Yet many analysts agree that the global economy is still in poor shape. News of a potential second wave of Covid-19 regularly hits the headlines. A large number of people worldwide are looking for jobs, and firms are operating at reduced capacity. Thus the markets markets may not be able to ignore further headwinds in the coming weeks. 

Another FTSE correction 

There will almost certainly be another market decline in 2020. But it would be almost impossible to know the exact date when FTSE shares may take a beating again.

The rapid recovery of stock markets worldwide and FTSE shares, even without the development of a vaccine, has been confusing for many investors. But if there is a delay in the discovery, development, and mass production of a vaccine, it is likely that stocks will retreat in the autumn.

Another serious concern for most economies is the expensive Covid-19 stimulus packages that will bloat budget deficits and cause inflation. Furthermore, high unemployment rates need to be taken into account in the months ahead. According to the Institute for Employment Studies (IES) “unemployment [in the UK] has already risen to at least 2.5m, or from 3.9% to around 7.5% of the workforce.“

Let’s not forget the ongoing dispute between the world’s two largest economies, the US and China either. Finally, there’s also the upcoming US election in early November, which should bring further choppiness to the markets. 

Likely opportunities in any market

In investing, risk and return go together. Whenever markets decline considerably in a matter of weeks, many investors wonder if they should sell and turn their paper losses into real losses. Each portfolio is unique and different investors have different risk/return profiles. 

However, history tells us that markets tend to recover from losses, only to make new highs. Yet timing the market is extremely difficult, especially for the average investor. Therefore, even if there is another decline soon, I believe FTSE investors should stay calm and focus on their long-term financial goals.

With a bit of due diligence, investors can also find robust FTSE shares that may be appropriate for many portfolios.

Here are several companies I would consider buying, especially if there is any further weakness in their share prices soon. In the FTSE 100, they include AstraZeneca, British American Tobacco, Diageo, Flutter Entertainments, Ocado, and Smith & Nephew.

In the FTSE 250, I like Bellway, Dechra Pharmaceuticals, Greencoat UK Wind, Softcat and Tate & Lyle as potential long-term investments.

Foolish takeaway on FTSE shares

Many FTSE shares have largely been unattached to economics lately. However, shareholders could once again have their faith tested in the coming weeks if FTSE stocks retreat. In the short run, I’m expecting continued volatility in stock markets.

Making the right decisions in investing is not necessarily about constantly picking winning shares and funds. Rather it is about having a long-term strategy. So if you are unsure where to begin, a low-cost FTSE 100 or FTSE 250 tracker fund might also be appropriate. 

Personally, I’m determined not to get caught up in any short-term selling in August, nor for the rest of the year.

The post Market crash: why I won’t sell my FTSE stocks in August appeared first on The Motley Fool UK.

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• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang has no position in any of the shares mentioned. The Motley Fool UK owns shares of Flutter Entertainment. The Motley Fool UK has recommended Diageo, Greencoat UK Wind, and Softcat. 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.

The performance of FTSE shares is usually negatively correlated to gold, which tends to do well when there is fear in equity markets. Do you also think gold bulls will continue to stay in control in the rest of the year? Then there are several ways you can include the shiny metal in your portfolio.

Tailwinds behind the price of gold

News headlines regarding a second wave Covid-19 cases, especially in Asia, Latin America, and the US, are hitting the wires worldwide. There is also no question that weakness in the US dollar is offering its own support to the price of gold.

Volatility has once again kicked in broader markets, including many FTSE shares. The past few days have seen the FTSE 100 gyrate between 6,300 and 6,100. Given the health and economic effects of the pandemic, investor sentiment may soon turn bearish again. Then it would not be surprising to see main stock indexes swing lower soon.

Such weakness in equity markets could be good for the price of gold, which is usually regarded as a ‘safe haven’. For hundreds of years, it has been as a store of wealth and a hedge against global uncertainties. 

Market participants have turned bullish on the precious metal in 2020 also due to the cheap money that is available worldwide. Many central banks, including the Bank of England, have cut interest rates further to help ease the pain of economic uncertainty. Economists are nervous as more debt has been issued and more money created than at any other time in history. There tends to be a negative correlation between interest rates and gold.

