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Forget the State Pension: I’d get rich and retire early with these 2 FTSE 100 shares

Peter Stephens
Gold bullion on a chart

Worries about the State Pension are likely to become increasingly commonplace as the age at which it is paid rises over the next couple of decades. Alongside this, it amounts to just £8,767 per year. This means that it is unlikely to provide an income that most retirees are able to live off comfortably in older age.

As such, investing in FTSE 100 shares could be a worthwhile move. In many cases, they offer wide margins of safety at the present time which could equate to generous returns in the long run.

With that in mind, here are two large-cap shares that appear to offer upside over the long run.

HSBC

The near-term prospects for HSBC (LSE: HSBA) may be somewhat more challenging than they were at the start of the year. After all, the company’s CEO has stepped down, and the uncertainty surrounding the China/US trade war has intensified.

As such, the bank’s share price now trades on a valuation that could make it highly appealing over the long run. It has a price-to-earnings (P/E) ratio of 10.3, while its dividend yield currently stands at 6.5%. Since its dividends are covered 1.5 times by net profit, they appear to be highly sustainable at their current level.

In the long run, HSBC’s increasing focus on Asia could provide it with greater growth opportunities that many of its sector peers have. Its recent update showed that growth in Asia remains encouraging, while its investments in areas such as digital growth and in improving customer service levels could enhance its competitive position.

Therefore, while the company has an uncertain outlook at the present time, it could prove to be a buying opportunity for long-term investors.

Fresnillo

Another FTSE 100 company that faces an uncertain near-term future is silver and gold producer Fresnillo (LSE: FRES). It has reported challenges at its mines that have resulted in lower production in the first half of the current year. Alongside rising costs, this has squeezed profitability and caused its share price to come under pressure.

However, with the company continuing to invest in its asset base and it having an impressive pipeline, Fresnillo could deliver improving financial performance in the long run. It is also seeking to increase its efficiency in order to enhance its profitability.

With the outlook for global interest rates becoming increasingly dovish at the same time as investor uncertainty builds, gold miners such as Fresnillo could become increasingly in demand.

With the stock trading on a P/E ratio of 13, it seems to offer good value for money at the present time. Its forecast growth in net profit of 6% in the current year suggests that, while it is experiencing internal challenges, it has the potential to deliver a rising share price over the long run.

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Peter Stephens owns shares of Fresnillo and HSBC Holdings. The Motley Fool UK has recommended Fresnillo and HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2019