Want to be a TSP trillionaire? Ask for one!
There are many ways to become a millionaire. Some of them are even legal. You can invent something, like fire, Scrabble or potatoes, even if these have been taken. Or you can write a book, then buy TV airtime, then give seminars telling other people how they or they can make a million in the market. If enough people buy it, you will become a millionaire without taking all that time and effort to invest. Or…
You can get a good stable job. Pick an outfit that will last a long time and has a great 401k plan. Very important. Uncle Sam is a good example. And make sure your employer is willing to match your dues. The government matches 5% for 99.5% of its employees. Many private companies have no equivalent. Which is huge. This 5% tax-deferred contribution is a head start that continues. Then, invest in equities for the long term, in good and especially bad times, like the C, S and I funds of the federal TSP. There are no guarantees of gains and good performance, but so far so good.
If you take the Long-Term Investing course, you can, as 112,000 federal and postal entry-level workers did, become a TSP millionaire. Maybe with $2-3 million which, along with your regular federal pension and inflation-indexed Social Security, will guarantee you a better retirement. As in much better.
But the keys are to invest for the long term and do what the winners have already done. Like Abraham Grungold. He is a long-time fed who has found a good financial coach: himself. He practiced what he preached to others. And it worked. He is our guest today on Your Turn (10am EST) here on FederalNewsNetwork.com or in the DC area at 1500 AM.
He will talk about his “simple” 5-step recipe for becoming a TSP millionaire. It’s the one you can’t afford to miss. Tell a friend. If you miss the show, or want to hear it again, it will be archived on our homepage. In the meantime, here’s a taste he calls:
The simple recipe to become a TSP millionaire
“There are about 4.5 million federal employees and about 2% of them, 112,880, are Thrift Savings Plan millionaires. These are the employees who have contributed to the TRP throughout their federal careers and who have invested aggressively. They have withstood all storms and financial crises. They lived through the COVID-19 pandemic and showed no fear.
It is an elite club. And this club welcomes new members.
What does it take to become a TSP millionaire? What is the recipe? It takes a few basic ingredients and several important steps.
- Contributions: Put as much as you can afford.
- Investment: Invest your account aggressively.
- Time: Let your account grow for 30 years.
- Ignore all financial crises.
- Ignore anyone who is not a TSP millionaire.
Becoming a TSP millionaire or a TSP multi-millionaire has nothing to do with talent or luck. Investing in one of the TSP funds is not gambling. But if you switch from one fund to another trying to time the market fluctuation, it’s just a recipe for disaster. An old friend of mine, who is also a successful TSP member, would say “Just Let It Ride”.
I started at TSP from the very beginning, in 1987. There was no computer technology to check your daily balance. Doing a simple interfund transfer took several weeks to complete. Everything was done manually by sending the forms and receiving your statements by mail. And for employees with less than three years of federal service, there were restrictions on the funds you could invest in.
So what does it take to be a TSP multi-millionaire? Well, my story isn’t just about making contributions and investing aggressively.
My story was about making the sacrifice to contribute the most every day of my federal career. I invested the maximum for 35 years. During the first twelve years of my federal service, I did not earn more than $50,000 a year. I worked a second job so that I could maximize my contributions. I have not deprived myself of the pleasures of life. I continued to travel and play golf, but lived on a budget so I could pay my living expenses. Also, during my career, I have had four TSP loans, two personal loans and two residential loans.
I reached my first million in May 2014. It took me 27 years. My second million was reached in February 2020. So why did it only take six years to get there? Well, I was contributing the maximum to the IRS, including the over 50 contribution, and the stock market grew rapidly from 2016 to 2019. My third million came in December 2021. So how would that have could be accomplished in just 22 months? Due to the COVID-19 pandemic, I saw my account decline in 2020, but it rebounded and skyrocketed in 2021. Also, I continued to buy stocks when the market experienced setbacks . Looking at my account now seems so surreal. Looking back, I made a few sacrifices, but they certainly paid off.
I have many clients who are TSP millionaires and many who want to be TSP millionaires. I always ask them how much risk and sacrifice are you willing to make to achieve your goals? The key to being a TSP millionaire is making those big contributions and investing aggressively.
Financial success can easily be achieved; it only takes a little effort.
Almost useless factoid
By David Thorton
In ancient Rome, cheesecake was called “placenta”.
Source: What’s cooking America