Warren Buffet's TSP Advice

ladies and gentlemen federal employees today we're talking about Warren Buffett's advice that he gives when it comes to investing we're going to talk about how you can actually apply that to the tsp and to your Investments as a federal employee now if you're new here so good to have you my name is D HW I'm a financial planner who helps federal employees just like you get the most other benefits of retire confidence so Warren Buffett if you don't know who he is he's one of the richest men in the world and one of the most successful investors of all time time he made his money not by building a business per se but by investing in other businesses he's an investor and he's worth about 120 billion that fluctuates but 120 billion with a B okay big big number and we know he made his money by picking specific companies however he has given explicit advice and recommendations to his wife okay who's younger than him say hey if I pass away invest the money this way okay invest it this way now I I have some good news the strategy he recommends for his wife is something you can do in the tsp and it's not complicated and it's not complicated this is the advice he gave to his wife to invest if he was not there he said I want you to put 90% I want you to put 90% of the money in the stock market in stocks so think C fund okay think the C fund S&P 500 the C fund he says the remaining 10% should be in short-term bonds which in tsp language that is the G fund the G fund okay so 10% 10% G okay so again the recommendation would be 90% C and 10% G G now here's the deal couple key principles I think when when looking at this this plan is it comforting to me that the plan Warren buff one of the most successful investors of all time has is simple it's not complicated it's not a bunch of crazy stuff it's 9010 it's simple 90% C 10% G that's it that's the plan simple simple simple and that's one of the key principles of investing is key keep it simple now the next question is if you don't have billions right billions of dollars like Warren Buffett's wife has then does this plan still work for you and the answer is maybe maybe depends on the situation however I think there's two big principles that that can apply to anyone and let me talk through that number one Warren Buffett understands that you've got to have money you've got to have money that is going to be your inflation proofer that's going to grow over time beat inflation to make sure you never run out and you don't have to worry about running out um before the end of your retirement that's huge you've got to have money that's working for you that's growing even in retirement you've got to have that money there that is working for you okay now he also understands and the principle of the G fund is you've got to have some money especially when you're using this money to spend right you've got got to have some money that is stable that can help you wear or go through the ups and downs of the market okay the ups and downs of the market now 10% in Warren Buffett's world is billions of dollars right but obviously in our world it's probably not billions okay so how can we apply these principles to federal employees just like you well let's talk about it if you are a federal employee that is far from reti if you're early middle of your career okay you've got lots of time you've got lots of time that your priority should be growth beating inflation Building Wealth over time you don't need the money anytime soon right your priority and your focus should be getting in the C fund the S fund the I fund the funds that are going to grow over time so that come retirement you've gotten the growth you need if you don't need the money soon let it grow Let It Grow you don't have to but sitting in the Gund your entire career is one way to live way Beneath Your Potential okay and your money is going to get eaten Away by inflation every single year okay so keep that in mind if you're early to middle of your career you need to be focusing on the growth side okay the growth side getting the growth you don't need the money anytime soon if you are getting to the late stages of your career you need to start in ucing some stability okay some G fund some f fund some of the more stable funds as you approach needing the money okay as you approach needing the money and then into retirement again you've got to have a base you got to have some stability stability to make sure you can ride the wave now the rule of thumb we use at our firm is about eight years eight years worth of money that you need in a safe investment for example if you need $10,000 a year from your Investments to supplement the rest of your income like your pension your Social Security Etc if you need 10 grand a year Well we want eight years worth of money to be in something like the G fund right so 10,000 a year for eight years that's 80,000 in this random scenario that I'm I'm saying right so 80 grand in that case would be in the G fund so you've got eight years of money to ride up if the rest of your money is working for you in the C fund the S fund I fund and growing over time well you've got 8 years of stability to write out any ups and downs of the market okay but even in retirement as Warren Buffett shows us you've got to follow the principles of you got to have some long-term money right to provide the long-term growth inflation breaking growth that you need as well as you need some stability to able to ride those ways out as you are in retirement needing the money again if you're far from retirement your focus should be here cuz you don't need the money anytime soon but if you are in retirement or close to retirement you got to have some stability while some of your money is still growing and getting there for you now those are the principles obviously every Situation's a little different you're going to want to make sure the principles apply to your situation okay but those are the principles of success that led to Warren Buffett being successful right there solid principles that that I've seen work time and time and time again I've talked with so many tsp millionaires it's crazy okay lots of them and they've all followed the same principles that we're talking about okay without exception without they follow the principles that work that work to provide success in investing Building Wealth and making sure you have the retirement that you want as a federal employee so I hope that's helpful if you have any questions throw in the comments below and there's actually a link in the description right in there somewhere that you can submit qu questions to us and we base our future content ideas on the those questions we receive so I hope that's helpful have a great rest of your day I'll see you guys next time

Channel: Haws Federal Advisors

Views: 16,288

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Id: IJRQ3WTsqDc

Length: 7min 35sec (455 seconds)

Published: Mon Feb 12 2024