Portfolio options

A diversified portfolio should ideally be made up of different asset classes. Many analysts recommend holding up to 10% of your investment in gold. Buying the physical asset is one option. In the UK, you can purchase it through the Royal Mint Bullion.

You may also consider investing in exchange-traded funds (ETFs), such as the WisdomTree Physical Gold ETF or the Invesco Physical Gold ETC. 

Owning some gold exposure through miners may be another way to stay ahead of the curve. I’d consider companies that have strong asset bases, experienced management, and robust balance sheets.

Within the FTSE 100 and FTSE 250, companies that mine gold include Chile’s Antofagasta, Mexico-based Fresnillo, Russian operation Polymetal International, and Centamin, which focuses on the the Arabian-Nubian Shield. 

So far in 2020, the returns for these four companies have been 12%, 86%, 51%, and 66%, respectively.

Investors should note that most gold stocks are low dividend-payers. So they may not be appropriate for passive income investing.

Finally, there are investment funds that invest in various miners. They include the BlackRock Gold and General, UBS Solactive Pure Gold Miners ETF, and iShares Gold Producers UCITS ETF.

Foolish takeaway on gold

All asset classes have their advantages and disadvantages. I believe the rally in gold will likely push the price over $2,000 in 2020. However, there may soon be a pause in the recent rally. Any decline toward the $1,800-level could give long-term investors a better entry point. 

The post FTSE investors: Can the gold price reach a new record high in August? appeared first on The Motley Fool UK.

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• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.

Therefore today I’ll discuss two FTSE shares that may be appropriate for long-term portfolios, especially for Stocks and Shares ISAs, even if there are further pressure on broader markets in the coming weeks. Let’s take a closer look.

FTSE mining giant

Chile-based FTSE 100 member Antofagasta‘s (LSE: ANTO) core business is mining, representing over 96% of revenue and EBITDA. 

As it operates four mines in Chile, the company benefits from increases in the price of copper, but that declined between 2010 and late 2016. And the share price of this FTSE mining giant mirrored this decrease. Yet between 2017 and early 2020, despite volatility, both the the price of copper and ANTO shares overall increased.

However, this year as markets plunged and countries, including Chile, went into lockdown, prices of copper and Antofagasta shares took a hit. Since then, both have improved considerably. In fact, on 27 July, the stock hit a 52-week high.

On 22 July it released a Q2 update that showed a drop in production during the quarter. Management now expects to meet the lower end of its full-year guidance. CEO Ivan Arriagada summarised that despite Covid-19 challenges “net cash costs at $1.12/lb are some 6% lower than last year as a result of the weaker Chilean peso, lower input costs and continued tight cost control”.

I believe his words highlight the proactive stance of management, which has helped the group weather numerous headwinds in the past. Due to the recent rapid increase in price, trailing price-to-earnings sits at 25.77, which is a bit on the high end for the industry.

In the coming weeks, there may be some profit-taking in FTSE shares, including ANTO, which would give a better entry price for investors. I’d consider buying it in an ISA, especially as the price goes towards, or even below, 1,000p.

Financial security in retirement years

Many financial planners highlight the importance of diversification to grow one’s savings, especially for later years. Now could be an opportune time to build a diverse Stocks and Shares ISA made up of high-quality businesses.

Security outsourcing group G4S (LSE: GFS) offers a range of services and products, including the supply of security personnel, secure transportation of individuals, and risk management solutions. FTSE 250 member G4S also works with governments overseas to deliver security and forensic medical services.

On 23 July, the group announced half-year results for the period to June. Revenue and EPS were £3.35bn and 6.3p respectively. Operating cash flow came at £364m, marking a significant increase from £164m in 2019. 

The group has been increasing its focus on integrated technology-enabled solutions. Management highlighted it was “generating an increasing proportion of revenues from integrated, technology-enabled solutions”, which it expects to help accelerate profitable growth. 

