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Building wealth in a Stocks and Shares ISA is a proven strategy for securing a more comfortable retirement. And even those starting late at the age of 50, there’s still plenty of time to leverage the tax advantages and grow a sizable nest egg, even with just £500 a month.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Exploring the possibilities
In 2025, the average retirement age is around 65. And assuming an investor intends to start enjoying retirement at this age, a 50-year-old today has 15 years to financially prepare.
When it comes to UK shares, the average long-term return investors have come to expect is around 6-8% a year for the more popular large-caps found in the FTSE 100. And investing at these rates with £500 a month for 15 years is sufficient to build a nest egg worth anywhere between £145,410 and £173,000. That’s almost double the total £90,000 in deposits that will have been made during the period.
While this sum of money is certainly nothing to scoff at, it’s hardly sufficient to live a luxurious lifestyle. After all, the estimated retirement income needed to support just a moderate lifestyle is £31,700 a year in 2025. And due to inflation, that number’s likely going to be higher come 2040.
Boosting performance
One of the easiest ways to ensure a larger nest egg is to simply contribute more. Doubling the monthly contributions to £1,000 is enough to boost a Stocks and Shares ISA to as high as £346,000. However, what if investors could also earn more than an 8% annualised return? By adopting a stock-picking strategy, that might be possible.
Investing exclusively in the best and brightest of businesses opens the door to amplified portfolio returns. And that’s something the shareholders of Cranswick (LSE:CWK) have experienced first-hand.
Through a combination of market leadership alongside consistent and strong financial execution, the food production enterprise has emerged as one of the best-performing companies in its industry. And in just the last 15 years, the stock’s gone on to deliver more than a 500% total return, averaging 12.8% on an annualised basis.
At this rate, a £500 monthly investment would have grown to £270,000, while a £1,000 monthly investment would now be worth £540,000. Needless to say, these are substantial differences compared to the results achieved by index funds.
Taking a step back
In 2025, Cranswick continues to be a compelling investment opportunity. Its latest trading update included a welcome upgrade to its medium-term targets with management now targeting underlying operating margins of 7.5%, up from 6%. And as the firm continues to become more cash generative, Cranswick’s still slowly expanding its market share through smart capital allocation.
With that in mind, it isn’t surprising to see overwhelming positive sentiment coming from institutional investors. However, while opinions are bullish, Cranswick still has its weak spots.
The firm operates in a highly regulated market with food safety requirements constantly in flux. Cranswick’s also highly dependent on UK retail customers, creating concentration risk. And it’s recent expansion into pet food through its 2022 acquisition of Grove Pet Foods, there are also strategic execution risks to consider.
Nevertheless, given its impressive track record, investors building retirement wealth in a Stocks and Shares ISA may want to take a closer look.
