Making a million through investing in FTSE 100 shares is never an easy task. There’s the potential for capital loss, which can hamper an investor’s progress towards generating a seven-figure portfolio.
However, the chances of making £1m from buying large-cap shares is likely to be higher than it is from having a Cash ISA. After all, the latter’s returns are currently behind inflation, which could reduce the spending power of any capital invested in them.
As such, buying FTSE 100 stocks while they trade on low valuations could be a shrewd move. Here are two examples of shares that, while potentially risky in the near term, could deliver impressive results in the long run to help you become a millionaire.
Should you invest £1,000 in Barclays right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barclays made the list?
TUI
Travel operator TUI (LSE: TUI) is currently enduring a period of significant difficulty. The company is experiencing lower-than-expected demand due, in part, to weak consumer sentiment. This situation is likely to persist in the near term, with Brexit-related risks seemingly set to continue over the coming months.
Alongside this, TUI has experienced a shift in demand among consumers booking holidays from the West Mediterranean to the East Mediterranean. Although it’s adapting to this evolving change in demand among its customers, it has contributed to a disappointing financial performance in recent quarters.
In response to a difficult operating environment, the company is rationalising its asset base. This includes asset disposals that could allow it to focus on core operating areas. Alongside this, the company is investing in its digital growth opportunities, as well as improving its competitiveness in a variety of areas.
While there are more resilient income stocks in the FTSE 100, TUI’s dividend yield of around 8.7% suggests it offers a wide margin of safety at present.
Standard Life Aberdeen
Also experiencing a challenging period is FTSE 100 company Standard Life Aberdeen (LSE: SLA). Its near-term outlook is clouded by uncertain political and economic prospects for the world economy. They are negatively impacting investor sentiment, which could cause the company’s share price to lag the FTSE 100 in the short run.
Despite this, Standard Life Aberdeen is reshaping its business in order to build a stronger long-term growth outlook. For example, it’s delivering cost efficiencies, while also expanding its range of funds and its UK advice business. Acquisitions are helping to grow the business, rationalising its asset base in order to strengthen growth opportunities.
With a dividend yield of around 9.7%, Standard Life Aberdeen offers more than twice the income return of the FTSE 100. Although its future appears to be relatively risky due to an uncertain investment environment, the changes it’s making to its business model may enhance long-term financial prospects and lead to improving total returns.
As such, buying the stock now could help you to make a million in the long run. Its total returns could significantly exceed those of a Cash ISA, thereby making it a more appealing investment opportunity on a risk/reward basis.
