TSP account: Zero to $1.3 million in 23 years!

So what are you doing for the next 10-20-30 years? Equally important, if you are a fed, is what will your Thrift Savings Plan be doing during that time? Will you both still be working? Or will the two of you be fishing in South Carolina or golfing in Arizona? Still working or watching the grandchildren? Whatever happens, assuming you survive it, time marches on. It will whether you do something or nothing. Like investing in your Thrift Savings Plan. At last count, there were just over 75,000 active and retired feds with TSP accounts worth at least a million dollars. Nearly all of them have the same story. Modest salary but they invested steadily over the years (average 29 years) riding out the highs and lows of the stock market. One, today’s example, started out in government as a janitor!

In the last two weeks we’ve shown you the blueprints of a couple of TSP millionaires. These aren’t fat cat feds. They are normal people who did the right thing. Hope these blueprints help. Here’s how he did it:

Dear Mike,

Below are my numbers. They just keep getting better in spite of my old mistakes. In the last column in mid-January of 2018, I went over a $1M and you wrote the story. At the end of that year the market was down and I had lost on paper over $175,000. You can see the number in red for 2018. But I closed my eyes and rode it out. By the end of 2019 I had recovered all of my paper loss of $175,000 and made another $100,000, giving me a balance of $1.1M.

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I was thrilled. Then came 2020 and COVID. I got nervous and saw my account dip. I tried to wait it out but instead I sold and went into the G Fund. I did what I told everyone not to do. I was probably down about $300,000 or somewhere around there on paper and I should have ignored it. But instead I moved my money. I’m unsure how much of the recovery I missed. I am actually too embarrassed to look. Within a week I recognized my mistake and tried to jump back, but in that short time I missed a ton of money in the recovery. I probably lost between $50-100K. If I had stayed the course and never moved, I would have seen no loss because it was all just on paper. By the way, many years ago I thought I was smart and tried to time the market in the TSP and lost $17,000. I should have remembered that mistake and I would not have made this bigger one.

I am happy to say that I just kept riding again and ended 2020 at $1,320,005. It’s an amazing feeling and a learning experience. I should not have tried to time the market. I should have sat back and ridden the market in 2020. The market has continued to climb and I now sit on over $1.4M in my TSP. But if I had not timed the market (poorly), I think I would be sitting on at least $1.5M. Please realize I only hit a million dollars in January of 2018 and have ridden the market down hundreds of thousands of dollars and I have ridden it right back up and am now up over $400,000 since hitting that million just two years ago.

This is my 40th year of government service, but I have only been in the TSP since 1997, 23 years.

Sincerely,
Janitor to Millionaire

Not bad, as they say, for government work!

Nearly Useless Factoid

By Alazar Moges

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