GovExec Daily: Financial Tips From a TSP Millionaire

Ross Gianfortune
This is GovExec Daily, where we bring you the federal stories that really matter.  It's August 8, 2022 . I’m Ross Gianfortune.

The Thrift Savings Plan is a big part of federal employees’ lives.  As economic uncertainty casts a dark shadow over American life, federal employees stake their retirement in the TSP. They watch their fortunes rise and fall with the funds in the plan. 

But, the TSP is not independent of the greater world.  After months of volatility and declining returns, every portfolio in TSP finished July in the black. The G Fund is now the biggest fund in the TSP core fund portfolio, suggesting that stability is on investors' minds. Against all of this volatility, the TSP web site and mobile app have undergone a rocky transition, leaving users frustrated, confused and often unable to use the site in the ways they want. 

Abraham Grungold is a financial professional as the owner of AG Financial Services , a longtime federal employee and a member of the exclusive TSP millionaires club. He knows a lot about the TSP and will join me after a short break to talk about it and the economic climate of the last few years.

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Ross Gianfortune  
Federal employees have options when it comes to their retirement, including plenty of options within the Thrift Savings Plan. The TSP website provides an overview of the program, but the choices that public servants make with their TSP options should not be taken lightly and more information is always helpful. Even against the backdrop of the last few years of economic uncertainty, the TSP is a huge part of feds’ lives.

Abraham Grungold is a longtime federal employee, the owner of AG Financial Services and a member of the exclusive TSP millionaires club. He joins me now to talk about the Thrift Savings Plan and the economic climate of the last few years.

 Welcome to the program.

Abraham Grungold
Ross, thank you for inviting me to the podcast. It's a real honor to be here.

Ross Gianfortune    
So as I mentioned, you're not just a financial coach, a financial professional, but you're also someone who has a lot of experience with the Thrift Savings Plan. We're in the middle of a real roller coaster of a time, not just for the broader economic environment, but also for the TSP. So what are some things that you have seen and noticed, and some easy sets of choices that feds can make during such a volatile time?

Abraham Grungold
Well, Ross, I've been in the TSP since the very beginning, before there was a tsp. So I've experienced every economic downturn in the TSP. And the best thing that I can tell tsp participants is in a down market as we are right now, it's a buying opportunity, a buying opportunity for active federal employees who are contributing to the TSP every pay period. So they should continue to be contributing to the maximum and also to invest as aggressively as they can tolerate. Now, if you're a retiree, and you are still a participant in the TSP, the best thing to do in a down market is to do nothing. Because in every financial crisis that I've experienced, I did nothing. When it came to my investment strategy. I just waited it out

Ross Gianfortune   
 Have you sort of handled the anxiety around that?  I know a lot of people who I work with or that I'm socially engaged with: They're glued to the 401k, or the TSP ticker, things like that. emotionally. I mean, I know you're not a therapist, but how do you sort of deal with that kind of up and down? And how do you not worry about it?  

Abraham Grungold
Well, that is an excellent question. That really is because as an investor, there are times that you certainly need to watch the market and watch your account. But when there are really rough periods in the market, as we are in now, sometimes you just need to close your eyes. And if you're a active federal employee, focus on your federal career. Focus on your interest if you're a retiree, golf, tennis, whatever, try not to watch too much of the financial news. But you need to be just aware of what's going on and be patient. Patients will carry you through these very tough times. And I've experienced that through Black Friday, the.com crisis, the financial crisis of 2008 to 2009, the Korean crisis, the Brexit crisis, the pandemic, and now the UK, Ukrainian crisis, each time I kept patient, and I just waited things out, because I know they're going to improve at some point.

Ross Gianfortune  
We've talked a little bit with some financial adviser types about risk on the TSP. What do you think about risk? And how should tsp investors sort of deal with risk? You know, particularly when it comes to the core funds?

