Tulip bulbs, Beanie Babies and your TSP

Many, if not most, investors know a sure fire way to get rich in the stock market is to buy low and sell high.

What not-so-many don’t know is that knowing the highs and lows of the stock market is the equivalent of driving with blacked out windows and using only the rear view mirror for a guide.

Most people know that when investing for the long haul, particularly in a vehicle like the federal Thrift Savings Plan, the way to a huge payoff at retirement is to buy and hold. But many people don’t do that. Which is where this advice comes in from a still-working fed who has built his 7-figure account the old way. It can be hard way for people who track every high and low, every trend and retreat of the market. Or who find an industry or individual stock — or an item — that will make them rich quick. Like the tulip bulb investment craze when many Dutch investors lost their bloomers. Or the more recent 1990s effort when many collected Beanie Baby dolls in hopes they would — over time — be as valuable as gold like the exciting but brief run of tulip bulbs. But the list of Beanie Baby millionaires (except for the people that made them) is short.

All this is by way of introducing Abraham Grungold. He’s a still working fed, and after hours financial adviser, who became a TSP millionaire the old-fashioned way. And like almost all other TSP millionaires, he did it the hard way — investing and staying put for decades. Here’s his report:

Get Rich Quick Schemes Fail. The TSP Does Not.

Many investors around the world are always trying to find a new get rich quick scheme. During my adult life, I have heard friends, co-workers and clients tell me about a new hot stock or a new investment opportunity. Unfortunately, none of these people have ever approached me and told me that they were successful. I saw the stock GameStop shoot up from $65 per share to $420 per share, and back down to $61 per share, all in a week. This is called a pump and dump scheme. The hype of the stock surged but the reality of the stock’s valuation hit home. Sure, some investors made money, but there were many investors who lost their shirt.

A federal employee with a $50,000 salary who contributes 5% to their Thrift Savings Plan over 30 years will end up with a million dollars in their TSP account. They will only have to contribute $75,000 of their own salary to reach $1,000,000. Now, that sounds like a get rich quick scheme. Invest only $75,000 and you can turn that into a million dollars! It can be accomplished, but not quickly. It will take 30 years. But what a payoff!

Let’s look at the individual with a $75,000 mortgage that takes them 30 years to pay it off. Do they have a million-dollar home at the end? Probably not. Home buying is important, but investing in your TSP is equally important. The Thrift Saving Board has determined that federal employees must contribute to their TSP. As of October 2020, new federal employees and rehired employees have mandatory 5% employee contributions for their TSP. This will get employees on the right path.

Investing should be like planting a tree. If you water it and give it sunshine, it can grow into a tree in about 30 years — tall and strong. For federal employees, the same approach should be taken with their TSP.

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

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

Nearly Useless Factoid

By Alazar Moges

The most valuable Beanie Baby is the Princess the Bear released in 1997 in dedication to the late Princess Diana after her death.

Source: Mental Floss

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THRIFT SAVINGS PLAN TICKER

Oct 26, 2021 Close Change YTD*
L Income 23.3406 0.0147 3.52%
L 2025 12.1388 0.013 6.40%
L 2030 43.1053 0.0599 7.92%
L 2035 12.9750 0.0195 8.58%
L 2040 49.2122 0.0794 9.26%
L 2045 13.5082 0.0229 9.83%
L 2050 29.6522 0.0527 10.41%
L 2055 14.6732 0.0292 12.65%
L 2060 14.6731 0.0292 12.65%
L 2065 14.6730 0.0293 12.65%
G Fund 16.6901 0.0006 0.99%
F Fund 20.8361 0.0344 -1.40%
C Fund 68.8686 0.1251 15.90%
S Fund 87.5019 -0.4814 11.66%
I Fund 39.5427 0.2149 8.56%
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.