Buying FTSE 100 shares could be a means of improving your retirement prospects. Certainly, they may experience ups and downs in the short run due to economic challenges facing the world economy. But in the long run, they may offer high returns that can catalyse your retirement nest egg.
With that in mind, here are two FTSE 100 shares that appear to offer good value for money and long-term growth potential. Buying them now could boost your retirement prospects and help you to beat an inadequate State Pension.
Political risk seems to be weighing on the share prices of housebuilders such as Taylor Wimpey (LSE: TW). The company’s recent updates have suggested that demand for new-build properties has been strong, and this has enabled the business to deliver improving financial performance.
Despite this, investors are cautious about its outlook. The stock currently trades on a price-to-earnings (P/E) ratio of just 8.5. This could mean that there is a margin of safety on offer for investors, with the company having the potential to benefit from high demand for new homes in the long run.
Clearly, changes to government policies such as Help to Buy could be ahead. However, continued low interest rates may mean that the housebuilding industry experiences further growth despite ongoing political risk.
With a dividend yield of over 10% that appears to be affordable due to Taylor Wimpey’s net cash position, its total returns could be very attractive over the coming years. Therefore, now could be the right time to buy a slice of the business while it trades on what could prove to be a low valuation.
Another FTSE 100 share that appears to offer good value for money at the present time is Anglo American (LSE: AAL). The mining company has enjoyed a significant improvement in its operational performance in recent years. For example, since 2012 its productivity per employee has more than doubled, while its ongoing focus on reducing costs and becoming more efficient may catalyse its financial performance in the medium term.
Clearly, economic uncertainty may lead to a challenging period for the business and the wider mining sector. Risks such as a global trade war may negatively impact on demand for a wide range of commodities. However, for an investor who has a long-term view, now could be the right time to buy a slice of Anglo American while it offers a margin of safety.
It currently trades on a P/E ratio of just 9.4. This seems to undervalue the business at a time when it is forecast to produce a rise in its bottom line of 13% in the current year. Therefore, its return potential seems to be high, with its overall strategy set to lead to a business that offers improving efficiency and growing profitability over the coming years.
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Peter Stephens owns shares of Taylor Wimpey. 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.