Background

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I’ve always been interested in investment and building wealth even before I had an income as a teenager. When I finished High School and started working, I wanted to buy a block of land, but I was discouraged by my mother because of the size of the debt required and my limited income. It was not until after I’d worked my way through university and had a larger income that I took this step and bought my first real estate. This laid the foundation for future purchases, and when my income increased it enabled me to borrow to buy our first home.

My first experience in the share market began in the late 60’s when Australia was beginning its resources boom and my first purchases were in speculative mining stocks. I was a new born lamb and made every mistake possible and bought into companies that were being floated by people who had nothing but hopes and a gullible public. Virtually all funds saved disappeared as the companies went bust, but I learnt that the promoters were all doing well, and living the high life protected by law. One of my friends made the classic mistake of buying shares in the Nickel miner Poseidon when the shares were near the top of the market. He lost everything when the collapse came shortly after in mid ’69. Needless to say this turned me off the share market, and what shares that I had went into the bottom drawer and were forgotten about for many years.

My purpose in keeping them was to remind me of my folly, and not to make the same mistakes again. There was one mining stock, Western Mining, and a couple of trading companies left. Over the years the trading companies paid small dividends, but nothing spectacular, and were eventually taken over by other companies which bought out my shareholdings leaving me with a small parcel of WMC shares. I recently sold them to BHP-Billiton when they out bid another takeover offer. In retrospect these shares recouped my initial investments and made a profit in dollar terms. I think BHP-Billiton still got them cheap, as Western Mining was sitting on 40% of the known Uranium deposits in the world, and, now that Global warming is becoming such a topical issue, the winds of change are making Uranium a very valuable resource. In terms of real purchasing power I probably at best broke even or perhaps made a small loss. But this does prove the adage that “Time in the Market” can offset mistakes in Market Timing. Time again brings rewards to those who can hold onto the asset.

What lessons did I learn?

1. Not to believe the words in glossy prospectuses put out by many promoters.
2. That you need to be able to keep close tabs on the stock market to be aware of changing conditions that affect your stocks.
3. In a job situation with a young family time is precious and I didn’t have it to spare.
4. Time works in your favour if you can hold the assets.

For these reasons over the next twenty years my investments were in Real Estate, which did not move as rapidly as stock prices, provided a real asset that put a roof over our heads and appreciated in value. This proved to be a much better investing strategy for someone like myself and wealth slowly accrued with time. I did learn though that Real Estate also went through cycle fluctuations when it could be hard to sell, but, if you kept it through the down turn, prices would recover. This is in effect is the same as “Time in the Market” for shares. The most important thing was to ensure that you were able to meet the fluctuations in interest charges, and NOT be forced to sell in a depressed market.

It was in the latter stages of my working life that I again became interested in the sharemarket, and in other investment strategies to provide an income for our retirement from the workforce. But this time I tried to avoid the mistakes of my youth by improving my financial education. I was to learn that you can still make mistakes, and that even professional advice was not immune from errors. In short, "INVESTMENT CAN BE A WEALTH HAZARD."