The price of gold has surged in the recent stock market crash. Many investors feel the precious metal could offer superior returns in the current uncertain environment. However, buying bargain FTSE 100 growth shares could be a better means of improving your retirement prospects.
While the world economy faces an uncertain future, these companies have definite competitive advantages that should help them pull through and generate attractive returns for shareholders over the long run.
The appeal of FTSE 100 growth stocks
Gold looks attractive from a short-term perspective. The coronavirus crisis has significantly impacted the global economy. As of yet, we don’t know how long the crisis will last, and how big of an impact it will have on growth.
Central banks’ efforts to try and contain the crisis have also fuelled inflation fears. As such, gold’s status as a store of value has resonated with investors. However, while gold may provide protection in the short term, long-term investors may be better off buying FTSE 100 growth shares.
Buying shares at the current time may seem like a risky proposition. But over the past few decades, the FTSE 100 has seen many uncertain economic environments. It has a strong track record of recovering from every one of these downturns. It has often gone on to post new record highs after every slump.
Sometimes it has taken several months to recover. On other occasions, it has been years before the index recovered its losses. But if you’ve got many years left until you plan to retire, FTSE 100 growth stocks could offer higher returns than other mainstream assets.
Many of these stocks are at the forefront of technology and offer unique products and services. While these companies could experience a decline in demand in the short term, their substantial competitive advantages should help them back to health when the economic recovery gains traction.
This could help these FTSE 100 growth stocks produce better returns than gold over the long term. And now could be the perfect time to start building a portfolio of FTSE 100 shares.
Shares on offer
After the recent stock market crash, valuations across the lead index are relatively low. This suggests investors can build a diversified portfolio of FTSE 100 growth stocks at a relatively low price.
A diversified portfolio would help reduce risk and possibly improve your chances of generating a healthy return on assets over the long run.
So, overall, now could be a great time to take advantage of the recent stock market crash and buy a range of large-cap growth shares for the long term.
These companies may not outperform gold in the short run. However, over the long haul, it’s highly likely a portfolio of undervalued FTSE 100 growth stocks will generate extremely attractive returns. And that could help you build a sizeable pension pot.
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Rupert Hargreaves 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.