Recent reports in the media about fraud and irregularities within the financial sector have caused much anxiety and fear for many.

But should you invest conservatively? It’s important during this time of financial challenges and uncertainty that long-term goals and growth are not abandoned for short-term gains. There are investors including pre-retirees and retirees who are particularly nervous at this time. You may live many years in retirement; therefore, diversifying your money into short-term, medium, and long-term investment instruments is important. Each category of investment carries a different risk. Risks can be low, medium, or high, and likewise the returns. The choices you make now determine the quality of life you have later.

I had a discussion recently with a new retiree who wants to have all her funds in low-risk instruments. She also had concerns about where to invest her funds as she expressed her disgust with the financial irregularities that made the news.

Every crisis presents opportunities. One such opportunity in the current financial environment is to become empowered. Do your due diligence; learn more. Find out more about the companies in which you seek to invest your funds. Seek to understand the safeguards that are employed by these entities in protecting your investment. Recently, one major financial entity — NCB — reassured its customers that it was safe to invest with them despite the uncovering of cases of internal fraud at that institution. Customers were advised that the institution would absorb losses due to fraud as the organisation would honour its commitments to them. Other institutions are reassuring their customers of the safety of their investments as they seek to build trust and integrity with them.

It was noted poet Leo F Buscagalia who said that “risks must be taken because the greatest hazard in life is to risk nothing”. His poem entitled Risks concluded that the person who avoids risk cannot learn, change, or grow.

I recommend that investors take calculated risks. Examine your current financial situation. Analyse the investment risks, the projected returns on the investments, and the time horizon. One of the issues faced by some consumers is they don’t see themselves as investors. Having spent more years being consumers than being investors, the mindset regarding investing is limited. It’s easier to spend than to save. Philanthropist and investor Warren Buffet said, “Investing is simple but not easy.” Saving and investing require discipline and investing successfully for long-term goals is dependent on the characteristics of the investor. The “three Ps” are important to overcome the fear of risks. Persistence, patience, and perseverance are the characteristics of a successful investor. These qualities are needed during harsh economic times when stock markets or the economy is in decline as well as during good times so gains are not squandered early. Don’t lose sight of your long-term goals. It is said that “tough times don’t last, but tough people do”.

Despite the challenges facing the economy and the downturn in the stock market locally, there are opportunities that investors and employed people need to seize. The downward trend of the stock market presents an opportunity for buying the shares of great companies at low or sale prices. Invest long-term while others invest short-term. The adage “Don’t watch the noise in the market, watch the sale” is relevant at this time as some investors are distracted and get carried away by the headlines of the day. The smart investor is not ruled by emotions.

According to Warren Buffet, “If you can’t control your emotions, you can’t control your money.” The long-term winners of this current financial crisis will be those who seize the opportunity to invest for the long term, while others see gloom and doom.

English mathematician Sir Isaac Newton invented Calculus and the theory of gravity and the laws of motion while in lockdown during a pandemic in 1665-1666 — another example of seizing an opportunity to create value for the future during a crisis. During the 2009 recession, Warren Buffet became the owner of a railroad after purchasing billions of dollars in shares of a railroad company. At that time many investors complained about the recession and wondered when it would end. Buffet saw that railroad shares were cheap, so when others stayed away from the stock market Buffet remain invested. He knew that one day the recession would end and the railroad shares would value a lot more.

In a recession or stock market slowdown, more people are willing to sell their shares or withdraw from the stock market because of fear of loss and the inclination to avoid risk. But now is an opportune time to take the risk to invest long-term and build your confidence.

As Buffet says, “Opportunities come infrequently. When it rains gold, put out a bucket and not a thimble.” Don’t be chained by fear. Be free to invest wisely.

Grace G McLean is financial advisor at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com