Earlier in April 2020, in order to conserve cash amid the uncertainties in the current environment, the company cut the final dividend payment. Year-to-date, GS4 shares are down around 33%, hovering at 147p. Its forward P/E and P/S are 12.60 and 0.31 respectively. I’d buy the dips.

The post Investing £2,000? Here are 2 FTSE shares I would consider for an ISA in August appeared first on The Motley Fool UK.

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• 2 ‘overpriced’ FTSE 100 shares I’ve got my eye on if the stock market crashes

tezcang 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.

Today, I’ll take a closer look at various risk factors that could challenge the recent optimism in the FTSE 100 shares. 

Could FTSE 100 shares crash again?

My short answer would be “Yes, at a future date, FTSE 100 shares are likely to decline again”. Yet I don’t think it would be possible or even prudent to try to give the exact day of such a potential market crash. 

Recent market action seems to be tied to news headlines about economic activity across the world restarting and the number of new Covid-19 cases on a given day. Unfortunately there has been a considerable uptick in the number of cases and hospitalisations, especially in the US, Asia, and Latin America.

Fears of another wave of the pandemic may well mean a prolonged recession worldwide. As the number of Covid-19 cases increases, I’m of the camp that believes a U-shaped recovery in the economy is most likely. Many countries, including the UK, will likely spend a longer time labouring in economic contraction than immediately rebounding. As long as there is no vaccine, a sharp and optimistic V-shaped recovery becomes more unlikely. 

Most health experts agree that a vaccine or another form of therapy could potentially take years to develop and fully distribute. As a result, the pandemic may hamper the expected global economic recovery. For example, the trajectory for unemployment in Britain is unclear. According to the recent figures released by the Office of National Statistics, the coronavirus jobs market has not been encouraging. 

Therefore, some short-term profit-taking in many FTSE 100 shares may be due. And the current busy earnings season, especially in the US, may put pressure on major indexes worldwide. Broad markets in the US tend to lead others. Thus FTSE 100 shares may also give up some of their recent gains. I believe a decline toward the 6,000-level in the index is possible. Yet such a drop would give investors better entry points to many of their favourite shares.

Brexit transition period is ending

On top of the global agenda, here in the UK, we’re beginning to hear the word ‘Brexit’ again. In about five full months, the Brexit transition period will end. So at the end of the year, deal or no-deal, we’re out of the European Union (EU) completely. 

Our government and the EU are currently negotiating a trade deal that could be acceptable to both sides. Yet news headlines don’t show much optimism for an agreement at this point. If the UK leaves the bloc with a deal, FTSE share are likely to take a dive. So it may be prudent to set some cash aside for investing later in the year. It’s likely that investors will be able to buy into good FTSE 100 businesses at prices that offer more value than now.

As always, at The Motley Fool, we encourage market participants to invest for the long-term.

The post Why I think FTSE 100 shares could crash again appeared first on The Motley Fool UK.

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• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang 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.

In the UK, we are now witnessing more public debate on medical marijuana, cannabidiol (CBD), and the rapidly changing cannabis industry. Medical cannabis is becoming a recognised investment theme. Therefore today I’ll discuss whether UK investors should consider adding marijuana stocks to their portfolios.

Canopy Growth stock faces headwinds

Canopy Growth’s Q4 results in May came in below analysts’ expectations. It posted revenues of $80.46m (it reports in US dollars) for the quarter ended March, missing estimates by around 15%. A year ago, revenue was $70.74 million. The quarterly loss was $1.16 per share versus the expected loss of $0.30. The number was $0.67 per share a year ago.

Put another way, like many of its peers, the Canada-based marijuana producer has so far not been able to convert revenue growth into real profits. And Canopy Growth stock is a testament to the woes of the industry. About 18 months ago, in October 2018, CGC shares had seen an all-time high near $60. Now, the stock is hovering around $16.

Like most other cannabis companies, Canopy has three segments of revenue:

• Canadian consumer (i.e., retail recreational)
• Canadian medical
• International medical

Currently, Canadian retail recreational remains the most important segment for Canopy Growth.  Yet over the past year, a lack of growth in the Canadian recreational segment has meant lower gross margins and higher operating expenses. Medical sales were not enough to produce the much-hoped for profits either.

