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My investing journey
by John Collins, ASA member
In 1974 the telephonist at my workplace nagged me about
buying shares. To keep her quiet I bought 50 BHP shares.
Work pressures left me with no time to learn about shares;
all I did was watch how the dividend reinvestment scheme
contributed to my share holding.
In 1987 I retired from a semi-government job in Victoria and
converted half my pension entitlement to cash. Through
my credit union I experienced my first financial adviser. He
moved my money into five roll-over funds. In the financial
pages I followed the price of these funds and quickly saw
that they were so conservatively managed that, while my
money was safe, my wealth was not growing quickly.
I realised that I was paying management fees for little
result. It was clear to me that I needed to learn about
money management.
For many years on ABC radio my wife and I had followed
an investment adviser named Bruce Bond. I read Bruce’s
book ‘Money Thoughts’ and began my journey to learn
about managing my own money. I liquidated my roll-over
investments and moved my money directly into the stock
market. I did my own research on companies by reading
articles and talking to other people who were investors.
Membership of the Australian Shareholders’ Association
was of great help because they held night meetings where
I could meet others who were finding their own way to
knowledge in the world of finance.
Despite being American, ‘You Have More Than You Think’
by Motley Fool founders David and Tom Gardner was my
next guide to investing. Their propositions include: you
can be your own financial advisor; do your own reading
and study the market; take your time and don’t panic
about mistakes you make but learn from them; and know
that most stockbroking firms are salespeople who receive
commission on products they sell you.
There are lots of books of advice, but you don’t need to
buy them – the finance section of your local library can
lend them to you. I encourage you to read them and decide
which of them offer you good sense. Reject the books that
are overly technical, but accept those that you feel offer
you good practical advice.
Managing your own portfolio requires some recording
work, but the advent of computers has made life a lot
easier. For taxation purposes you have to keep your own
records. I find that an Excel spreadsheet program is more
than adequate for all my share records. Each share has its
own spreadsheet that records the purchase date and cost,
the dividend rate, the amount of the dividend, the average
price paid (when shares in the same company are bought
at different times and brokerage is factored in) and the total
number of shares. Another spreadsheet records all of the
dividends and franking credits for each company for each
financial year.
You do need the services of a sharebroker. As I was doing
my own reading and was simply buying and selling shares,
I did not need a ‘full service’ broker; I simply required a firm
that can follow instructions about what to buy and sell and
to hold my CHESS records. Look at http://www.asx.com.
au, go to ‘Education & Resources’, then ‘Find a Broker’,
and follow the prompts. Do your own research and choose
your own broker. I use Commonwealth Securities as my online
broker and the holder of my CHESS registered shares.
The internet didn’t exist when I started out, but when it
became available I began to use it. In 2010 Helen Dent,
a past Chairperson of the ASA, presented an excellent
seminar, Internet for Investors, which gave a rundown on
what is available on the internet and provided excellent
advice about what to look for and what to be careful about.
If you need information and advice about share matters
the internet will give more sites than you need. Once again,
sample them and make your own mind up as to what is
useful to you. Here are sites I have found useful: www.asx.
com.au and www.commsec.com.au. Both sites give detailed
information about companies and both provide free courses
to help you educate yourself about the share market.
It is your money; no one is more interested in looking after
it than you are. My current portfolio has a market value of
over a million dollars so, with some effort, I have looked
after my own money. Sure, you need to educate yourself,
but why give someone else between 1.5 and 5 per cent
of your money Especially when you can have a lot of fun
looking after it yourself and, with some effort, do it quite well.
EQUITY December 2014 Page 8