While it is better to start early when it comes to planning for retirement, it is never too late to invest for older age.
At the present time, there are a number of FTSE 100 shares that appear to offer good value for money. Certainly, they face risks, but the long-term track record of the index shows that a diverse portfolio of shares can deliver higher returns than other mainstream assets.
With that in mind, here are two FTSE 100 shares that could be worth buying today to improve your retirement prospects over the coming years.
FTSE 100 housebuilder Berkeley Group (LSE: BKG) recently released a trading update and it said its operating conditions have remained robust. That’s despite economic and political uncertainty being high, with the company experiencing resilient demand for its properties.
The business is taking a long-term view of the UK housing market. Certainly, there is scope for the firm to face difficulties in the near term, with issues such as planning, economic uncertainty and political change weighing on its short-term performance. But with there a lack of supply of new homes in London and other parts of the UK, the long-term prospects for the industry appear to be encouraging.
Berkeley Group currently trades on a price-to-earnings (P/E) ratio of 13.8. This could offer investors a margin of safety when compared to its intrinsic value, since the stock market seems to be factoring in potential difficulties for the wider sector. However, for a long-term investor who can accept a degree of uncertainty for now, the stock could deliver high returns due to its strong market position and resilient demand for new homes across London and other parts of the UK.
Another FTSE 100 share that has been impacted by economic and political uncertainty in the past couple of years is Lloyds (LSE: LLOY). Its recent updates have shown that trading conditions have been tough – especially with ongoing PPI costs hurting its profitability.
Despite this, it has pushed ahead with the delivery of its strategy. The acquisition of Tesco Bank’s mortgage portfolio could strengthen its position in a key market, while the investment it is making in a wealth management joint venture with Schroders has the potential to boost its income over the coming years.
Lloyds currently trades on a P/E ratio of just 8. This could reflect investor uncertainty regarding its near-term performance, which could be impacted by issues such as Brexit and the upcoming general election.
As such, long-term investors may be able to buy the stock while it trades on a low valuation. This could lead to capital growth in the long run, as its strategy of investing in becoming more efficient and the possible end of costs such as PPI lead to more favourable operating conditions for the business.
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Peter Stephens owns shares of Berkeley Group Holdings, Lloyds Banking Group, and Tesco. The Motley Fool UK has recommended Lloyds Banking Group and Tesco. 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