The accidental investor who stumbled into BHP, CSL and CommBank

Colin Edwards undersells his investing acumen somewhat, putting many of his investing decisions down to serendipity. He was given BHP shares on his 21st birthday and he bought Telstra, Coles and CommBank because he was a customer.

He’s made some mistakes along the way, but since retiring he’s taking a more active role in researching his investments and now has a well diversified portfolio that he’s very happy with.

Colin Edwards tells Buffy Gorrilla about a fascinating life that has always benefitted from taking advantage of the opportunities that present themselves.


Colin, can you give me a little bit of background about yourself?

Yes. I describe myself as an accidental investor, I suppose. I was born in New South Wales. I’ve got three older brothers. We grew up in a country town. My father was, and by choice, a country solicitor, although he came from Sydney. My mother came from a sheep grazing family on the slopes of New England. When I say I’m an accidental investor, I guess my mother gave me 100 BHP shares for my 21st birthday, so that was the starting point. I say accidental because, well, for most of my younger life, I didn’t have any other investments, I just had a bank account like most people did at that age, I think.

I went to secondary school in Sydney, to Barker College, which is a much better school now than it was then. I get their magazine. I just got one today. That was fine. Not sure what to do with myself after school, my father actually found that CSIRO were advertising for a technical assistant in Armidale, which was near where we lived. I got the job. I was there for two years, and the guy I worked with, who was an agricultural scientist said, you should go to university, you’re too bright for this job.

Again, my father was pretty good at finding these things. He found out there were cadetships going, as they were in those days. There were lots of teaching ones, but this one was to go be trained to study agricultural science and then go to Papua New Guinea. It tied me down for five years, but it was quite an experience. I actually met my wife up there. She had gone up there nursing.

Wow.  You were in Papua New Guinea for five years?

Actually for nine years all up. During that time, I was given post-graduate option to go overseas. From Papua New Guinea, agricultural people used to go to the Imperial College of Tropical Agriculture, when it was still a colony. That’s in Jamaica.

That sounds very exotic.

Yeah. That had been closed down with independence, and someone suggested I could look to go into the Inter-American Institute of Agricultural Sciences in Costa Rica. I applied to go there, and I went there and did a one-year masters degree. Then I came back to Papua New Guinea.  We actually left because we had one child there and one on the way, and my wife had some dental issues and it wasn’t a good spot for good dental care.

We returned and came and settled in WA, where my wife came from, and I applied to do a PhD at UWA.  I ran out of money, but got some work at the university as a senior tutor in biometrics. I’d started to move sideways from agriculture science to other things. UWA at that time had just set up a computer centre with big computers and interactive computers, and I got interested and went to write Fortran. As I say, I got a job in what was called the biometrics unit, helping students analyse their research projects and that kind of thing.

How long did you work there?

Can’t remember exactly, but I was headhunted to go to the State Department of Agriculture, to their biometrics unit. I joined the team there.  At that stage, they were still using electric calculators to do analysis, but they also had a small computer system. They were PDP-11, that you used to feed paper tape into. Then, they also got what was called a batch terminal to the university computer, and you had punched cards. I’ve been on the computing side from pretty early on.  I decided to set up a computer services section, and I was the manager of that for a number of years. I moved sideways again from statistics into computing, information technology.

You’ve got a lot of analytical skills that might come in handy with investment, I would imagine.

Well, you’d think so, but…

Well, I was wondering if we  could go back to your BHP shares. Tell me a little bit about how they evolved, and were you disappointed when your mother, when you turned 21, gave you those and your friends were getting maybe cooler birthday presents?

No on the contrary. I had an aunt, her maiden sister, and her income was from BHP shares. She had several thousand, I gather, at the time. It seemed like a good thing. In fact, every now and then there’d be a new issue and you’d just find the money from somewhere. I gradually accumulated I can’t remember how many. When we moved to WA, we needed a deposit on a house if we were buying, and I sold all the … Well, at least I thought I’d sold all the BHP shares. I think I ended up still with something like 32 for some unknown reason.

BHP shares helped to help us buy a house and have a reasonable mortgage. So no, that was a really good investment. It was probably not until we were married and had children that there was some interest in possibly other shares. I called myself an accidental investor because the sort of thing that happened, and other people around my age would relate to this: we got Coles subscription or whatever it was to buy from Coles, and we bought Coles shares because you’d get a discount.

Okay. Is that Coles the supermarket chain?

Yeah. That, of course, became Wesfarmers, so that’s how I ended up with Wesfarmers shares. Our bank accounts were with the Commonwealth Bank, and when they privatised, we were offered shares in Commonwealth Bank. Somehow, although we had a joint account, we were both offered shares, and we both took them up. We’ve got joint accounts now, but that’s how accidentally, so to speak, I ended up with Commonwealth Bank shares. They’ve done very nicely, thank you very much.

