Image source: Getty Images
I’m planning to use my Stocks and Shares ISA to help fund my retirement. But how much do I need to invest to get there?
According to the Retirement Living Standards for 2025/26, a single person needs at least £13,400 a year. So that’s the first target.
Dividends
The FTSE 100 has an average dividend yield of around 3.2%. So earning £13,400 a year requires a £418,750 portfolio. Contribution limits mean nobody can put that much in an ISA in one go. But there are ways to get there over time.
Investing £250 a month is one way. At a 9% annual return, that compounds to more than £418,750 in less than 30 years.
It’s worth factoring in the effects of inflation over time. But it’s hard to think of a better strategy for long-term returns. The obvious question is where to find a 9% return opportunity? But I don’t think investors need to look beyond the FTSE 100.
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.
9% returns?
One stock I own is Bunzl (LSE:BNZL), the distributor of packaging, cleaning supplies, and safety equipment.
The company has an enterprise value of £9.9bn. And it generated £578m in free cash in 2025 (down from £634m in 2024). As a result, the stock’s fallen 29% since the start of 2025. But I think it looks interesting at today’s prices.
The Gordon Growth Model helps investors value stocks like Bunzl. On this basis, I think it looks cheap. At today’s prices, a 9% annual return requires 3% growth a year. And I think that’s highly achievable.
Growth prospects
In general, companies have three ways of growing their free cash flows on a per-share basis:
- Higher sales.
- Wider margins.
- Share buybacks.
I think all three might be realistic for Bunzl over the next few years.
Acquisitions are a big part of the firm’s revenue growth. It has an outstanding record and a lot of future potential.
Margins are less obvious. But Bunzl’s looking to shift customers to its own-branded products with a view to boosting profitability.
Buybacks have been stop-start in the last year. Despite this, the firm reduced its share count by about 1%.
Ultimately, I think Bunzl’s a cheap stock with numerous growth opportunities. But as with any stock, there are risks.
Risks
In terms of revenue growth, the biggest threat recently has been price deflation. This comes from two sources. One is lower input costs, which Bunzl’s obliged to pass on to customers.
And the other is competition. That could offset the effect of some of Bunzl’s acquisitions. So revenue growth won’t be entirely straightforward.
On top of this, the firm has had issues with shifting customers to its own-branded products. This was a challenge in 2025.
All of these are reasons why the stock isn’t too good to be true. But I think it has a good chance of hitting that 3% growth target.
Opportunities
Bunzl’s free cash flow yield is just under 6%. The question is whether management can turn that into 3% annual growth. I think they can. It’s been a tough 12 months, but the business isn’t in structural decline.
Bunzl’s already a big part of my ISA. But at today’s prices, I find it hard to think of a FTSE 100 stock I’d like more of when I have cash to spare.
