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No savings at 40? I’d start by buying these 2 FTSE 100 shares inside a Stocks and Shares ISA

Having no savings at 40 doesn’t mean it is too late to build a retirement nest egg from which to enjoy a generous passive income in older age. However, starting to invest sooner rather than later could be a good idea. It will allow compounding to have a greater impact on returns over a longer time period.

Opening a Stocks and Shares ISA in order to invest tax efficiently could be a sound first step in building a retirement portfolio. With the FTSE 100 appearing to offer good value for money at present, now could be an opportune moment to purchase undervalued large-cap shares.

With that in mind, here are two FTSE 100 companies that appear to offer good value for money and long-term growth potential.

BP

BP’s (LSE: BP) recent performance has been relatively impressive, with second quarter results highlighting strong performances across its divisions. Notably, it’s investing in its low carbon businesses as it seeks to shift towards cleaner fuels in response to growing demand.

Alongside this, the business is making investments in Upstream projects in a variety of geographical locations. Four of these projects began production in the first half of the year, with further ones expected to come onstream over the medium term.

BP’s price-to-earnings (P/E) ratio of around 11.6 highlights the uncertainty facing the wider oil and gas industry. The prospect of a slowdown in global economic growth appears to be causing investors to demand a margin of safety across the sector. This could create a buying opportunity for long-term investors, with BP appearing to have a sound strategy through which to grow its bottom line over the coming years.

ABF

Another FTSE 100 stock that could offer long-term growth potential is Associated British Foods (LSE: ABF). Its recent trading update highlighted the uncertain trading conditions faced by its Primark retail segment, with like-for-like sales declining by 2% for the full year. However, with an increase in selling space and a market share gain, the overall performance of the division could become increasingly positive over the long run.

Meanwhile, ABF’s other divisions have generally performed well of late. Weakness in its sugar division has largely been offset by growth elsewhere, with the company’s diverse range of operations providing a relatively smooth path to growth.

Trading on a P/E ratio of 15, ABF may not appear to be a stock that offers good value for money. However, it’s forecast to post a rise in net profit of 8% in the current year. Its diverse geographical spread and the potential for its retail division to produce growth as weak consumer confidence causes shoppers to trade down to its budget offering could catalyse its financial performance. As such, now could be the right time to buy a slice of the business for the long run.

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Peter Stephens owns shares of BP. The Motley Fool UK has recommended Associated British Foods. 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.