No savings at 50? I’d forget gold and buy cheap UK shares to retire in comfort

The recent performance of UK shares may dissuade some investors from buying FTSE 100 and FTSE 250 stocks. However, British shares continue to offer long-term growth potential that could make a real impact on your retirement plans.

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As such, now could be the right time to avoid the rising gold price and purchase a range of stocks. At age 50, you are likely to have sufficient time for them to recover after the recent stock market crash.


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Investing in UK shares at age 50

Investing money in UK shares at age 50 may seem like a risky move. After all, retirement is likely to be 15-20 years away. For individuals who have no retirement savings, or who are concerned about their retirement prospects, buying gold may seem to be a better idea than purchasing FTSE 100 or FTSE 250 shares. The precious metal has a long history as a store of wealth that can mean it outperforms other mainstream assets during periods of economic weakness.

However, current economic woes are unlikely to last for 10-15 years. The past performance of the economy shows that no recession has been anything more than temporary, with growth returning after a period of months or years. Therefore, investor sentiment towards defensive assets such as gold could wane in the long run. Since the precious metal currently trades at a high price, its scope for capital gains may be limited.

By contrast, cheap UK shares could deliver excellent returns in the long run. The stock market has always posted new record highs following its previous declines. This is likely to take place over the coming years due in part to the level of stimulus being enacted in the UK and elsewhere. This could mean that an investor aged 50 is very likely to experience the full benefit of the current bull market on their portfolio valuation.

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Buying cheap stocks today

Clearly, not all UK shares are worth buying at the present time. Some companies face uncertain operating conditions that could negatively impact on their financial performances. Should they have weak financial positions, they may suffer more than their peers. As such, owning companies with low debt and solid market positions could be a means of reducing risks and improving your long-term return prospects.

Furthermore, diversifying across a wide range of shares may enhance your retirement prospects. Doing so could allow you to take part in the long-term growth stories of a broader range of industries and geographies. It will also reduce your exposure to a specific sector or region that could be impacted to a greater extent by ongoing geopolitical risks that are present. Over time, this may have a positive impact on your portfolio’s performance. It may even improve your chances of retiring in comfort on a growing passive income.

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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.

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