Have you put that accidentalness to one side and started becoming a little bit more active now?

Yes. I have a bit. I guess the thing that precipitated that was the GFC, because when my wife retired a bit earlier than I did. I retired just on the turn of the century. We both had superannuation but not particularly large. We had a financial advisor with our credit union, as it was then, which eventually became Bank of Queensland, which is why I’ve got shares in the Bank of Queensland. There’s another accidental situation.

The investments in the superannuation fund, like everybody else’s, went south with the GFC. They’ve come up again reasonably well, but it meant we had to be pretty careful what our spending patterns were. It’s around that time, I guess, I really started listening to Alan Kohler, and he was on the ABC. He was, in those days, would interview people. The other really good investment I made and sort of on his advice, it really wasn’t, but he interviewed McNamee, who was the CEO of CSL. I decided to buy shares in CSL at the time, which has also turned out to be a winner. Thank you, Alan, for that.

Things changed when Commonwealth Securities were set up and you were able to do online trading and that kind of thing. I wasn’t intending to trade, but it was much easier to sell some shares if you had to or buy more shares and that kind of thing. I also subscribed to the Eureka Report when Alan was running that. I’ve kept on with it, but these days I’m not an active investor, but I’m more a careful investor, I guess, which is why I like to be part of The Constant Investor.

How do you identify the shares that you’re interested in making an investment in?

Yeah. I knew you’d ask me that question. I find it difficult, but I guess I scan the various advice from people through Eureka Report, through Alan’s discussions about newcomers. The interest in listed investment companies really sparked my interest because I could see that was quite a good way of spreading your investments or going into things like real estate.

I didn’t mention that when we were much younger, we used to go down to the southwest of WA for holidays with the kids, and at one point we went to stay with some friends who had a house in Nannup, and there was a vacant block next door, quite a big block. It was up for sale.  We ended up buying that thinking this will be a retirement place for us, which just didn’t happen for various family reasons. It’s a big, uncleared block of land which we ended up just paying council rates and water rates on. It went up in value, but the valuation by the LandCorp, as it’s called in WA, was outrageous compared to what it was really worth, and we decided earlier this year to sell.

I got out of real estate except for our own home, but I was really interested in Blue Sky Alternative Investments, where you have a spread of well thought out, well considered real estate and other kinds of investments, and that’s how I like to spread. I’ve got something like, I think at the moment, 25 different investments in the portfolio. I’ve still got Commonwealth Bank, I’ve still got BOQ.

Telstra was the other accidental one because we had a telephone account. When they privatised, yes, we bought Telstra shares. John Howard persuaded us to buy at a silly price, but on average, I’m just breaking even on the capital value of Telstra shares. I might take Alan’s advice and bail out of that, but at the moment I’m sitting tight. When I say I’m an accidental, you can see that I’m not particularly diligent, I guess. My wife is very conservative. She’s allowed me to just manage everything, so I’ve got to be a bit careful what I do, what I don’t do.

Well, I know. You don’t want to be like, sorry, honey. I’ve lost everything.

That’s right. Yeah. What are the foolish ones? When the mining boom fired up, I made some investments that were pretty silly. Got out quickly enough without losing too much, but that was a bit of a scary time. That was back in the 70s.

There’s been a time to reflect on that and learn from those mistakes.

Yeah.

What do you hope to achieve with your investments? Now it sounds like you’ve been retired for a good amount of time. Are you a traveller? Do you use your wealth for big adventures?

We’ve done some travelling. My youngest daughter is, they’re separated now, but she got married to a guy who came from England, and his parents retired to France. His father made some kind of invention, he was an engineer, that went into every television set at the time and made mega bucks. They retired to France. We took Russell and Naomi and at that stage, there were three kids. We joined them and headed off to France and stayed there for a while, and Maxine and I went to Italy for a short visit. We’ve been again to England for a short visit, but I think our travelling days are pretty much over as far as we’re concerned. Happy to just potter around. We keep our physical health as well as we can. I bicycle ride. We live close to Kings Park in Perth, so that’s a good spot.

My aim with my investment is to really maintain a reasonable capital and have enough extra income that just tops up our account-based pensions that still come from the superannuation. It’s hung in reasonably well, the super fund that we have. We don’t spend a lot out of it, so it’s hanging in pretty well. I’m 81 and my wife’s 78, so we could still go on to our 90s. These days, one has to try and work out how on earth you’re going to do that. Because of the capital we’ve got, we’re not eligible for a pension, so the alternative is to go and spend it all and then live on a pension, but it just doesn’t quite fit with my ethos at the moment. I’m not anti-pension at all for people who haven’t been as fortunate as we’ve been, in a sense.

Well, Colin, that is an excellent story. I love the accidental investor aspect of it. Thank you so much for your time, I really appreciate it.

Thank you, Buffy. I hope it’s interesting for a few people, particularly older people my age.

I think it will be.

Thank you.