Your Portfolio Is Suffering a Loss? Here’s What You Should Do ?

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Mr. Sharma started investing in mutual funds about 15 months ago. When he recently checked his portfolio, he was shocked to see that its value had fallen and that his portfolio was showing a loss.

Like Mr. Sharma if you too have your portfolio in red what should you do?
The first and most important thing is not to panic.
A decline in the current value of an investment represents a paper loss until the investment is actually sold. Market fluctuations are a normal part of equity investing, particularly over shorter periods.
You should first understand why his portfolio is showing a loss. The overall market conditions play an important role in determining the value of equity mutual funds.
For example, on 10th September, the Sensex closed at 74,902 points. If you have started investing when the market was at higher levels may currently see your portfolios in the red. This does not necessarily mean that your investment strategy has failed.

So, how does long-term investing work?

Consider a simple example.
Suppose you invests ₹3 lakh in an equity mutual fund. After one year, the market falls and the investment value drops to ₹2 lakh. Seeing a ₹1 lakh loss can be uncomfortable.
But if your goal is 10–15 years away and the underlying investments remain suitable, the short-term decline needs to be viewed in the context of the entire investment horizon. Markets can experience multiple periods of rise and fall during a long investment journey.
Similarly, consider you ₹10,000 every month through an SIP. When markets fall, the your existing portfolio value may decline, but the same ₹10,000 SIP can purchase more units at lower prices. When markets recover, those additional units can contribute to portfolio growth.

A real-life example: COVID-19 market crash

The COVID-19 market crash is a good example of why investors should not panic during short-term market declines.
In March 2020, the Sensex fell sharply amid uncertainty surrounding the pandemic and lockdowns. On 23 March 2020, it closed at around 25,981 points. However, the market subsequently recovered, with the Sensex crossing 50,000 points by March 2021.
Investors who remained invested through the downturn and continued their SIPs were able to participate in the subsequent recovery. Those who exited in panic would have locked in their losses and potentially missed the recovery.
The lesson learned during this crash – Market corrections can be uncomfortable, but for investments aligned with long-term goals, staying disciplined can be important.

What should you do when your portfolio is in the red?

Instead of reacting emotionally, you should:

Analyse the reason for the decline in your portfolio.
Check whether the mutual funds continue to be suitable for your financial goals and risk profile.
Avoid making investment decisions based purely on short-term market movements.
Continue your investments through SIPs, where appropriate.
Focus on your financial goals and investment time horizon, rather than the current portfolio value.
Review your portfolio periodically to ensure that the asset allocation and investments remain aligned with your goals.

The key lesson

A temporary fall in the market is not necessarily a permanent loss.

Long-term investing is not about avoiding every market correction. It is about having an investment strategy that is aligned with your goals, risk profile and time horizon, and staying disciplined through different market cycles.
The right response to market volatility is to review, reassess and remain disciplined—not panic.