The Motley Fool

FTSE 100 crosses 6,000! I think investing £250 a month may mean a comfortable retirement

Image source: Getty Images

Since late March, FTSE 100 shares have been in ‘market rally’ mode. As the initial shock of the coronavirus-induced market crash has subsided, a large number of investors have again been buying in to stocks. On 23 March, the index dipped below 5,000. On Thursday it was hovering around 6,100. That was a healthy gain of over 22% at one point, although it did close below 6,000 again.

But it was still well up on the March low. As the City debates whether this V-shaped recovery can be trusted, today I’d like to discuss why these short-term choppy market moves should not concern retail investors who may be investing for the long run and for retirement.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Thinking about retirement amid the volatility 

It is hard to emotionally distance yourself from alarming headlines about Covid-19, as well as the stomach-churning market volatility in the FTSE. We all have a lot to worry about right now. 

So you may find that when trying to balance life priorities, saving for retirement can easily get pushed back.

However, deep down many of us know that ‘this too shall pass’ and life will return to ‘normal’ in some weeks.

The full basic State Pension stands at £175.20 per week. Do you believe you can live on that amount for the rest of your life after retirement?

Start planning sooner, not later

It is important to form a realistic plan for paying for retirement. To start, I’d encourage contributing to your workplace pension scheme.

Every UK resident should also learn more about the different types of ISA available to them. My emphasis would be on Stocks and Shares ISAs. The deadline for individuals to contribute to the current tax year’s ISA is 5 April 2021. So there is plenty of time to do due diligence on shares.

My Motley Fool colleagues regularly cover FTSE 100 and FTSE 250 shares and funds that you could consider adding to a diversified retirement portfolio. They point out that despite various downturns and even crashes, over the long run, stocks in the UK return about 6% to 8% annually, on average.

Are you are worried about a potential economic contraction? If yes, then you may want to research firms that have solid earnings that can be relied upon through a recession.

There are several companies I’d consider buying, especially if there is any further weakness in their share prices in the coming weeks. In the FTSE 100, they include AstraZeneca, British American TobaccoOcadoPennon Group, Smith & Nephew and Unilever.

In the FTSE 250, I like Babcock International Group, CranswickDechra Pharmaceuticals, and Softcat as potential long-term investments.

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

Time is on your side

Here’s an example of the power of time on your investments: let’s assume you’re now 35 with £20,000 in savings and that you plan to retire at 65.

Despite the market crash, you now decide to invest that £20,000 in a fund and make an additional £3,000 in contributions annually at the start of the year. You’ve 30 years to invest. The annual return is 6%, compounded once a year. At the end of 30 years, the total amount saved becomes £366,275.

Saving £3,000 a year means putting aside £250 a month or about £8 a day. Is it time to skip that next impulse purchase?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

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

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.