I became a self-made millionaire working in the Coast Guard – all it took was a simple savings trick
A COAST GUARD officer says he became a self-made millionaire with a simple savings trick.
Steve set aside an equal regular amount each month, regardless of the performance of the stocks or other securities.
The 44-year-old warrant officer has now surpassed his $1 million Thrift Savings Plan (TSP) for US federal employees.
He was able to reach the benchmark through what is called cost averaging.
This involves investing an equal amount each month, which means buying more stocks at lower prices and fewer at higher prices.
This tactic avoids poorly planned lump sum investments at a potentially higher price and can reduce the impact of price volatility.
Steve – whose last name has not been revealed – says Military Times that he “will be the winner in the long run, or at least he was for me”.
Steve said he made sure throughout his career that he contributed to TSP first, before anything else.
His strategy has been to invest in various TSP funds, but he has stayed completely away from international funds.
He has also long encouraged other service members to start investing in their TSPs early.
“I’m a huge proponent of TSP, to the point where the crew hates standing watch with me because they have four hours of conversation about TSP whether they like it or not,” he said.
He credits his success to his parents who encouraged him to start saving to accumulate six months of savings when he enlisted at age 18.
“So it’s like a drug. I became addicted to savings. What I owe them is that I will retire in four years and go back to work if I want.
Gerri Walsh, chairman of the FINRA Investor Education Foundation, said taking a long-term view can help weather market volatility.
“One of the best ways to save for retirement is to save for a long time and keep going, even if you start small,” she said.
“Start small and dream big, because as these contributions add up, get worse, and even out, there are opportunities for growth.
“The most important thing is sometimes the hardest thing to do, and that is to step back, take a deep breath, and look rationally at what you have and what your balance sheet looks like for your family.”