Warren Buffet’s TSP Advice | FedSmith.com

Warren Buffet is one of the most successful investors of all time with a current net worth of about 120 billion! But is there any part of Buffett’s investment strategy that applies to federal employees? 

I am glad you asked!

While Warren made his billions picking individual stocks, he gave explicit instructions on how his wife should invest after he has passed away.

Warren Buffett’s Advice

Warren Buffett’s advice to his wife is to invest in 90% stocks (like the C Fund) and 10% short-term government bonds (like the G Fund). The 90% stocks provide the inflation-fighter growth over time while the 10% bonds provide some stability during the down markets. 

Simple, right? Great strategies don’t have to be complicated. 

Your Plan?

However, does 90% C and 10% G make sense for you with less than a billion?

Maybe not, but his strategy does teach 2 principles of investing:

• Principle #1: You need growth over time to beat inflation and never worry about running out of money in retirement.
• Principle #2: We want stability during bad market times if you need the money soon.

Application 

But how do you apply these principles to your TSP in real life? 

If you are early in your career then you need to focus on growth (C, S, and I Funds) as you have lots of time before you need your money. 

As you approach retirement, you will want to start introducing stability (G and F Funds) as you are getting closer to needing some of your investments to live off of. 

In retirement, it is important to have some of your money be safer in the G and F Funds to provide stability in down markets, but you also still need long-term investments (C, S, and I) to make sure you can maintain your lifestyle over time and you don’t run out prematurely. 

Final Thoughts

While no one is going to become a billionaire in the TSP, countless federal employees have used it to build wealth and secure a great retirement.

If you don’t understand how the TSP works then I urge you to put in the time now so you can enjoy the benefits for years to come.