Secrets of the TSP’s $2M man!

Inauguration Day is the perfect time to ask yourself where you will be 4 years from now. Retired or still working because you can’t afford to retire? Looking for advice? Usually a good idea, provided you ask the right person. When investing for retirement, timing the stock market is not a plan.

Odds are the expert advising you on investing, having a successful marriage or running an electric eel farm actually made most of his or her money from book or app sales, not from actually reading the stock market, avoiding 4 divorces or learning what it really takes to turn an electric eel on. Not from doing what they tell you you should be doing to have fame and fortune.

As most federal/postal workers and retirees know, the Thrift Savings Plan is a good deal. About 2% of the 75,000-plus people have become TSP millionaires in the course of their federal service. They didn’t have big salaries, but they had time and patience. And it worked. A growing number have hit the $2 million mark. And these are not rich, hot shot political appointees who brought 401k cash with them. These are people who earned it by being patient and staying the course. Today’s guest is a case in point. Abraham Grungold is a long-time fed who stayed the course. Like most other TSP millionaires, he’s been in it for the long haul. It took 27 years (at a starting salary of about $21,000) to make his first million. Then six years later he hit his second million. And he’s going to talk about it today on Your Turn live at 10 a.m. EST streaming here or on the radio in the D.C. area at 1500 am. If you miss it or want to hear it again, it will be archived on our home page. Bottom line, listen to it. A fellow fed who did it the old-fashioned way.  And it can work for you. He can tell you what he did, and just as importantly, what he DID NOT do to hit the $1 million, then the $2 million mark. For more on the current TSP numbers for all feds and the growth in account balances, click here.

Meantime, here are the myths to becoming a TSP millionaire Abraham Grungold, career fed and financial coach, says are to be avoided if you ever want a seven-figure account.

Here’s what he says:.

There are approximately 4.5 million federal employees and only about 2% percent of them are Thrift Savings Plan millionaires. These are the employees who contributed to the TSP their entire federal career and invested aggressively. They weathered every financial storm and crisis. They lived through the COVID-19 pandemic and showed no fear. It is an elite club. And this club welcomes new members.

Over the years, I have heard many myths of how to be a TSP millionaire. None of these myths are true.

  1. You must have a salary of over $100,000 per year.
  2. You must contribute the maximum allowed by the IRS.
  3. You must bring in 401k monies from a previous employer.
  4. You must invest in the C, S and I Funds.
  5. You must time the market with interfund transfers.
  6. You cannot take advantage of any TSP loans.

A federal employee earning $50,000 per year contributing 5% of their salary and investing in the C Fund can be a millionaire in 30 years.

So, what does it take to be a TSP multi-millionaire? Well my story is not just about making contributions and investing aggressively. My story is about making the sacrifice to contribute the maximum every day of my federal career. In the early years, the maximum contribution was 10% of your salary. I started my federal career earning $21,804 per year, and during the first 12 years of federal service, I did not earn more than $50,000 per year. So how could I afford the necessities such as food, housing and clothing? The answer to that question is that I had a part-time job to supplement my income. And that is what I did during my first 12 years of federal service. I worked a second job so I could maximize my contributions. I did not deny myself the pleasures of life. I still traveled and played golf, but I lived on a budget so I could afford my living expenses.

In 1987, the TSP had no history of investment performance. There were restrictions on how employees could invest in each of the available funds. There was no computer technology on checking your daily balance and making simple interfund transfers. It was all done manually by mailing the forms and receiving statements through the mail.

I achieved my first million in May 2014. It took me 27 years. My second million was achieved in February 2020. So why did it only take six years to do that? Well I was contributing the IRS maximum, including the over age 50 contribution and the stock market grew rapidly during 2016 through 2019. Also, during my career, I had four TSP loans, two personal loans and two residential loans.

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 can you tolerate to achieve your goals? The key to be a TSP millionaire is making those important contributions and investing as aggressively as you can.

Financial success can easily be achieved; it only takes a little effort.

Any questions or comments please contact me on LinkedIn or my Facebook page at FERS Federal Employees.

Nearly Useless Factoid

By Alazar Moges

The oldest piano in the world is at the Metropolitan Museum of Art in New York City. The Metropolitan’s Cristofori dates back to 1720. It has a single keyboard and no special stops, in much the same style as Italian harpsichords of the day.

Source: Metropolitan Museum of Art

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THRIFT SAVINGS PLAN TICKER

Jun 24, 2021 Close Change YTD*
L Income 23.0026 0.0316 2.88%
L 2025 11.8599 0.0328 5.61%
L 2030 41.8412 0.1491 7.07%
L 2035 12.5665 0.0491 7.71%
L 2040 47.5573 0.2027 8.36%
L 2045 13.0309 0.0596 8.91%
L 2050 28.5512 0.1392 9.49%
L 2055 14.0307 0.0824 11.70%
L 2060 14.0307 0.0824 11.70%
L 2065 14.0306 0.0824 11.69%
G Fund 16.6113 0.0006 0.53%
F Fund 20.8319 0.0057 -2.22%
C Fund 63.9589 0.3752 12.61%
S Fund 85.8605 0.8891 11.60%
I Fund 38.9848 0.1591 10.58%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.