Investing money in UK shares today may not necessarily produce high returns in the short run. Risks such as Brexit and coronavirus may harm the prospects for many FTSE 100 and FTSE 250 shares in the coming months.
However, at the age of 50, you’re likely to have a long time horizon until you retire. Therefore, you have sufficient time for the stock market to recover after its recent market crash.
With that in mind, here are two UK shares that could produce impressive long-term returns after their recent declines.
Investing money in Tesco could produce attractive returns
Investing in Tesco (LSE: TSCO) at the start of the year would have produced a 10% loss for investors. Its first quarter trading update may have showed an 8% rise in sales, but higher additional costs related to the pandemic mean its near-term profitability could be less impressive.
However, over the long run, the business appears to have recovery potential. It’s doubled its online capacity over recent months so it’s maintained a strong position in the e-commerce grocery segment. This could pay off in the long run, as many shoppers may continue to order online, rather than shop in one of its stores.
Furthermore, the company is generating strong growth in its convenience stores, as well as in its Jack’s budget chain. And, with the growing popularity of its Clubcard offer, it could outperform many of its rivals in the coming years.
Certainly, further coronavirus-related challenges mean investing money in Tesco shares today won’t necessarily lead to strong capital growth in the short run. However, it appears to be in a good position to generate improving returns in the long run.
Why WPP can mount a successful share price recovery
Many may be wary of investing money in WPP (LSE: WPP) at present. The company has underperformed many UK shares since the start of the year, recording a 40% decline year-to-date. Moreover, with the global economic outlook uncertain, it may experience further challenging operating conditions.
However, the company’s first quarter update showed it has the potential to deliver a successful turnaround in the long run. Its asset disposal programme has significantly strengthened its balance sheet, which increases its capacity to overcome a period of weak trading conditions. And, with demand from sectors such as technology and packaged goods high, it’s in a good position to win new business as advertising spend increasingly shifts to digital media.
Although investing money in WPP shares could lead to paper losses in the short run, depending on how the economy performs in the coming months, it appears to offer long-term growth potential. As such, buying it as part of a diverse portfolio of shares could lead to impressive returns, relative to other UK shares.
The post No savings at 50? I think investing money in these 2 UK shares can help you retire early appeared first on The Motley Fool UK.
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Peter Stephens owns shares of Tesco and WPP. The Motley Fool UK has recommended 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 2020