On a more positive note for shareholders, beverage giant Constellation Brands has a 38% stake in Canopy Growth stock. Analysts believe Canopy will likely lead the cannabis-infused beverage market. In the coming weeks, I expect CGC stock to trade between $12.50 and $17.50. I’d buy, but potential investors may find more value in the shares if the price declines toward the $15 level or below.

Foolish takeaway

The gold-rush hype surrounding the cannabis space is over. But that may not be such an adverse development for those investors looking to enter the  industry for the long run. The global medical cannabis market size is around £10bn. By the end of the decade, the market is expected to be over £100bn.

For those investors looking to add shares of cannabis companies, there is also a UK-based ETF. Earlier in the year, HANetf and Canada-based asset manager, Purpose Investments, launched The Medical Cannabis and Wellness UCITS ETF (CBDX) on the London Stock Exchange (LSE).

Canopy Growth is not included but the fund may still deserve your interest. It consists of publicly listed companies conducting legal business activities in the medical cannabis, hemp, and CBD industry. That includes producers and suppliers of medical cannabis, CBD-focused biotech companies, companies leasing property to medical cannabis growers, and software solutions for medical cannabis producers.

Our readers may be surprised to learn that Britain is the biggest producer and exporter of legal cannabis in the world. And that is thanks to one drug, Sativex, produced by Cambridge-based GW Pharmaceuticals (NASDAQ: GWPH). In 1998, the company obtained a unique Home Office licence to cultivate cannabis seeds. Since then, it has been producing Sativex to treat spasms in multiple sclerosis patients. GWP makes up around 10% of the CBDX.

The post Why I think Canopy Growth stock may sit well in a UK portfolio appeared first on The Motley Fool UK.

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• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang 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.

On July 22, the company reported Q2 earnings. Therefore today, I’ll take a closer look at the potential of EV shares for long-term UK investors. 

Tesla stock: four straight quarters of profit

The most recent earnings report marked four consecutive profitable quarters for the electric carmaker. It reported $104m in profit for the April to June quarter. It would be important to remember that due to lockdowns, its Fremont, California manufacturing plant was closed down for about half of that period.

Tesla stock is now eligible to join the S&P 500, the index of top companies in the US. If it were to become part of the coveted index soon, the company would be among the top 20 most valuable companies. 

In that case, many funds that track the index would have to add Tesla stock into their holdings, a move that would likely support the share price in the coming months.

Musk has recently confirmed the company is “very close” to achieving Level 5 autonomous driving technology. He gave a video message at the opening of Shanghai’s annual World Artificial Intelligence Conference (WAIC). Tesla’s founder referred to the capability to navigate roads without any driver input and said: “I’m extremely confident that Level 5 or essentially complete autonomy will happen, and I think will happen very quickly”. 

Industry analysts currently debate whether the technology will be ready that fast. Yet when Musk speaks so boldly about the future of EV automation, investors in Tesla stock listen and add to their long positions. 

Other US-based EV manufacturers to consider

In the past few months, other EV manufacturers have also been attracting Wall Street’s attention. Oregon-based Arcimoto (NASDAQ: FUV) may excite your interest if you’re looking for a cheap share that could become the ‘next Tesla stock’. FUV shares currently have a price tag of $5.88. After going public in September 2017, Arcimoto has built its production facility. Since September 2019, it has been producing and selling the Fun Utility Vehicle.

Texas-based Ayro (NASDAQ: AYRO) started trading on the NASDAQ composite on May 29 following a merger with DropCar, which was already listed on the exchange. The group creates sustainable electric solutions for last-mile delivery, fleet management, and closed campus transport such as golf courses, universities, or airports. These light-duty vehicles are typically classified as low-speed electric vehicles (LSEVs). They serve a niche, yet growing, market.

Ayro shares opened at $4.10, but by June 4, were down to $2.15. Yet investors’ risk appetite in EV shares helped push the shares to a high of $8.18 on July 6. Now they’re around $4.80.

Foolish takeaway on Tesla stock

Do you believe that the new decade will see increased investor appetite in electric vehicles? Then you may want to research the suitability of EV shares like Tesla, as well as FUV or AYRO. Once you’re ready to hit the ‘buy’ button, you should typically be able to buy these US-based stocks through your broker.

The post Should UK investors join the electric vehicle (EV) revolution with Tesla stock? appeared first on The Motley Fool UK.

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tezcang has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Tesla. 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.

Put another way, Buffet is a believer in the future of the Cupertino, California-based tech titan. Year-to-date, Apple shares are up around to 35%. But that metric tells only half the story. On 23 March, AAPL stock hit a recent low of $212.51. Now it’s hovering at $395. So since then, AAPL stock is up an eye-popping 85%. I think UK investors may also share Mr Buffett’s enthusiasm regarding AAPL.

Why Buffett loves Apple shares

Earlier in the year, Buffett released his annual shareholder letter. He believes stocks will most likely beat bonds over long term if interest rates stay low.

In the US, the Federal Reserve has slashed interest rates to record low levels in recent months as part of its efforts to ease the economic effects of the pandemic. Apple shares remain Berkshire Hathaway’s largest holding and part of Buffett’s conviction regarding them links to that view that broader markets will outperform most other asset classes.

Buffett’s typical preferred investments are

• Large-cap stocks
• Consumer brands
• Financials, including banks and insurance companies
• Stocks that pay dividends

In August 2018, Apple became the first US-based company to hit a $1trn valuation. Currently the market-cap is over $1.7trn. By comparison, Microsoft and Amazon each have market-caps of about $1.6trn. On a side note, all three companies have been crucial in driving broader US markets higher since March.

With such a market-cap, it would be safe to assume that Apple shares are unlikely to be held down by the market for too long, even in uncertain times brought on by Covid-19. The Street and Warren Buffett regard large market-cap companies as good and stable long-term investments. 

Although most market participants think of Apple as a tech company, Buffett views it as a compelling consumer business thanks to its popularity worldwide. In a recent interview he said: “I do not focus on the sales in the next quarter or the next year. I focus on the … hundreds, hundreds, hundreds millions of people who practically live their lives by [iPhone]… It’s probably the best business I know in the world”.

Apple controls over 50% of the US smartphone market. Many analysts agree that 5G will likely turbocharge its stock price in the coming months too.

Foolish takeaway

APPL is the cornerstone of Warren Buffett’s portfolio. If you also share his views and would like to buy Apple shares, you may want to talk to you financial advisor about their suitability for your risk/return profile. There may also be tax implications of owning foreign shares. Once you’re ready to hit the ‘buy’ button, you should typically be able to buy the stock through your broker.

Alternatively and very easy, there are UK-based exchange-traded funds (ETFs) that include Apple as a holding. They include the AXA Framlington Global Technology Fund, Herald Investment Trust, iShares S&P 500 Information Technology Sector UCITS ETF USD, and Polar Capital Technology Trust. These funds would enable UK investors to take a bite out of Apple shares as well as other technology stocks.

The post Warren Buffett owns Apple shares. Should UK investors copy him? appeared first on The Motley Fool UK.

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• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. tezcang has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Apple, Berkshire Hathaway (B shares), and Microsoft and recommends the following options: long January 2022 $1920 calls on Amazon, long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short September 2020 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2022 $1940 calls on Amazon. 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.

It is anyone’s guess what stocks may do in the coming weeks. Yet I believe the recent market crash, as well as any potential further declines, may create an opportunity, especially for long-term investors who may want to grow a nest egg to retire wealthy. History tells us that eventually economic slumps end and robust FTSE 100 shares go on to make new highs. 

Therefore, I’d like to discuss two reasons why I believe new investors may want to review their long-term financial goals. The first reason is low interest rates. The second reason is that time is always on the side of the long-term investor. Let’s see how.

