Power of compound interest and agency match (2005-2010)
Instead of simply showing you my TSP balance, I want to share with you my experience the effect of compound interest and the agency match over time. I started my government tenure in mid-2004. I put in 10% of my salary into C (which wasn't the max back then) and my agency matched half of that. I kept track of my TSP contributions over time and you can see the results below.
Obligatory personal details: 55y old; 20y in federal government.
Current TSP details: $2.5M balance; 100% in C; rolled over $140K from previous 401k in 2015, otherwise everything is from my contribution, match, and growth.
(this chart may not display properly on mobile screens. There are 7 columns in total)
| Year | My Personal Contribution | Agency Match | C share price (at eoy) | C shares purchased | Current value of those shares | Personal ROI |
|---|---|---|---|---|---|---|
| 2005 | $10,499 | $5,250 | $13.55 | 1,213 | $111,105 | 1059% |
| 2006 | $11,234 | $5,617 | $15.69 | 1,179 | $107,994 | 961% |
| 2007 | $12,533 | $6,267 | $16.56 | 1,139 | $104,335 | 832% |
| 2008 | $13,050 | $6,525 | $10.43 | 1,446 | $132,490 | 1015% |
| 2009 | $13,819 | $6,909 | $13.22 | 1,898 | $173,865 | 1258% |
| 2010 | $14,453 | $7,227 | $15.21 | 1,589 | $145,597 | 1007% |
| 2011 | $14,800 | $7,400 | $15.53 | 1,436 | $131,540 | 889% |
To get the current value of my shares, I am using the C share price on 10/11/24 of $91.6272.
Here are the lessons I hope can take from my experience:
- Compound interest over time is your friend
- The agency match is rocket fuel for compound interest
- C has been great for me
- When the share price drops, that is an opportunity to purchase shares at a discount. The 2008 recession allowed me to buy a lot of C shares.
You can look at my previous post from December.