The Reality of Becoming a TSP Millionaire

[LaserGuy]

So you want to be TSP millionaire? I ain't easy folks, here's the reality of how it works when you're getting close and the consequences of the decisions we make. On Thursday 2/20 my balance was $999,950 after the all time high S&P close on Wednesday 2/19, and at that time I was 100% C fund. Earlier in the month around the 4th or 5th I had made my first February interfund transfer after the Iowas caucus Bernie victory and with all the coronavirus scares popping up, I got nervous so I went conservative - 50%G, 25%F, and 25%C. The next day the market was up big, which typically happens after I make a move to safety! So I went back 100% all-in into C fund and rode it out for the next few weeks as the market kept melting up higher and higher. On Thursday 2/20 I'm $50 away from a seven figure TSP, then the market dropped over 1% for the day. On Friday 2/21 the market opened lower again, the coronavirus scares were amplifying, and I looked at the chart of the S&P with its huge rise since late summer and realized that was not going to continue, the chart looked like it was screaming for a correction. So just just before noon on Friday 2/21 I made my last move for the month and went 100% G fund, since that is the only allowed move after you use up your two monthly interfund transfers.

I nervously held my breath as I checked my account on Monday morning the 26th with the DOW futures down 1,000 points. Thankfully my transfer had gone through in time and I was safely 100% G fund as the carnage began. If I had stayed in the C fund for the week I would be down $120k instead of the only $12k drop from the 20th and 21st. I learned my lesson from the end of 2018 when I wasn't paying enough attention and let my account fall $100k during all that mess. So the lesson here is that money not lost is just as good or better than money earned. This week will be interesting, the futures are green as I write this but more CV cases are popping up, so I'm staying in G for now. Hang in there guys - stay vigilant, be patient and you can eventually get there!

[crondanet5]

Welcome. You should play the Fantasy Game as everyone starts with the same amount and then it is a question of how well you manage it. Good practice for when you stop making contributions to your TSP Account, which you might want to consider doing now that you have this much set aside for future medical bills.

[head]

Hi crondanet5, do I detect a bit of sarcasm..??

[crondanet5]

No. He has reached a major milestone in his TSP Account. I am suggesting he contribute sufficient cash to meet Agency Match. After that, by opening a taxable account he will have a revenue source to withdraw while allowing the tax deferred account to continue to grow by itself (grow through his prudent management of course). Remember that the original purpose of the 401k program was to create a cash account to cover medical expenses past age 70, not to fund retirement expenses. Assuming he applies healthful measures to extend life it is very possible he will need this tax deferred account to support his needs at age 80, 90 or 105. Oftentimes we don't think about those possibilities and we would rather play quarterback to age 45 or beyond. Life doesn't work that way. Rather, the geriatric stage has debilitating physical situations restricting activities and creating a need for outside support. That is where the TSP Account should be utilized. And by creating a huge after tax account you can enjoy retirement while waiting for your body to commence self destruction. It is inevitable. Solomon aptly described the process long ago. It is still relevant.

[NUC SHARK]

growing old....definitely not for the wimpy!!! at least the little blue lets one grow old with a bit of dignity and a mischievous grin from time to time!! celebrate life often my friends!!!!

[cswift01]

So you want to be TSP millionaire? I ain't easy folks, here's the reality of how it works when you're getting close and the consequences of the decisions we make. On Thursday 2/20 my balance was $999,950 after the all time high S&P close on Wednesday 2/19, and at that time I was 100% C fund. Earlier in the month around the 4th or 5th I had made my first February interfund transfer after the Iowas caucus Bernie victory and with all the coronavirus scares popping up, I got nervous so I went conservative - 50%G, 25%F, and 25%C. The next day the market was up big, which typically happens after I make a move to safety! So I went back 100% all-in into C fund and rode it out for the next few weeks as the market kept melting up higher and higher. On Thursday 2/20 I'm $50 away from a seven figure TSP, then the market dropped over 1% for the day. On Friday 2/21 the market opened lower again, the coronavirus scares were amplifying, and I looked at the chart of the S&P with its huge rise since late summer and realized that was not going to continue, the chart looked like it was screaming for a correction. So just just before noon on Friday 2/21 I made my last move for the month and went 100% G fund, since that is the only allowed move after you use up your two monthly interfund transfers.

I nervously held my breath as I checked my account on Monday morning the 26th with the DOW futures down 1,000 points. Thankfully my transfer had gone through in time and I was safely 100% G fund as the carnage began. If I had stayed in the C fund for the week I would be down $120k instead of the only $12k drop from the 20th and 21st. I learned my lesson from the end of 2018 when I wasn't paying enough attention and let my account fall $100k during all that mess. So the lesson here is that money not lost is just as good or better than money earned. This week will be interesting, the futures are green as I write this but more CV cases are popping up, so I'm staying in G for now. Hang in there guys - stay vigilant, be patient and you can eventually get there!

