How I Bought My First ASX Shares
In this blog post I share with you the uncommon means I went through to acquire my first Australian company. I earned an unexpected profit along the way.
Six years after its founding in 1999, I had my first ever exposure to Port Moresby Stock Exchange (POMSoX) through a client. I was starting out with ANZ and it was 5 months into my 9 year professional career with the bank when a wealthy established Papua New Guinean indigenous businessman walked into the bank and discussed with us his business funding request to purchase shares on the exchange. This was the first time I heard about POMSoX. I came across it again, as I read through the loan proposal, during the administering of the end-to-end lending process for the deal. It took 2 weeks to complete the process. The bank approved and funded 100% of a PGK3 million loan facility. The client acquired Bank South Pacific Limited (POMSoX:BSP) shares on POMSoX.
In retrospect, I was a financial illiterate despite having an accounting degree. I was young, narrow-minded and blinded by the generous starting out employment package. I was determined only to climb up the corporate ladder and bask in the fame and prestige that come with it. I never had the remotest thought of developing myself and growing my personal wealth through the stock market while being an employee. Converting my salary into profit never crossed my mind then.
The author Robert T. Kiyosaki sparked a thirst in me that was a prelude of a major paradigm shift in my life. His book, Rich Dad Poor Dad gave me new lenses that cured my financial illiteracy blindness to see the world in a different perspective and launched a personal lifelong journey. I read an eBook version that was sent to me by a friend. Robert, through his book, lead me back to POMSoX.
I bought my first company on POMSoX on Monday, March 9, 2015.
I will point out here that:
I am a Do-It-Yourself (DIY) Investor. I choose to build and manage my own investment portfolio. After investing in POMSoX for 2 years, I moved to broaden my income options and spread my risk across different geographies and currencies. I have invested money in 2 countries - Papua New Guinea and Australia - to start with. Over a year ago, I further expanded my income basket by investing in a US Dollar income generating asset. I plan to share this story (and journey) later in this blog.
Buying Securities On The Australian Stock Exchange (ASX)
Two options were available to me.
The first option was to remit investment funds to my ASX trading account via a bank telegraphic transfer. This was not doable then because it was partly my fault. I did not satisfy the minimum trading account balance requirement to place a buy order on ASX. My stockbroker was helpful but thanks to the Papua New Guinean Government's foreign exchange rationing, she was not able to remit the funds to Australia. She then suggested another way that we could use, only if I agreed to it.
I accepted the second alternative. During the genesis of my investment journey, I did not know that this option was possible. I understood what dual listed companies were, but did not know that I can buy shares of a dual listed entity on POMSoX and then do an off-market transfer of the same acquired shares onto ASX. This was workable and this was what my stockbroker did. I acquired shares of dual listed Highlands Pacific Limited (POMSOX:HIG/ASX:HIG).
My intention was not to buy Highlands Pacific. My goal was to own Telstra Corporation Limited (ASX:TLS). If I had used option 1 above, it would have been straight forward. However, settling for the second possibility involved buying one company in Papua New Guinea to eventually owning another in Australia.
There are costs and risks associated with both options. I also want to make it known that it took sometime before I was able to sell the Highlands Pacific shares on ASX. I had to satisfy certain requirements in order for my stockbroker to initiate my ASX trading account. Truthfully, I would have incurred a loss if it were not for the delays. After buying Highlands Pacific, its share priced dipped. I was fortunate that when my ASX trading account was finally activated, the share price had rallied by AUD$0.044 more, over and above the price I paid for Highlands Pacific.
Profit
Profit is calculated as: Income - Expenses = Profit
After selling the Highlands Pacific shares on ASX, the stockbroker applied the sale proceeds to acquire Telstra. Looking at the Contract Notes (Sell and Buy Confirmation) afterwards, I realized that I netted more on the Highlands Pacific sale than what I spent purchasing it.
I calculated a 9.62% profit on top of total costs after identifying and accounting for all fees and/or charges incurred. The unexpected profit earned enable me to acquire a few extra shares of Telstra. The stock exchange has enable me to be part owner of Telstra; the fourth largest company on the ASX and Australia's telecommunication behemoth.
Conclusion
Six years after its founding in 1999, I had my first ever exposure to Port Moresby Stock Exchange (POMSoX) through a client. I was starting out with ANZ and it was 5 months into my 9 year professional career with the bank when a wealthy established Papua New Guinean indigenous businessman walked into the bank and discussed with us his business funding request to purchase shares on the exchange. This was the first time I heard about POMSoX. I came across it again, as I read through the loan proposal, during the administering of the end-to-end lending process for the deal. It took 2 weeks to complete the process. The bank approved and funded 100% of a PGK3 million loan facility. The client acquired Bank South Pacific Limited (POMSoX:BSP) shares on POMSoX.
