Investing £2k, or any other amount, in FTSE 100 shares today could be a means of capitalising on a likely long-term stock market recovery. Although this process may take many months, or even years, the track record of the stock market suggests it will experience improving investor sentiment and higher share prices over the long run.
As such, buying FTSE 100 shares today while they trade at low prices could be a sound move. Here are two companies that, while facing uncertain futures, could boost your returns and help you to retire early.
Standard Life Aberdeen
The recent investor update from FTSE 100 wealth management business Standard Life Aberdeen (LSE: SLA) showed that it’s adapting to changing operating conditions caused by coronavirus. It reported only a modest impact on the level of service provided to its customers in the first four months of the year, as many of its staff are able to work from home.
Of course, weaker stock markets across the world are likely to impact negatively on the company’s financial outlook. Investor sentiment may have improved in recent weeks, but demand for many of the funds operated by Standard Life Aberdeen may prove to be lower than over the last few years.
Standard Life Aberdeen’s share price has fallen by around 30% since the start of the year. As a cyclical business, it could experience a high degree of volatility over the coming months. However, its stock price seems to offer a margin of safety. Meanwhile, its relatively strong balance sheet could mean it has recovery potential over the long run. As such, now could be an opportune moment to buy a slice of the FTSE 100 business.
FTSE 100 telecoms company BT
Another FTSE 100 share that’s recorded a significant decline in its price since the start of 2020 is BT (LSE: BT.A). Its shares are down by 43% in 2020, which is around twice the decline of the index over the same time period.
The company’s recent full-year results were in line with expectations. It was able to complete the first phase of its transformation programme. It will continue with its modernisation programme, and expects to achieve annualised gross benefits of £2bn by 2025.
As part of this, it will rationalise many of its products and switch off many legacy services. This could help to create a simpler and more agile business that can compete more effectively with its peers.
BT’s suspension of its dividend in the 2021 financial year is disappointing for income investors at a time when interest rates are at historic lows. But the decision provides additional capital that can strengthen the FTSE 100 company’s operations.
This may lead to a stronger business that’s able to deliver an improving financial performance over the long run, as well as a recovering share price.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now spread to over 200 countries worldwide, the bull market we’ve enjoyed over the past decade has finally come to an end.
Against such a backdrop of market worry, it’s little wonder that many investors feel panicked. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
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Peter Stephens owns shares of Standard Life Aberdeen. 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.