Just out of curiosity, how many years did you contribute? Where did you place all your money, C and S buy and hold?

Thanks,

Me

[Optimus187]

Great Post and ver my high energy. Very cool

[searight]

cswift01, I can jump in with my path to 7 digits.

- I started contributing 5% in 1990 and put everything in the G fund for over a year "Ouch!!!" So I switched to all C fund. I also increased my contribution to 10% so that I could borrow from TSP to buy a house.
- 1995 I borrowed $10K to buy my first house.
- 2000 I borrowed $40K to buy my second house.
- 2008 I lost 30% but never got out of C. I also repaid my TSP loan when it was low.
- Around 2010 I switched to 50/50 C and S and would occasionally dip up to a third into F when I got scared. But always kept 2/3 in C and S.
- I have not ever contributed "catch up payments" I stick with the regular max.

What I would recommend to a 21 year old me starting in the TSP.

1. Start contributing 5% to the C and S funds.
2. With every raise or promotion increase to the max and keep it there.
3. Don't be afraid of borrowing to buy a house. You have to repay it, so it is better to save for your down payment in TSP then a separate account.
4. Never put money in the G fund. If you are scared or seasonally invest move a portion to F, it tends to go the opposite way of your C and S.
5. You get a pension which is very low risk, so stay riskier in your TSP.

[bloobs]

cswift01, I can jump in with my path to 7 digits.

- I started contributing 5% in 1990 and put everything in the G fund for over a year "Ouch!!!" So I switched to all C fund. I also increased my contribution to 10% so that I could borrow from TSP to buy a house.
- 1995 I borrowed $10K to buy my first house.
- 2000 I borrowed $40K to buy my second house.
- 2008 I lost 30% but never got out of C. I also repaid my TSP loan when it was low.
- Around 2010 I switched to 50/50 C and S and would occasionally dip up to a third into F when I got scared. But always kept 2/3 in C and S.
- I have not ever contributed "catch up payments" I stick with the regular max.

What I would recommend to a 21 year old me starting in the TSP.

1. Start contributing 5% to the C and S funds.
2. With every raise or promotion increase to the max and keep it there.
3. Don't be afraid of borrowing to buy a house. You have to repay it, so it is better to save for your down payment in TSP then a separate account.
4. Never put money in the G fund. If you are scared or seasonally invest move a portion to F, it tends to go the opposite way of your C and S.
5. You get a pension which is very low risk, so stay riskier in your TSP.

I love it. I also borrowed a small amount to buy a house and was able to pay it off in about 3 years. A TSP loan is often maligned because people don't understand that, except for the $50 fee, you pay YOURSELF 100% of the loan repayments. So it's not even a loan! In hindsight, taking out a TSP loan makes great sense if you do it before a correction/crash--so your repayments are during subsequent periods when the share prices are cheaper. Turbo dollar-cost averaging.

PS - are you all S Fund right now????

[searight]

bloobs, this year I am/will be; 35% C fund 35% S fund and 30% modified Seasonal Strategy 57171. I modify it to only use C,S and F. I have never liked G and I do not like I for the coming years because of the European economy vs the US economy.

If the modified seasonal works for me (like last week) I will probably stick with it longer then just this year.

I agree with on the residential loans, for your TSP it looks like you moved the money into G, and for you short term it looks like you are borrowing at the pitiful G fund rate of 2-3%.

[DAP]

Best advice: don't get divorced. Just turned 50 last month, one month after divorce finalized, and TSP balance dropped from $875K to $410K... poof. More damage than any market correction could ever do.

[Scorpio70]

[quote="NUC SHARK"]growing old....definitely not for the wimpy!!!


Fact!!!!!

Never begrudge getting older, it is a privilege denied many.

[Brownstone]

Best advice: don't get divorced. Just turned 50 last month, one month after divorce finalized, and TSP balance dropped from $875K to $410K... poof. More damage than any market correction could ever do.

Uhhg, Sorry DAP. Well, you still have a lot of time for that to grow my friend. Hang in there.

[Sauktim]

Well DAP, you know what a good lawyer will tell you,, "it s a 50 /50 situation. When you get married, she gets half. When you get divorced, she gets the other half....

[ProduceMan]

Well DAP, you know what a good lawyer will tell you,, "it s a 50 /50 situation. When you get married, she gets half. When you get divorced, she gets the other half....

LOL, it’s probably more like 25/75 when you get married