Many readers can’t get information about fellow feds or retirees who are self-made millionaires. They like to know how it happened, how long it took and if there are any secret strategies. The answer is that of the thousands of civil servants who racked up million-dollar-plus accounts, most were longtime (28 years, on average) investors. They also invested heavily (sometimes exclusively) in the stock indexed C, S and I funds. During the Great Recession (2008) they did not get out of the stock market. They continued to buy — at what turned out to be bargain prices for shares — even though, for several years, the value of their accounts kept going down.
While most appear interested in the subject, and hopeful of becoming self-made millionaires, three readers have objected. All for the same reason: If the general public hears about millionaire feds, even if they are totally self-made, it will go hard for all federal workers in general. They have a point. Up to a point. But it can also show that even modestly paid feds can accumulate a retirement nest egg by saving and investing wisely. And over a long period of time.
Meantime, here’s another success story from a worker who’s been in the TSP since 1987. Hardly an overnight success, but definitely a winner. Here’s what he said:
”I am an ordinary federal employee and longtime TSP investor.
I entered federal service under the FERS retirement system and started investing in the TSP in 1987 when the TSP first started and the only investment option was the G fund. Since then, several more investment options were made available, beginning with the F fund and then C, S, and I funds, and finally followed by the lifecycle funds. During the first 10 years, I invested way too conservatively, exclusively in the G fund. However, in the past 20 years, I diversified my portfolio and now I follow a very aggressive strategy, investing only in the C, S, and I funds.
Even though my investment strategy was terrible in the early years, I always invested the proper amount to take advantage of the maximum matching contribution of 4 percent (1 percent matching contribution is automatic regardless of participation status). Currently, I contribute $18,000, the 2017 IRS maximum limit, plus the maximum catch-up contribution of $6,000 (for participants age 50 and over).
During the Great Recession of 2008, followed by six consecutive quarters of negative growth, I saw my portfolio value shrink by over 26 percent, but unlike so many of my coworkers, I didn’t panic and sell, instead I continued to invest in the C, S, and I funds. Today, the value of my portfolio is over $1.1 million. To quote you, ‘Start early, max out, stay the course,’ and above all, ‘don’t try to time the market.’
A moment was a medieval unit of time. The movement of a shadow on a sundial covered 40 moments in a solar hour, so a moment is roughly 1.5 minutes. However, because in this case “hour” meant one-twelfth of the period between sunrise and sunset, the actual length of both an hour and a moment would have depended on the season.