Low interest rates may support FTSE 100 shares

Both in the UK and many countries worldwide, interest rates are at all-time lows. The Bank of England (BoE) website details the progressive decline of interest rates over several decades. As you can see, 0.1% is historically low. 

Interest rates have an important effect on economic activity, the cost of borrowing, capital flows and retirement planning. According to legendary investor Warren Buffett, if rates and taxes stay low, stocks will likely beat bonds long term.

You may regard buying bonds or keeping your money in cash as technically risk-free. However, that would mean free from downside risk. Yet, the risk of inflation potentially renders today’s pounds significantly less valuable in the long run.

Many analysts would agree with Mr Buffett that with interest rates as low as they are, taking a raincheck on regular investing in FTSE 100 shares may indeed come with high opportunity costs. Historical data from our economy shows that low rates have bolstered stock prices over time.

On top of that capital growth, robust dividends on offer by many FTSE 100 shares could be a good option for income investors. In 2019, the average dividend yield for the FTSE 100 was about 4.5%.

Time is on your side 

If you want to retire wealthy, it is important to appreciate how your money could grow with compound interest over time to a surprisingly large amount. 

Let’s assume that you are now 30, with £5,000 in savings and that you plan to retire at age 65.

You decide to invest that £5,000 in a fund now and make an additional £4,000 of contributions annually at the start of the year. You have 35 years to invest. The annual return is 6%, compounded once a year. At the end of 35 years, the total amount saved becomes £510,914.

Saving £4,000 a year would mean being able to put aside around £333 a month or about £11 a day. Might you just be wondering if you should skip that next impulse purchase or cup of coffee?

And if you were to increase the amount of annual contributions from £4,000 to £6,000, the total amount saved becomes £747,155. That would be the power of time and compound interest at work together.

Making the right decisions in stock market investing is not necessarily about constantly picking winning shares and funds. Rather it is about having a long-term strategy. 

The post 2 reasons why I’d start investing in FTSE 100 shares now to retire wealthy appeared first on The Motley Fool UK.

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• £10,000 invested in red-hot Tesco shares just 1 week ago is now worth…
• See the income from investing a £20k ISA in this UK stock before it goes ex-dividend on 9 April
• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang 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.

Stocks and Shares ISAs

ISAs were introduced in 1999. Currently, there’s a maximum subscription allowance of £20,000 per adult per tax year. Individuals can divide this in across a Cash ISA, a Stocks and Shares ISA, a Lifetime ISA (maximum of £4,000) or an Innovative Finance ISA.

I believe every UK resident should learn more about the different types of ISAs available to them, with an emphasis on Stocks and Shares ISAs, which offer tax-efficient benefits for investors. 

Individuals can usually invest in three ways:

• With a lump sum only, from a year-end bonus, for example. This method gives the portfolio a longer time for growth during the year. 
• For those with irregular income, an initial lump sum, followed by top-up payments works best.
• With regular (usually monthly) payments, which can be set up automatically by direct debit.

How to pay for retirement

The main mistake most people make is not knowing how they will pay for retirement. One suggestion is that you’ll need between half and two-thirds of the salary you earned before retirement. A safe range would be between £24,000 and £28,000 a year. This amount assumes that you don’t have any mortgage or rental payments to make in retirement.

Let’s assume that starting at age 65, you’ll need £28,000 per year and you expect to live for another 25 years after retirement. Let’s also leave your potential State Pension or any other private pension income aside for now.

One way to calculate how much in savings you’d need is to multiply £28,000 by 25. The result is £700,000. This calculation further assumes that the £700,000 will earn no interest income.

In other words, if you’d like to finance your retirement fully with your savings, simply multiply the amount you’d need per year by 25.

You may also be entitled to the State Pension or have other streams of income.

Becoming a millionaire by retirement

My Motley Fool colleagues point out that the stock market returns about 6% to 8% annually on average. An important part of that return comes from dividends.

Research also shows that investors who purchase dividend-growth stocks and reinvest the dividends to buy more shares are likely to see considerable growth in their savings.

Let’s assume that you’re now aged 30 with only £100 in savings and that you plan to retire at 65.

