A lot of FTSE 100 shares have performed well of late. Over the last five years, many have produced gains of 100%, 200%, or more.
Could these shares be the secret to retirement wealth? Let’s discuss.
Planning for a comfortable retirement
According to wealth management firm Quilter, an individual in the UK now needs a pension of £691,000 to retire comfortably. That assumes they’ll spend around £45,400 a year in retirement (no mortgage or housing costs) and will pocket around £12,500 annually from the State Pension.
Now obviously, £691,000 is a lot of money (it’s far more than most Britons have saved for retirement). And that figure’s what’s needed to retire today – those retiring in the future will need more money.
Are FTSE 100 shares the secret to success?
As for whether FTSE 100 shares can help Britons build up a big pension, I think they can. But really, they’re only part of the equation.
To build up a £691k+ retirement pot, the key’s to take a multi-pronged approach to retirement saving. By taking advantage of tax-efficient investment accounts and investing in different areas of the market to diversify and reduce risk, investors can give themselves a much better chance of financial success.
For example, when it comes to accounts, the Self-Invested Personal Pension (SIPP) is a brilliant retirement savings vehicle. Here, a £1,000 contribution is boosted to £1,250 by the government (this rate of tax relief is for basic-rate taxpayers – higher earners get more).
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Meanwhile, when it comes to investments, spreading money over FTSE 100 shares, UK small-caps, international shares, tech shares, and other areas of the market can pay off. Over the long term, a diversified global portfolio has beaten the Footsie.
A Footsie star worth checking out
There are definitely some gems in the FTSE 100 that are worth considering however. One stock that’s worth highlighting is Polar Capital Technology Trust (LSE: PCT).
This isn’t an individual company. Instead, it’s an investment trust that invests in lots of different publicly-traded businesses. As its name suggests, its focus is on the Technology sector. Stocks in the portfolio today include the likes of Nvidia, Alphabet, and AMD.
Overall, it holds around 100 different shares. About 60% of the portfolio’s allocated to the US while around 25% is allocated to Asia and Japan.
Huge returns
Why do I like this product? Two main reasons.
First, it’s a play on the global tech boom. In the years ahead, the world’s only likely to become more digital (AI, self-driving cars, etc), and this product offers exposure to the companies driving the revolution.
Second, it has an amazing track record. Over the last 10 years, it’s returned more than 25% a year versus around 7% for the FTSE 100 (remember though, past performance isn’t an indicator of future returns).
One other attraction is that it can be traded just like regular shares. So investors can be nimble and capitalise on intra-day weakness.
I’ll point out that tech stocks tend to be volatile. So it’s not the kind of product I’d consider going ‘all in’ on at once.
By regularly picking up a few shares in the trust on dips however, I think investors could do very well over time. In the long run, this trust has the potential to boost Britons’ retirement savings significantly.
Should you invest £5,000 in Polar Capital Technology Trust Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Polar Capital Technology Trust Plc made the list?
Edward Sheldon owns shares in Nvidia and Alphabet
