Can you afford not to invest in UK shares today? My answer is an emphatic no! I’m not trying to give you the hard sell. I don’t have to. The many acres of column inches that illustrate how the State Pension is in increasing jeopardy does that for me.
Investing in UK shares might not just save you from pensioner poverty. It may even allow you to get rich and possibly hang up your work apron early. I myself continue to build a balanced portfolio of quality UK shares to help me eventually retire in comfort. And the recent stock market crash provides us with all with an opportunity to build a retirement-boosting stocks portfolio at very little cost.
Making big money with UK shares
So how much money do you and I need to have built up to live a comfortable retirement?
According to financial services platform Unbiased, someone who wishes to retire with an annual income of £20,000 will need to have built a pension pot of £170,000. That comprises the maximum £9,110 per year that pensioners can claim through the State Pension and the weight of their own savings pots.
I think that most of us could live in relative comfort on £20,000 a year. But it probably won’t allow you and I to live the life of retirement luxury that we may have been dreaming of. And this is where that £100 a month invested in UK shares comes in.
Say you’re 25 years of age and invest a century every month in something like a Stocks and Shares ISA. By the time you come to retire at the age of 65, you’re likely to have built a mighty pension pot of between £322,000 and £555,000. That’s based on studies that show long-term investors in UK shares tend to make an average annual return of between 8% and 10%.
Fancy retiring at 58?
These are the sort of sums that would allow you and I to go on that once-in-a-lifetime holiday, give the kids a financial boost, buy a new car, frankly do whatever we pleased. But this is not the only benefit of buying UK shares. For those happy to retire on a little less, they could ditch the day job years before the vast majority of people and still retire in comfort.
That person who invested £100 a month in UK shares from their mid-20s could, based on that 8% to 10% formula, expect to have made at least £181,000 if they retired at age 58. This would allow them to achieve that £20,000 annual income that would give them a comfortable retirement.
It’s never too late to start investing in UK shares to try and get rich or retire early. The financial pages are often replete with stories of individuals who have made a fortune after they began investing in their 40s or 50s. And there are plenty of investment guides and reports from experts like The Motley Fool to help you carve our a comfortable retirement.