If you’ve reached 50 years of age with no pension savings, there’s no need to panic. It’s never too late to start saving for retirement. Indeed, by acquiring a basket of UK shares, you could dramatically increase your chances of being able to retire with a large financial nest egg.
With that in mind, today I’m going to take a look at two UK shares that I believe have the potential to generate large returns for investors.
UK shares for retirement
UK retailer Next (LSE: NXT) has been a surprising winner in the coronavirus crisis.
The company was forced to shut all of its brick-and-mortar stores at the beginning of lockdown, and management also closed the group’s online operation.
However, the online business soon reopened, and demand exceeded expectations.
Booming demand for the organisation’s online offering helped it weather the storm. Unlike other UK retailers, Next now conducts the biggest chunk of its business online. This gives the company a strong competitive advantage in the viciously competitive UK retail market.
It also makes the business stand out as one of the best UK shares to buy. Next has generated large total returns for shareholders in the past. The stock has produced an average annual return of 12% for the past 15 years, outperforming the FTSE 100 by nearly 7% per annum.
The company’s substantial competitive advantages and robust balance sheet could allow it to repeat this performance in the years ahead. That’s why I think the stock could be a great addition to a diversified retirement portfolio today.
As well as Next, I’ve got my eye on Barratt Developments (LSE: BDEV) as one of the best UK shares to buy now. The UK’s housing market is structurally undersupplied. Homebuilders have been trying to match supply and demand over the past decade, but there is still a lack of supply in the market.
The government is now planning to stimulate demand by overhauling planning laws. This should help Barrett and its peers increase output in the years ahead. The government’s Help to Buy scheme and low-interest rates should also support demand.
As such, I think the backdrop for the homebuilder and other building sector UK shares is highly encouraging. I think these tailwinds should help the business produce large total returns for investors in the years ahead.
Historically, the company has returned a significant proportion of excess profits to investors with dividends. The stock’s dividend yield has been in the high-single-digits for the past five years. I think it is highly likely this trend will continue next year when there’s more visibility on the outlook for UK housing.
In the meantime, shares in the homebuilder appear cheap. It is trading at a discount of around 30% to the rest of the market. As such, I think that now could be an excellent time to buy Barratt as part of a basket of UK shares before investor sentiment towards the business starts to improve.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of Next. 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.