My Investments Are Losing Money. What Should I Do?

Our editor-in-chief 'makes cents' of investing when the markets are down

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Dear Kristin,

I have a municipal bond fund and it seems like daily the balance is eroding. What would your suggestion be? Hold on to what I currently have and keep cash for new investments or something different? It's actually for long term goals, like a house, new car, etc.



Dear Scott,

You aren’t alone right now. Whether your money is invested in a municipal bond fund, exchange-traded funds (ETFs), index funds, or individual stocks, chances are, your portfolio is hurting right now. So it comes as no surprise that you want to know if you should pull your money out of your investment or not.

In general, I don’t think it’s the best idea to get rid of an asset just because it loses money. Market volatility can be temporary, and if you sell your investment as soon as it dips, you might miss out on increased returns when the market bounces back. If you still believe your investment will perform well in the long run, you should hold onto it, especially if you are investing for the longer term. 

But this is a good time to ask whether municipal bond funds are the right investment for you at the moment. It’s not unusual to change your portfolio allocation based on the strength of the economy, your financial goals, your age, or other factors. You haven’t said how old you are, or even what else you invest in, but with long-term financial goals like buying a house and a new car, I’m guessing you’re a younger investor. In that case, municipal bond funds might not be the best choice for you at this stage in your life. Why? Because your youth is the time to take risks, and this includes your investment choices. 

Muni bond funds, as they are called, are great for older investors because they are relatively low-risk investments that offer steady rates of return. They can also be exempt from federal, state, and local taxes. But low risk often means low reward, and this type of investment won’t generally perform as well as stocks do. Over time, you’ll miss out on the greater gains that could help you achieve some of those financial goals you mentioned, or even prepare for retirement. 

That doesn’t mean you should liquidate your investment in these funds and invest in other assets instead. Muni bond funds can be a good way to diversify your portfolio or provide a better return than a more conservative asset like a certificate of deposit (CD), especially if you are risk-averse. But maybe consider investing in other assets like equities. Even if you invest in stocks, it doesn’t mean you can’t mitigate some of the risks. Instead of purchasing individual shares of stocks, you might be interested in an ETF, which is a basket of securities that are grouped together, like by industry or theme. You could also consider an index fund, which is a type of fund that tracks the returns of a market index by investing in part (or all) of the securities in that index. Index funds are relatively simple ways to invest in indexes like the S&P 500, which tracks 500 publicly traded, large-cap U.S. companies.

Sit down and consider your financial goals, and the returns you are receiving on your investment, and ask yourself if you’re willing to take more risks for more reward. If you are interested in investing for the long term, this is a good time to ask yourself if your investment strategy is working for you. 

Good luck!


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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  1. U.S. Securities and Exchange Commission. “Investor Bulletin: Municipal Bonds – Asset Allocation, Diversification, and Risk.”

  2. U.S. Securities and Exchange Commission. “Market Indices.”

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