In the UK, the current retirement age to be able to access the State Pension is 66. This has been rising over the years, and likely will continue to increase. So even if someone doesn’t have any savings at 50, it’s not the end of the world. Far from it. There’s still almost two decades of potential work to build a retirement pot that can add to the state provision and really make a difference. I’ve always been a firm believer in trying to improve my wealth. As a result, I’m keen to build my own investment portfolio of top UK shares to get the ball rolling.
How much should I invest?
I’ll come to my ideas for shares later, but first I want to go over the numbers. Let’s assume that I’m 50, and want to ensure I have a large enough pot by the time I’m 66. Let’s also say that I want to be able to have £1,000 a month for expenses until I’m 90. So I need to get my UK share portfolio up to £288,000 to facilitate this spending.
Over the next 16 years, this means I’ll need to put away just under £8,500 a year, or around £710 a month. If I pick good growth stocks that give me an average return of 10% a year, I’ll be able to reach my goal. I hope this illustrates that even from a standing start at 50, a decent amount of money can still be generated through investing in shares.
Which top UK shares should I buy?
I recently wrote an article saying that if I could only buy one stock this year, I’d buy Barratt Developments. Fortunately, that was a theoretical question, and I can actually buy more than one stock. I would still buy Barratt, but alongside a dozen other top UK shares. In this way, I’d hope to be able to smooth out my returns over the next 16 years.Â
Another top UK share I’d look to buy would be Ocado Group. The business is going from strength-to-strength, and I think it’s a safe investment should further lockdowns hit the UK. As such, holding Ocado alongside Barratt would smooth out my performance. If Covid-19 places limits on our lives again, then construction could be halted. This would negatively impact the share price for Barratt. At the same time, the Ocado share price would likely rally, as a surge of online orders would come from people being more housebound.
This shows the benefit of holding several stocks, especially over the long term when trends are harder to predict. I’d look to add into the mix some UK shares that don’t go out of fashion, regardless of changing trends. One example here would be the London Stock Exchange Group. The company generates revenues in a variety of ways, from capital markets to information services. The stock isn’t cyclical, and so should continue to generate revenue for a long time.
I think that mix, along with more shares to diversify my portfolio and regular monthly investing, is a good strategy to help me in my goal of building a generous retirement pot.