Building a retirement savings portfolio can be challenging. However, with the FTSE 100 appearing to offer a number of companies which could deliver impressive returns in the coming years, buying large-cap shares today could make that task much easier.
Furthermore, purchasing them through a Stocks and Shares ISA may improve your overall returns due to the tax efficiency offered by the account.
With that in mind, here are two FTSE 100 shares that could be worth buying today with £1k, or any other amount. They may improve your prospects of building a retirement nest egg to draw a passive income in older age.
Global bank HSBC (LSE: HSBA) delivered a mixed performance in its most recent quarter. Despite reporting financial strength in its operations in Asia, the performances of its European operations and US business were somewhat disappointing.
As a result, the bank’s reported earnings increased by just 4%, while it now doesn’t expect to reach its return on tangible equity target of 11% for the full year.
Looking ahead, the 2020 financial year is expected to be disappointing for HSBC. Its bottom line is forecast to fall by 1% versus the previous year. Alongside risks to the global economy, such as from the spread of coronavirus, this could cause investor sentiment towards the stock to come under pressure in the near term.
However, with HSBC forecast to post a rise in earnings of 6% next year, and it currently trading on a price-to-earnings (P/E) ratio of just 11, it could offer long-term investment potential. Furthermore, the stock’s dividend yield of 6.7% suggests its total returns could be highly attractive, which may help to boost your portfolio returns in the coming years.
The recent trading update from support services company Compass (LSE: CPG) was relatively encouraging. Although it experienced a difficult operating environment in Europe, this was offset by a strong performance in the US. As such, it is on track to meet its guidance for the full year.
Since Compass has been able to report positive net profit growth in each of the past five years, it appears to offer a resilient financial outlook. This could become increasingly popular among investors at a time when risks, such as US political uncertainty and the impact of coronavirus, could have a negative impact on the global economy.
As a result of its consistent past performance, as well as its forecast growth in net profit of 6% next year, Compass trades on a premium valuation. For example, it has a P/E ratio of 22, which is higher than many FTSE 100 companies which offer similar forecast growth rates.
However, the consistency of Compass and its diverse range of operations could mean its shares continue to rise over the coming years. As such, now could be the right time to buy it.
The post Retirement savings: I’d invest £1k in these 2 FTSE 100 shares in a Stocks and Shares ISA appeared first on The Motley Fool UK.
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Peter Stephens owns shares of HSBC Holdings. The Motley Fool UK has recommended Compass Group 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 2020