2 FTSE 250 investment trusts I plan to retire on

These two FTSE 250 (INDEXFTSE: MCX) are almost certain to help you achieve a comfortable retirement.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I’m looking at to FTSE 250 investment trusts that I’ve recently bought for my personal retirement portfolio.

Top trusts 

First up is the British Empire Trust (LSE: BTEM). I believe this is one of the best investment trusts today that you can buy to protect your portfolio from market volatility. 

The trust is unlike many of its peers because it doesn’t pick shares to try and beat the market. Instead, the firm invests in other investment vehicles that are trading at what it believes to be a substantial discount to their full intrinsic value. In some cases, management then works with these undervalued instruments to help unlock value for shareholders and investors.

This approach has yielded fantastic results for investors over the past few decades. British Empire has been around in one form or another since 1889, and according to the most recent performance data (30 June 1985 to 30 April 2018), the total return net of fees to investors is 12.1% per annum.

Unfortunately, if you are looking for dividend income, this might not be the trust for you. The shares only yield 1.6%, according to the firm’s website. Still, the capital returns produced over the past four decades more than make up for this lack of income in my opinion.

The power of compounding

My next pick, Witan Investment Trust (LSE: WTAN) is, in my view, appealing for many of the same reasons. 

Founded in 1909, this company has achieved 43 years of consecutive dividend growth with the payout more than doubling over the past 10 years. At the time of writing the shares support a dividend yield of 2.1%.

Witan does invest in single companies, but the trust has a global investment mandate and invests wherever there is value to be found. Right now, only a third of the portfolio is invested in the UK while 22% is devoted to European equities, and 21% is invested in North American equities. The rest is placed across the world with the focus on Asia Pacific.

And the team at Witan has more than proved that it knows what its doing over the past decade. Since 2008 shares in the trust have returned 11.5% per annum.

It is this double-digit annual return that has really got me excited about the prospects for my retirement portfolio. According to my calculations, thanks to the magic of compounding, if Witan and British Empire continue to produce annual returns of between 11.5% and 12.1%, I only need to invest £250 a month to be able to retire with a pension pot of £1.5m in 35 years time. 

Of course, this assumes that the bull market we are currently in continues on for the next three decades, which is unlikely in my opinion. 

That being said, with four decades of over-performance behind it, I’m confident that British Empire at least can continue to produce double-digit returns for investors every year, no matter what the market has in store for us.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns shares in the British Empire Trust and Witan Investment Trust. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »