How I Got Into Buying Shares

In 1980, I was 30 years old, and Margaret Hilda Thatcher was Prime Minister, having beaten ‘Sunny Jim’ Callaghan at the previous year’s General Election. It was the first year that I thought deeply about saving for my future. I was employed as a Section Leader in the Proposals Drawing Office at Babcock Power Limited, working on the design of power stations and earning decent money.

Babcock had decided to do away with weekly pay some 10 years before and had moved all staff over to monthly payments directly into their bank accounts. I, and many others, didn’t have a bank account and had never really needed one before then. I did have an account with the Bradford and Bingley where I saved for my holidays. But you couldn’t have your wages paid into the B&B account, so I took up Babcock’s offer of arranging for Barclays to open me an account at the Warren Street branch that was close to the office.

In 1980, the new Conservative government decided that they needed to encourage personal saving and brought in Save As You Earn (SAYE) contracts. There was a simple SAYE contract that anyone could take up, where you choose to save between £10 a month and £60 a month for five years, and at the end of five years, the government added 12 months’ payments to the amount saved, tax-free. If you left the money untouched for a further two years, you got another 12 months added. In those days, this was a pretty good return on your money.

However, companies could offer a variation on this scheme, where you could buy company shares. The idea was that a company worked out how much you would have saved after 5 years, added the bonus to it, and divided the total by the cost of the company shares on the day you took out the contract. To make life easy, they deducted the money from your wages and paid it directly to your SAYE account at National Savings. At the end of 5 years, you had the choice: to buy the shares at the price they were when you took out the contract, or if the shares had gone down on the stock market, you could walk away with the money.

So, I looked at this and thought I couldn’t lose. If I saved £20 a month, that was £240 a year, which made £1,200 after 5 years, plus £240 I could walk away with. But if I chose to buy shares, it looked to be a possible winner. At the start of the contract, Babcock shares were valued at about 24p, which meant I had the option of buying roughly 6,000 shares. If the shares only went up a couple of pence, I was quid’s in. The idea was the company bought the shares in my name on the day I signed the SAYE contract and looked after them until I either handed over the proceeds of my SAYE scheme or took the money.

But it didn’t work out like that. About 3 years after I took out the contract, Babcock Power was bought by Fisher Karpac Industries (FKI) to form a new company called FKI Babcock, and my possible 6,000 shares in Babcock became about 12,000 possible shares in FKI Babcock. I had to do nothing, just keep paying into my SAYE scheme. Then, after about 18 months, Babcock and FKI split, with FKI and Babcock International both being quoted independently on the stock exchange. I was still working for the Babcock Power Division of Babcock International, but as I was no longer an employee of FKI Babcock, I was no longer entitled to buy the shares, and they couldn’t be transferred into Babcock International shares. The answer was, as the shares were in my name, FKI had to buy them back at the price they agreed when they broke up FKI Babcock, which was about 75p a share. So, I was sent a cheque for around £9,000!

My father couldn’t believe it. He couldn’t believe that in 4 ½ years, my £20 a month had become £9,000. But it didn’t stop there. The SAYE scheme still existed, and if I chose to, I could close it immediately, but I would only get back what I had paid into it. However, I could continue paying in my £20 a month for six more months and take the £1,480 with the 5-year bonus. My father wanted to know what I got the £9,000 for; he just couldn’t understand it and was sure I would be chased to pay the proceeds of my SAYE scheme to FKI.

The money from the FKI shares bought me a new car, and the money from the SAYE scheme was used to do what I intended to do in the first place: buy Babcock International shares. Of course, it didn’t buy me the same number of shares as I had originally contracted for, but it was a decent number. In those days, only very rich people had accounts at stockbrokers, and I remember walking into Barclays and getting someone there to purchase them, and a few weeks later, I got a share certificate.

Thanks to Mrs Thatcher and the ‘Privatisation’ of nationalised industries, I was now able to buy more shares. I didn’t buy water, but I did subscribe to the privatisations of electricity, gas, National Grid, BT, the Post Office, and the railways, some of which have been more profitable than others. I also missed out on Rolls-Royce and rather regretted it. I now had a drawer full of share certificates and was a little worried that I was sitting on rather a lot of money. So, I opened an account with Charles Schwab.

Why Charles Schwab? Well, they would take my paper certificates and turn them into electronic holdings, they would reinvest dividends, I could set up a monthly standard order (later a direct debit) and save until I had enough to buy another holding, but best of all, it was all online and I could see what was happening to my holdings simply by logging on. A good while back, Barclays bought Charles Schwab’s UK stockbroking arm, and my portfolio is now held by Barclays Stockbrokers. Some people weren’t happy with this, but for me, it is ideal. I can log on to the bank and see my current account and swap instantly to my stockbroking account, I can move money between accounts instantly and buy and sell online.

Of course, I have bought holdings in many other companies. I now have shares in 25 or so companies and have tried to spread them between all types of companies, including engineering, utilities, pharmaceuticals, banks, oil, shops, services, food & drink, and entertainment. In 2022, I eventually bought those Rolls-Royce shares and never regretted it; my holding is up about 500%! What about those original Babcock shares? Well, they have had their ups and downs, but I have stuck with them through thick and thin. At the moment, it is thick, and my hold is now worth substantially more than I paid for them, even taking into account that I had to take part in a fundraising exercise some years back and have bought additional shares. But today, they have made me a lot of money.
 

© WorthingGooner 2025