Consistent contributions over the course of your federal career contribute significantly to the growth of your TSP. Image: Thapana_Studio/Shutterstock.com
By: Abraham GrungoldThere are over 100,000 Thrift Savings Plan (“TSP”) millionaires at this point in 2023. These are the employees who contributed to the TSP their entire federal career and invested aggressively. They weathered every financial storm and crisis. It is an elite club. And this club welcomes new members.
So how can you become a TSP millionaire?
A very simple first step would be to seek out a TSP millionaire and simply ask them. Federal Agencies have mentor programs for new employees. Perhaps the agency should be giving them some guidance from either the Human Resource Department or from someone who has achieved this goal.
In February 2022, I achieved the TSP three-million-dollar mark after 36 years of federal service. What is the TSP recipe?
It takes a few basic ingredients and several important steps:
1. Contributions: Putting in as much as you can afford is a fundamental step. Consistent contributions over the course of your federal career contribute significantly to the growth of your TSP.
2. Investing: Adopting an aggressive investment strategy is crucial. While the stock market can be volatile, a long-term perspective and a diversified portfolio can help weather financial storms and maximize returns.
3. Time: Allowing your TSP account to grow over an extended period is essential, such as a 30-year career. The power of compounding works best over time, and patience is key to achieving substantial growth.
4. Ignore Every Financial Crisis: Emotional discipline during financial crises is crucial. Panicking and making impulsive decisions can hinder long-term gains. Staying focused on your investment strategy and long-term goals is important.
5. Ignore Everyone Who is Not a TSP Millionaire: This emphasizes the importance of seeking advice from those who have achieved success in the specific context of TSP. Learning from those who have successfully navigated the federal retirement system can provide valuable insights.
In terms of what to avoid, you rightly caution against taking investment advice from unreliable sources such as blogs and Facebook forums. Relying on credible, experienced individuals who understand the intricacies of TSP and federal retirement is key.
Paying attention to the fees associated with financial advisers is also a valid consideration. Understanding the cost and potential benefits of professional advice is crucial, and individuals should carefully evaluate whether the services provided justify the fees.
Should you pay 1.5% commission to a financial adviser. A TSP millionaire would have to pay 15,000 dollars for an advisory fee with no guarantee. They do not provide their success stories because they claim financial privacy and they are not sharing their own personal portfolios with you.
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? Becoming a TSP millionaire can be achieved during your 30-year federal career, and in this case time is definitely on your side.
Abraham Grungold is a retired federal employee with 36 years of federal service, and through his company AG Financial Services he helps federal employees with their TSP and federal retirement planning and decisions. Mr. Grungold has written over 80 articles regarding the TSP and FERS retirement and been a guest on several podcasts with the Federal News Radio and Government Executive Magazine.
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