take the opportunity to diversify. Diversify among asset classes and within equity mutual funds.


So, we hope we gave you some insight into what to do if you are losing money in mutual fund investments. Don’t make any hasty decisions and try to be prudent about the ultimate choice you make.