In retrospect, I was a financial illiterate despite having an accounting degree. I was young, narrow-minded and blinded by the generous starting out employment package. I was determined only to climb up the corporate ladder and bask in the fame and prestige that come with it. I never had the remotest thought of developing myself and growing my personal wealth through the stock market while being an employee. Converting my salary into profit never crossed my mind then.
The author Robert T. Kiyosaki sparked a thirst in me that was a prelude of a major paradigm shift in my life. His book, Rich Dad Poor Dad gave me new lenses that cured my financial illiteracy blindness to see the world in a different perspective and launched a personal lifelong journey. I read an eBook version that was sent to me by a friend. Robert, through his book, lead me back to POMSoX.
I bought my first company on POMSoX on Monday, March 9, 2015.
I will point out here that:
- I am an Investor. Not a Day Trader.
- I am not a professional.
I am a Do-It-Yourself (DIY) Investor. I choose to build and manage my own investment portfolio. After investing in POMSoX for 2 years, I moved to broaden my income options and spread my risk across different geographies and currencies. I have invested money in 2 countries - Papua New Guinea and Australia - to start with. Over a year ago, I further expanded my income basket by investing in a US Dollar income generating asset. I plan to share this story (and journey) later in this blog.Buying Securities On The Australian Stock Exchange (ASX)
Two options were available to me.
The first option was to remit investment funds to my ASX trading account via a bank telegraphic transfer. This was not doable then because it was partly my fault. I did not satisfy the minimum trading account balance requirement to place a buy order on ASX. My stockbroker was helpful but thanks to the Papua New Guinean Government's foreign exchange rationing, she was not able to remit the funds to Australia. She then suggested another way that we could use, only if I agreed to it.
I accepted the second alternative. During the genesis of my investment journey, I did not know that this option was possible. I understood what dual listed companies were, but did not know that I can buy shares of a dual listed entity on POMSoX and then do an off-market transfer of the same acquired shares onto ASX. This was workable and this was what my stockbroker did. I acquired shares of dual listed Highlands Pacific Limited (POMSOX:HIG/ASX:HIG).
My intention was not to buy Highlands Pacific. My goal was to own Telstra Corporation Limited (ASX:TLS). If I had used option 1 above, it would have been straight forward. However, settling for the second possibility involved buying one company in Papua New Guinea to eventually owning another in Australia.
There are costs and risks associated with both options. I also want to make it known that it took sometime before I was able to sell the Highlands Pacific shares on ASX. I had to satisfy certain requirements in order for my stockbroker to initiate my ASX trading account. Truthfully, I would have incurred a loss if it were not for the delays. After buying Highlands Pacific, its share priced dipped. I was fortunate that when my ASX trading account was finally activated, the share price had rallied by AUD$0.044 more, over and above the price I paid for Highlands Pacific.
Profit
Profit is calculated as: Income - Expenses = Profit
After selling the Highlands Pacific shares on ASX, the stockbroker applied the sale proceeds to acquire Telstra. Looking at the Contract Notes (Sell and Buy Confirmation) afterwards, I realized that I netted more on the Highlands Pacific sale than what I spent purchasing it.
I calculated a 9.62% profit on top of total costs after identifying and accounting for all fees and/or charges incurred. The unexpected profit earned enable me to acquire a few extra shares of Telstra. The stock exchange has enable me to be part owner of Telstra; the fourth largest company on the ASX and Australia's telecommunication behemoth.
Conclusion
- I am a DIY Investor. I am not a Day Trader nor am I a professional. I choose to continuously learn and develop myself as I travel along my investment journey.
- The intent of this post is to show fellow Papua New Guineans that investing in the stock market is not complicated. As Warren Buffet says, invest in companies that make products you understand. You can teach yourself and learn if you choose to. You can choose to be a DIY investor or if you want to you can entrust your money to someone else to invest and manage it for you. Whoever it is, they will normally charge you a fee for handling your money.
- While investing in the stock market may be right for me, it does not mean that it would be right for everyone. It is just one of the many systems available for creating wealth.
- While I shared with you how I earned an unexpected profit via the share market, the method in which it was achieved is not a reliable means to making money on the stock exchange.
- Investment decisions should be based on an individuals own goals, time horizon, and tolerance for risk. You should seek professional investment advice prior to investing.
- I highly recommend reading the book "Starting Out In Shares The ASX Way". I bought this used book at a second-hand shop in Madang for PGK2.90. It taught me a lot both on POMSoX and ASX. I know there is a new edition out already. If interested check for more information here.
- A simplified version of how to start investing on POMSoX can be found here.
This blog post is designed to provide accurate and authoritative information on the subject of share marketing investing. While the story is based on true experiences, some situations have been changed slightly for educational purposes. It is posted with the understanding that neither the Author nor the Publisher is engaged in rendering legal, accounting, or other professional services by publishing this blog post. As each individual situation is unique, questions relevant to personal finances and specific to the individual should be addressed to an appropriate professional to ensure that the situation has been evaluated carefully and appropriately. The Author and Publisher specifically disclaim any liability, loss, or risk which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this post.
Comments
Post a Comment