Investing in the stock market has been very good to those in the Federal Government community that have invested in the Thrift Savings Plan (TSP).
Growing Number of TSP Millionaires
The number of millionaires among Thrift Savings Plan investors has exploded. Moreover, the latest figures do not include the number that may have been added in the run-up of the stock market since mid-December. The latest figures available from the Thrift Savings Plan are as of December 14, 2016. The data are provided by Kim Weaver, Director, Office of External Affairs for the Federal Retirement Thrift Investment Board (FRTIB).
| Date | Number of TSP Millionaires |
|---|---|
| December 2016 | 9,599 |
| February 2016 | 3,272 |
| February 2015 | 4,167 |
| December 2013 | 1,695 |
| March 2013 | 562 |
| January 2012 | 208 |
For those with an eye on how you may be performing compared to the TSP millionaire with the most money, the highest TSP balance is $5,336,444.65. That account is probably worth considerably more now as the C fund is up 5.95% in the first two months of 2017. That account balance is based on data as of December 14, 2016.
For those who may feel discouraged, keep in mind that not everyone in the TSP has had a full career as a federal employee in the executive branch. There are people who have joined the government and rolled over existing accounts into the TSP, and there are also Congressional representatives who invest in the TSP.
Trends in the Number of TSP Millionaires
For an historical trend of the number of millionaires in the TSP, be sure to see these articles:
- January 2012: 208 (See 208 TSP Millionaires Enjoy a Big Return in January)
- March 2013: 562 (See A Bullish Stock Market: Number of TSP Millionaires Up Significantly)
- December 2013: 1,695 (See Number of TSP Millionaires up 195%)
- February 2015: 4,167 (See A Growing Number of Wealthy Federal Employees)
-
February 2016 (Number of TSP Millionaires Drops Below 2015 Level)
Most of these investors have probably not been investing most of their money in the G Fund. The G fund is thought to be the safest investment among the TSP funds and it is the safest in the sense that it does not lose money (i.e. go down in value).
However, as the chart below shows, this safety net comes at a steep price. The G fund is the lowest performing of the TSP funds since the end of 2011. It has not lost money. It has also gained much less than the other TSP stock funds and largely failed to keep up with inflation.
Here are the results of investments in the G fund vs. the TSP stock funds. And, if we added in the data from the first two months of 2017, the disparity is even wider.
| Year | G Fund | C Fund | S Fund | I Fund |
|---|---|---|---|---|
| 2012 | 1.47% | 16.07% | 18.57% | 18.62% |
| 2013 | 1.89% | 32.45% | 38.35% | 22.13% |
| 2014 | 2.31% | 13.78% | 7.80% | 5.27% |
| 2015 | 2.04% | 1.46% | -2.92% | 0.51% |
| 2016 | 1.82% | 12.01% | 16.35% | 2.10% |
Becoming A Millionaire Will Involve Taking a Risk
Becoming a millionaire will involve taking at least some risk. We do not know how each of these 9,599 TSP millionaires have invested their money. Probably some of their funds are in the G fund as a safety net. It is also likely that their investments are largely in the TSP stock funds. Based on anecdotal evidence in emails sent in from readers who have reached the $1 million dollar TSP club, that is the case for these investors willing to take some risk and stay invested for the long haul.
Some skeptics will point out: “You did not take into account the stock market drop in 2008. That would have yielded different results.”
That is true. In 2008, a TSP investor with all of his assets in the G fund gained 5.45%. An investor in the C fund lost almost 37%. That was a great year to be in the G fund. The difference in the TSP millionaires and those who seek the ultimate safe investment: The G fund under-performed the C fund in six out of the next eight years. The under-performance of the G fund was substantial in five of those eight years. (See Annual Return Rates for All TSP Funds)
TSP Balance Breakdowns
Here is a breakdown of TSP balances and the average number of years they have been investing. Not surprisingly, the accounts in excess of $1 million have been investing for the longest number of years.
| Balance | # of Participants | Average years |
|---|---|---|
| < 50k | 2,841,352 | 8.8 |
| 50-249k | 1,448,644 | 18.6 |
| 250-499k | 413,491 | 23.5 |
| 500-749k | 120,124 | 26.2 |
| 750-999k | 35,161 | 28.3 |
| > 1 Million | 9,599 | 29.2 |
| 4,868,371 | 13.6 |
What Does it Take to be a TSP Millionaire?
Some readers think they cannot become a millionaire by investing in the Thrift Savings Plan. Check out Lyn Alden’s article What Does it Take to Be a TSP Millionaire. Don’t get discouraged. Many TSP investors can reach this figure more quickly than they may have thought. Invest wisely and as much as you can afford to ensure a brighter financial future in retirement.
Our congratulations to the approximately 10,000 people who have reached this impressive figure with their TSP investments.