Abraham Grungold
Well, risk is different for everyone. As an investor, TSP participant, you need to evaluate how much risk can you tolerate my risk level might be stronger than someone else's risk level. And there are two I always say there are two types of investors in the TSP. They're the ones who ride the roller coaster, the TSP roller coaster, and then they're the ones who ride the TSP merry go round. Now the roller coaster riders, they know, the  upswings and downswings of the market. And the TSP roller coasters, a lot of them have become TSP millionaires. Now, the ones on the merry go round, the other ones that are typically in the G fund. And there's nothing wrong with being that merry go round rider. Those other participants who don't want to take a chance with their tsp balance, so they are investing strictly in the G fund. Now, I know a lot of people in the TSP both friends and clients, and the ones that are on the roller coaster, they realize the up and down swings, the ones who are in the TSP merry go round, they may be strictly in the G fund, but outside of the government, they may have an IRA or a brokerage account where they are investing in equity funds. So they are just not taking any risk with their TSP portfolio,

Ross Gianfortune 
There are a different sort of options on obviously, the core funds and everything outside of that. We've talked a few times with people about the Roth IRA option and things like that, how diversified how I mean, I know obviously, it's different for individual investors, and you certainly work with clients like this, but spreading it around diversifying things like that, how important is that in the TSP?

Abraham Grungold
That's a good question. Over the years in the TSP, I experimented with all the funds, the G fund, the iPhone, the s, the F and the C fund. I experimented with all them because in the beginning, there was no historical track record of how they would perform. So I did experiment with them. But what what you need to do is to evaluate your entire portfolio, both as a tsp investor and outside of the government. Outside of the government, you may have real estate, you may have bonds, you may have equities. So you need to look at that total portfolio, and then say, How am I going to invest my tsp? Am I going to be aggressive, moderate, or very conservative. And it's okay to be involved in many of the different funds that the TSP offer, because, you know, diversity is an important thing. But again, you have to look at your entire portfolio, both with the TSP and outside of the government, and look at how much you can invest in equities, stocks and bonds, I think it's important to have a diversified portfolio.

Ross Gianfortune   
Yeah, that seems to be, you know, a way certainly to ride out some of these storms, you don't want to have everything in one place, the proverbial eggs and the basket we've covered on our site. And certainly, I know, it's been the talk of tsp participants about the change in the websites and the record keeping and the machinations of it. What do you think of it? How have you found it to be both as a financial professional and as a participant?

Abraham Grungold
Well, certainly the TSP website needed a facelift. And it needed to have some updating. But right now, it's going through a lot of different problems, problems where participants cannot put in their beneficiaries and the historical information from participants' accounts are not there. There are a lot of the features on the website that are just not working properly. And I know this, even from a personal standpoint, I logged in to the TSP website yesterday. And I found a lot of the features that just not working properly, I could not go back historically, beyond May of this year to see anything about my account. I know the TSP board is going to correct all these problems over time. But right now, it's very frustrating, and very frustrating, both for participants who are active, and those who are retirees. tsp participants are going to have to show a lot of patience and call in to the 800 number. There are long wait times, and it may take you sort of different steps of who you're speaking to, to get the right answer. So it it's a challenge right now for tsp participants. So that's frustrating, but I think a lot of these minor issues are gonna be resolved quickly.

Ross Gianfortune  
I know that's certainly something that TSP has been preaching a little bit more: patience. A little bit more patience. Though I am sympathetic to the people who are frustrated with the website. And the long call times we've all been on the wrong end of customer service in our lives, will end on this just sort of a general bird's eye view. What are some of the other general tips and tricks that you've learned in your TSP experience? You said, as you mentioned, you've gone back a long way with this.

Abraham Grungold
Okay, so as a TSP investor, and it doesn't matter which stage the Iran investor whether you're an active employee or retiree, you have to show some patience, both with investing and, and also, you know, certainly now with the website, so you do have to show some patience. The other major thing that I think is so important for tsp participants, is you have to read the materials that are available on the TSP website. The the newsletters, the updates, the features, you have to understand the mechanics of the plan, because the TSP He is changing in various different ways. And you have to keep up with it, you have to keep up with the tax rules legislation. And it's very important because knowledge is power. And a lot of people are just not well informed because they're not taking the time to read the materials. And this is a very important factor that I think, to to, to be involved in the TSP and to have an excellent experience with the TSP both as an investor and just the day to day participant.

Ross Gianfortune 
I think that's all good news. Hopefully, our listeners can use it as such, everyone. Thanks so much for being on the show with us.

Abraham Grungold
Thank you very much for having me.

Ross Gianfortune 
Thanks for listening to GovExec Daily. Our show was produced by Adam Butler and hosted by me, Ross Gianfortune. We want to thank Abraham Grungold for joining the program. Our music is the song “Signals” by Catfish Dancing. Be sure to rate, review and subscribe on Apple Podcasts or Google Podcasts or wherever you get your podcasts. You can email us any feedback at podcast @ govexec.com or hit us on Twitter @ Govexec. 

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