It’s not too late to build a retirement nest egg from a standing start aged 50. The historic return of the FTSE 100, for example, shows that even modest sums of capital can grow at a relatively rapid rate.
With that in mind, now could be the right time to buy a range of large-cap shares to improve your chances of retiring early. The index appears to offer good value for money at the present time, as well as growth potential.
As such, these two stocks could be worth buying today. They could produce a growing retirement fund that can pay a generous passive income in older age.
Housebuilder Persimmon (LSE: PSN) is currently experiencing a turbulent period. Not only does it face an uncertain outlook due in part to the ongoing Brexit process, it has come under criticism for the build quality of its homes.
Specifically, the company appears to have favoured volume over quality in the past. This was reflected in the pay structure of its senior management team.
Now though, the company is investing in improving its customer satisfaction rates. This has led to a slowdown in its number of completions, but it is also leading to a lower chance of customer redress. As a result, the company’s long-term financial future may be more positive.
Persimmon currently trades on a price-to-earnings (P/E) ratio of just 10. This suggests that it offers a wide margin of safety, while the continuation of government policies such as Help to Buy may catalyse the performance of the housebuilding sector. Therefore, now could be the right time to buy a slice of the business for the long run.
Another FTSE 100 company that could produce high long-term returns is Next (LSE: NXT). The retailer has embraced omnichannel retailing and has invested heavily in delivering an online platform that could enhance its market position within the clothing and home segments.
Additionally, Next has invested in its supply chain as it seeks to continue to be relevant to a younger demographic of shoppers who are increasingly demanding greater levels of convenience and flexibility in where and when they purchase items. This has caused a number of the company’s rivals to experience disappointing sales performances, but Next’s recent updates have shown that it is on track to deliver on its medium-term financial guidance.
With the stock trading on a P/E ratio of 15.5, it is not the cheapest retailer in the FTSE 100. However, its growth strategy seems to be highly effective, and could strengthen its market position during a period of change for the wider industry. As such, now could be the right time to buy a slice of the business as it prepares for an evolving retail industry that could deliver improving financial performance for the company.
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Peter Stephens owns shares of Persimmon. The Motley Fool UK has no position in any of the shares mentioned. 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