Are You A Millionaire Yet?

By on November 29, 2004 in Current Events, Retirement with 1 Comment

Are you a millionaire? Do you have prospects for becoming one before you retire?

We do not have hard statistics to back up this theory: Most federal employees are not millionaires and will not ever have more than a million dollars in assets, excluding their house. But there are a few who will achieve it.

Those motivated by a strong desire to make the big bucks and accumulate a lot of money probably go into sales, finance, or real estate.

While federal employees get a good paycheck, have better than average benefits and a health and retirement system often cited as model examples for the rest of the country, Donald Trump was never a GS-12 employee toiling in a federal office building in New York City (or anywhere else for that matter).

But there is a good chance the number of federal employees who achieve this magic number will increase. An additional two million American households recently joined those with more than $1 million in assets excluding their primary residence. This means that some 8.2 million American households now have a net worth in excess of a million dollars.

What’s their secret? According to the Wall Street Journal, a consistent investment strategy was the secret behind building up the big bucks. The investment strategy of America’s millionaires didn’t change during market downturns. In other words, they did not sit around checking their stock investments and sell stocks when the prices fell—a strategy usually followed by investors who panic during a bear market. (Also known as buying high and selling low.)

Most of these investors did not try to time the market by switching between stocks and bonds. They don’t change their investment portfolios frequently. They didn’t try to time the market as a way to enhance their investment returns.

From this experience of America’s millionaires, there are several steps you can take to increase your total net worth over the duration of your career.

  • First, take full advantage of the thrift savings plan. This plan is often cited as a model for private sector investment plans. Most readers won’t be able to retire comfortably without a substantial amount in their TSP accounts by the time they retire. Moreover, the expenses of this plan are less than a similar plan costs those in the private sector. So maximize your investment as soon as you can to give your investment money time to grow. 
  • Second, diversify your TSP investment. Decide on a strategy you want to follow in dividing your investment between bonds, stocks (and types of stocks). 
  • Third, once you decide on a viable investment strategy, tweak your portfolio occasionally to keep your investments in line with your strategy. So, for example, if international stocks (the TSP I fund) have had a great year, you will want to periodically reduce your investment in this fund and increase your investment in funds that have not had a good year. 
  • Fourth, don’t try to time the market. Many people have tried; many have lost money in the process. That doesn’t mean some people have not been successful with this approach. It probably means most of us won’t be successful with timing the market.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.