I believe that investing in UK shares is one of the best ways to build a big retirement pot. I’ve happily put my money where my mouth is, too. By investing often in my Stocks and Shares ISA I’m taking steps to offset the danger of a paltry State Pension and retire in comfort.
There’s no such thing as a ‘dead cert’ when it comes to investing in UK shares. Even the biggest and the best can come tumbling down eventually as trading conditions evolve. The declining fortunes of former FTSE 100 royalty Centrica and Marks & Spencer, to name just a couple of fallen angels, provide perfect evidence of this.
However, history shows us that those who build a diversified portfolio of UK shares can make big returns over the long term. One can achieve this by having exposure to many companies of different sizes, spanning multiple sectors and operating across a number of countries. This strategy means that I have a great chance to make decent returns over the long term even if one or two companies underperform. I think that a portfolio comprising around 15 to 20 shares is a good way to achieve this.
£300 a month spent on UK shares could do it
Studies show that the average long-term investor — that is someone who invests with a view to holding their stocks for a decade, perhaps longer — makes an average annual return of around 8%. Such proven rates of return mean that I don’t have to spend a fortune to build a big retirement fund either.
Investing £300 a month over 30 years can do it. Over this sort of timeframe one could possibly make a whopping £422,565 to retire on based on that 8% figure. Not a bad return on a total outlay of £108,000, I think you’d agree.
Let me talk you through a couple of the UK shares I own in my ISA. Here’s why I reckon they could make me big profits in the years ahead:
- A long economic downturn in Britain could significantly hit homebuyer demand in the 2020s. Further Covid-19 lockdowns across the construction sector remains a possibility in the short-to-medium term too. These twin issues could cause significant problems at brickmaker Ibstock. I still rate this stock as a buy, though, because of the huge housing shortage in the UK. The country’s population continues to grow and there aren’t enough places to house it. I think housebuilding activity, and as a consequence brick demand, will need to rip higher to solve this problem. Ambitious government build targets for the new decade illustrate my point.
- I also bought CVS Group as spending on animalcare goes from strength to strength. This UK share operates hundreds of veterinary surgeries in Britain, Ireland and The Netherlands. It also owns a string of laboratories and animal crematoria. One threat to the company’s profits, however, comes from a rising shortage of vet care professionals that could push labour costs northwards. I’m still backing the business to help me retire in comfort, though.
