I’d drip feed £100 a week into FTSE shares to try and retire early

By regularly putting money into blue-chip shares chosen from the FTSE indices, our writer thinks he might be able to retire early.

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A lot of people like the idea of ending their working lives while they are still young enough to fully enjoy their retirement. But to retire early takes planning. Living without working does not pay for itself, after all.

One approach I could take to try funding an early retirement is regularly drip-feed a consistent amount of money into FTSE shares. Here is how I would do that, using £100 a week.

Drip, drip, drip

Having a lump sum to invest can be a lucrative source of future income. But for many people who are busy juggling careers and the expense of daily life, there simply is not a big bag of spare cash lying under the bed.

That is where the principle of doing a little, often can come in handy. By putting money aside on a regular basis I would hope to get into a steady saving habit. Hopefully I would feel the impact of the money leaving my account less once I got used to it while, over time, the regular contributions could start to add up to a substantial sum.

While £100 a week is not a small amount, I think it could be manageable based on my own financial circumstances. I would drip-feed it into a share-dealing account, or Stocks and Shares ISA.

Creating a portfolio of FTSE shares

Saving money on its own could help me prepare for retirement. But to retire early, I would put that money to work in the stock market. If I am fortunate, the shares I buy may grow in value, pay me dividends – or both.

Some shares do well but others can perform poorly. So I would invest my funds in a diversified stock portfolio rather than letting one or two particular shares dominate my retirement planning.

With an eye on the long term, I would try to invest in proven, successful companies that have already demonstrated their ability to turn a profit. I would therefore focus on shares in a FTSE index like the FTSE 100. While such component companies are not guaranteed to be successful, they have typically reached a significant size to be included in the index.

Within that pool of firms, I would choose ones I understood and thought had a competitive advantage in a business area with resilient customer demand. If those shares were trading at what I saw as an attractive price, I would consider buying them for my portfolio.

Building towards retirement

An example of such a FTSE 100 share I would consider for my retirement portfolio if I had spare cash to invest is financial services giant Legal & General.

I expect demand for insurance to remain strong. Legal & General’s strong brand gives it a competitive advantage when it comes to attracting and retaining clients.

With its dividend yield of 7%, Legal & General could hopefully provide me with a stream of dividends. By reinvesting them, I could build my portfolio faster using dividend cash as well as my steady £100-a-week contribution.

Hopefully, with patient investing over the years, that could help me afford to retire early.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

C Ruane has no position in any of the shares mentioned. 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.

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