Forget gold! Start hunting fallen ASX 200 shares to buy for an earlier retirement

Gold has been one of the standout trades of the past year, and I can understand why investors have been drawn to it.

When economic worries rise, geopolitical risks increase, and markets feel uncertain, gold often attracts attention. It can act as a store of value when confidence in other assets weakens.

But if I were investing for an earlier retirement, I would be more interested in something else right now.

I would be looking at high-quality ASX 200 shares that have fallen heavily from their highs.

Why fallen ASX 200 shares interest me more

Gold can be useful in a portfolio, but it does not produce earnings, pay dividends, or reinvest for growth.

A strong business can do all three.

That is why I think investors should be careful about getting too caught up in gold after a big run.

If higher fuel prices keep feeding inflation, interest rates could be heading higher in the United States. That could put pressure on the gold price if real yields become more attractive.

Meanwhile, a number of ASX 200 shares have already been punished heavily.

Some of these falls are understandable. Earnings expectations have been reset, sentiment has weakened, and investors are less willing to pay high multiples for growth.

But I think that is exactly where long-term opportunities can start to appear.

The ASX 200 sell-off list is getting interesting

There are now plenty of well-known ASX 200 names trading far below where they were.

In healthcare, CSL Ltd (ASX: CSL), Cochlear Ltd (ASX: COH), and Telix Pharmaceuticals Ltd (ASX: TLX) have all been hit hard. Each has its own issues, but I think the broader point is that investors are now being offered lower prices for businesses with meaningful long-term healthcare exposure.

The technology sector has also been under pressure. WiseTech Global Ltd (ASX: WTC), Xero Ltd (ASX: XRO), Pro Medicus Ltd (ASX: PME), and Life360 Inc. (ASX: 360) have all pulled back as investors reassess valuations, growth expectations, and the impact of artificial intelligence (AI). I do not think every fallen tech share is automatically a bargain, but I do think this is where patient investors should be looking closely.

Then there are turnaround-style names such as Domino’s Pizza Enterprises Ltd (ASX: DMP) and Treasury Wine Estates Ltd (ASX: TWE), where sentiment has been weak for some time. These situations can take longer to play out, but they can also become interesting when expectations are already low.

The point is not that every one of these shares is a screaming buy today. It is that the opportunity set has changed. A year ago, many quality ASX 200 shares looked expensive. Today, more of them are trading at prices that could give long-term investors a better chance of attractive returns.

Cheap does not mean risk-free

Of course, a falling share price does not automatically make a stock a bargain.

Some companies fall because the outlook has genuinely deteriorated. Others need time to rebuild confidence. And in some cases, earnings may take years to return to previous highs.

That is why I would be selective.

I would want businesses with strong market positions, long growth runways, and balance sheets that can handle tougher conditions. I would also want management teams that have a clear plan to keep the business moving forward.

For me, the opportunity is about finding good companies where the share price may have fallen further than the long-term investment case has changed.

Why this could help with retirement

The path to an earlier retirement usually comes from owning assets that compound over time.

That means buying quality businesses, reinvesting dividends where possible, and giving them years to grow.

If investors can buy those businesses when sentiment is weak, the long-term returns can be much stronger.

A recovery does not need to happen quickly. In fact, patient investors may benefit if prices stay low for a while and allow them to keep adding.

Foolish takeaway

Gold may still have a role for some investors, especially during uncertain periods.

But if I were trying to build wealth for an earlier retirement, I would be hunting for fallen ASX 200 shares instead.

With so many quality ASX 200 shares trading well below their highs, I think May could be a good time to start looking carefully.

The post Forget gold! Start hunting fallen ASX 200 shares to buy for an earlier retirement appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• CSL and Wesfarmers among scores of ASX shares hitting fresh 52-week lows
• Down over 50%: Are CSL and Cochlear strong buys in May?
• ASX 200 tech shares rebound 20% in 5 weeks: experts reveal stocks to buy
• WiseTech shares are flying 6.5% higher today. Can they keep going?

Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Cochlear, Domino’s Pizza Enterprises, Life360, Telix Pharmaceuticals, Treasury Wine Estates, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Life360, Treasury Wine Estates, WiseTech Global, and Xero. The Motley Fool Australia has recommended CSL, Cochlear, Domino’s Pizza Enterprises, Pro Medicus, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.