You decide to invest that £100 in a FTSE 100 tracker fund now and make an additional £7,000 of contributions annually at the start of each year. You have 35 years to invest. The average annual return is 7%, compounded once a year. At the end of 35 years, the total amount saved becomes £1,036,462.

In retirement, you can simply draw down, say, 4% of your portfolio for your expenses, which should theoretically be covered by your investment returns on the portfolio holdings. If those long-run averages hold, you shouldn’t need to work again and can live off your investments.

The post I believe long-term FTSE 100 investors can become ISA millionaires appeared first on The Motley Fool UK.

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• £10,000 invested in red-hot Tesco shares just 1 week ago is now worth…
• See the income from investing a £20k ISA in this UK stock before it goes ex-dividend on 9 April
• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

tezcang 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.

The tech sector

Broadly speaking, tech companies develop, manufacture or offer technology-based services or products. The sector encompasses a wide range of businesses, from telecommunications, to personal computers, semiconductors, e-commerce, software as a service (SaaS), cloud computing, fintech, online social networks, artificial intelligence (AI), and internet of things (IoT).

We first tend to think of companies headquartered in Silicon Valley or Seattle in the US, such as Amazon, Apple, Google, or Microsoft when we mention tech shares. Nonetheless, the UK also has promising technology businesses with plenty of scope for future growth.

The London Stock Exchange’s techMARK market “was launched in November 1999 by the Exchange to create new opportunities for companies whose business is dependent on technological innovation, and for investors in those companies”. 

And the FTSE techMARK All-Share Index comprises all companies included within the techMARK market. There are currently 26 UK-listed companies in the index. 

The list includes large-cap as well as medium and smaller companies, which are growing fast and offer potential for impressive stock price gains. Investors may use the index as a starting point to research tech shares further.

Our blue-chip FTSE 100 index also offers several possibilities for investors to consider. I believe many of them may provide long-term returns to help investors retire wealthy.

FTSE 100 tech shares

One of the most successful stocks of the past decade has been Aveva. It provides engineering and industrial software. Then there’s global defence contractor and cyber security firm BAE Systems. Year-to-date (YTD) both shares are down by 13% and 15% respectively. 

Telecoms giants BT and Vodafone are two tech-based names that may increasingly benefit from the current stay-at-home and work-from-home economy. Multinational consumer credit reporting company Experian may become another business to ride the Covid-19 wave. Many consumers and business are likely to rely on credit data as uncertainty begins to take its toll on many economies.

Bookmaker holding company Flutter Entertainment is another stock to watch. Since March, due to the lockdown, sports fixtures have been cancelled worldwide. Yet as economies begin to open up, the company is likely to see revenue growth in the coming months.

Stock exchange and financial information company London Stock Exchange Group may also come out of the current volatility in acceptable financial shape. The lockdown shouldn’t affect its business model much.

Engineering group Halma specialises in products for hazard detection and life protection. Although not a household name, its stock has been a robust long-term investment.

Online retailer Ocado is regularly in the news. The group is currently working around the clock to answer the increase in demand for online grocery shopping. From warehouse to delivery routes, the business is highly automated. In late 2019, it successfully sold its automated technology to Japan, a leader in robot technology.

Finally, cloud-based accounting and payroll services provider Sage Group may deserve further due diligence as a tech share to consider to retire wealthy. YTD, the shares are down by 12%.

The post FTSE 100 investors: I believe these tech shares can help you retire wealthy appeared first on The Motley Fool UK.

More reading

• Is now a good time to start investing in the wealth-building stock market?
• £10,000 invested in red-hot Tesco shares just 1 week ago is now worth…
• See the income from investing a £20k ISA in this UK stock before it goes ex-dividend on 9 April
• What’s going on with the AstraZeneca share price now?
• This S&P 500 stock is down 30% and the CEO just bought $10m worth of shares

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. tezcang has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Microsoft. The Motley Fool UK owns shares of Flutter Entertainment. The Motley Fool UK has recommended Halma and Sage Group and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. 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.