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No retirement savings and missed out on the Footsie’s gains? Here’s what to do

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Since reaching a low of around 3,400 points in March 2009, the FTSE 100 has enjoyed stunning gains. It now trades at a level that is around 120% higher than where it was just over nine years ago. This equates to an annualised gain of over 9% during that time period. And when dividends of over 3% per annum are added to the mix, the UK’s leading index has clearly enjoyed a strong period of growth.

Fear of missing out

Of course, not everybody has been able to take part in what has been a ‘purple patch’ for the FTSE 100. Whether through personal circumstances or the uncertainty which has been a part of the last nine years, many individuals may find themselves in a position where they are concerned about their retirement plans.

This situation is a lot more common than many people realise. With the cost of housing being exceptionally high and the demands on disposable incomes from a wide variety of sources, saving and investing can easily take second place to short-term necessities. As such, retirement planning may not always be possible.

Perhaps the key takeaway for individuals in such a situation is not to panic. Certainly, the FTSE 100 has enjoyed a strong period, but it is never too late to find high-quality companies trading on low valuations. As such, investing in a rash manner or buying shares without proper research could be the worst thing for an investor to do.

Significant opportunities

In fact, it could be argued that the FTSE 100 is still cheap at the present time. It has a dividend yield of around 4%, which is historically very high. There are also a number of shares which trade on relatively low valuations and that offer strong growth prospects. In many cases, the improving outlook for the world economy means that their risk/reward ratios may be more attractive than they have been for a number of years.

Furthermore, Brexit presents an opportunity for long-term investors to maximise their total returns. A number of stocks and sectors are currently seen as unfavourable by investors due to their reliance on the UK economy. With Brexit negotiations seemingly having made progress in recent months, there could be buying opportunities on offer. And with a number of defensive sectors seeing share price falls in the last year, opportunities still seem to be available for investors who have held back in recent years.

Outlook

Of course, planning for retirement is extremely challenging. But an individual who can invest even a relatively small sum on a regular basis into the FTSE 100’s constituents could find themselves with a larger-than-expected nest egg in the long run. As such, now is not the time to panic, but rather to look forward to the potential opportunities which could allow for strong total returns to take place over the next decade.

Buy-And-Hold Investing

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Peter Stephens 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.