Investing in FTSE 100 and FTSE 250 stocks can be an uncomfortable experience at times. As we saw more recently during the Covid-19 crisis, events can drop out of the sky that suddenly send share prices tumbling.
However, history shows us that buying UK shares still has significant benefits. Over the long-term, a diversified portfolio of quality shares can produce truly generational wealth.
A £1.6m nest egg
In recent decades, the FTSE 100 has delivered a robust average annual return of 8%. The FTSE 250 has performed even better, providing an 11% yearly return!
If these performances continue, a £300 monthly investment would eventually net a long-term investor £1,630,888 after 40 years. That’s a decent amount to eventually pass down to an investor’s children and grandchildren, I’m sure readers will agree.
But what FTSE shares could help share pickers make that sort of wealth? Here are two I think are worth serious consideration.
Games Workshop
Since 2004, fantasy gaming giant Games Workshop‘s (LSE:GAW) has seen its share price soar almost 2,500% to today’s levels. I’m expecting it to continue rising sharply but I admit it faces competitive pressures from cheaper rivals.
Games Workshop is the gold standard when it comes to the rapidly growing realm of tabletop gaming. Its Warhammer 40,000 system in particular is revered by loyal hobbyists across the world. And recent landmark releases (like its latest version of 40k) have sold out within hours of release.
This underlines how strong demand for its niche products remains even during tough times for consumers. Last week, it predicted core revenues and profits of “not less than” £490m and £200m respectively for the financial year to June. That’s up from £445m and £171m in the previous year.
An upcoming media deal with streaming giant Amazon could also help it take sales to the next level. As well as providing significant royalty revenues in their own right, TV and film content could amplify sales of its miniatures and game systems.
London Stock Exchange Group
London Stock Exchange Group (LSE:LSEG) has also recorded significant share price gains in recent decades. Its shares are 2,300% more expensive than they were 20 years ago.
As readers may have seen, London’s stock market has been in the spotlight for all the wrong reasons more recently. Companies looking to launch IPOs have snubbed the UK to list their shares elsewhere. In addition, delistings are increasing as smaller companies seek alternative ways to raise funds.
These are significant problems. Yet I believe London Stock Exchange shares remain attractive today. One major reason is its role as a major data provider to banks and other financial companies.
Its Data and Analytics division now accounts for 48% of group revenues. And revenues here rose another 4% at constant currencies in the March quarter.
And if its partnership with Microsoft works out, data revenues could go to the next level, especially as the agreement looks to incorporate the use of artificial intelligence (AI) in future products.
