Guest Post: The Magic of a Company Match

Hi, all!  Chris Pascale is here with us once again as a guest poster.  Tonight he’s going to share about maxing out your company’s retirement account match.

The Magic of a Company Match

By: Christopher Pascale

I work for the federal government.  So long as I do, I can contribute to a Thrift Savings Plan (TSP), which is like a 401(k), or a 403(b), but for federal employees.

A major benefit is that the government will match up to 5% of my pay.  As such, I’d never put in less.  If you have a company match, you must – at the very least – max it out. The main reason is because the match provides a 100% gain upon deposit. By not doing so, you’re taking a pay cut, which will be discussed at the end of this piece.

100% Gain on Day 1

If you have a company match, but aren’t taking it, you’re losing a 100% gain over a period of zero minutes.

So many investment professionals will tout the magic of compound interest – how they can double your money every 10 years with investments that will grow 7% or 8%.  By using the company match, you’ll double your investment not in 10 years, but in zero minutes. It doubles right off the bat.

Maxing Out Tax Savings

I’m not going to get into the intricacies of paying no taxes in old age.  What I will do is explain how by saving for your future, you can pay less taxes today.

This is a simplified example, so bear with me. Let’s say you earn $80,000, and are in the 25% tax bracket (there’s no 25% tax bracket right now, but there was one, and could be again).

If 25% of your $80k income was taxed, you’d pay $20k in taxes.  By participating in a matching program like mine, you’d invest 5%, or $4,000, which is then matched with another $4,000.

Along with having $8,000 put into your retirement account, you will now pay taxes on $76k instead of $80k.

That means you’ll pay $1,000 less in taxes while getting $4,000 extra!

Can Federal Employees Retire Millionaires?

In 35 years with the federal government (if you made $80k and never got a raise), you’d have contributed only $140,000 of your own pay, but your matched TSP would grow to about $1,200,000.

On top of that you’d have saved $35,000 in income taxes, as well.

This doesn’t account for federal employees’ traditional pensions, nor their Social Security payments.

Negative Reasons to Max Out Your Match

If good reasons were good enough in this life, people wouldn’t smoke, vape, or acquire trivia about the Kardashians (how can Rob put up with Blac Chyna, amirite?!?!).  Instead, they’d be reading good books (like mine!) and taking the stairs instead of the elevator once in a while.

I’ve told you some good reasons to max out your match, but there are some awful ones, too.

One of them is that monetary and farming policies are simply awful for the value of our currency.  For the good milk (from nourished cows instead of poisoned ones), it’s $5.99 for a half-gallon.  And honestly, once you’ve had an organic strawberry, the other red globules sold in the produce section taste like re-packaged garbage.  And don’t get me started on Sockeye versus farmed salmon!

Also, interest rates are going to rise.  This is shitty for people with no money, because borrowing will cost more.  But it’s great for people with money, because savings will be rewarded.

Lastly…it’s a part of your pay!  You’re actually giving yourself a pay cut if you don’t take the company match.  If it’s 1%, then you’re volunteering to take a 1% pay cut.  If it’s 5% like mine, that’s about $3,500 of my pay I’d be letting the government keep.

Am I so rich that I can just let the government keep $3,500 of MY MONEY for things like studying the benefits of genital washing?  Spoiler alert…I’m not!  And I have about half a dozen sources of income between military pensions, teaching college courses, and cockeyed schemes I get myself into that sometimes even make money – like writing!

If I can’t afford to take the pay cut of not maxing out my match, then you can’t, either!

Your future can be bright, but only if you let the light in.  There are outside forces working against you, but that’s not what is going to hurt you – in the USA.  What is going to hurt you are the internal forces you can control.

Take the company match. End of discussion.

Christopher Pascale is an author, accountant and adjunct professor from Long Island. He is the former CFO of Portfolios with Purpose, and is a current member of the IRS’ Office of the Chief Counsel.


My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click here to be taken to its Amazon page.

(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)


Guest Post: The Gap Used to Be a Penny Stock, by Chris Pascale

Good evening, Joes and Janes!  Tonight I’d like to once again turn the floor over to Chris Pascale, author, accountant, former CFO of Portfolios with Purpose, and current member of the IRS’ Office of the Chief Counsel.  Take it away, Chris! 

The Gap Used to Be a Penny Stock: More Proof That Eric Is Right

As I mentioned in a previous guest post, I’m working with my children so that they can learn about the stock market. My main goal is that they start saving young. If they become savvy investors, that would be an incredible bonus.

Recently, my 12-year-old asked me what the stock market is. Apparently, it’s mentioned on her news-feed. So, adapting the definition Eric gave us in his book The Stock Market Is for Everyone, I told her:

“Just as you can buy pieces of produce at the farmers market, you can buy pieces of businesses at the stock market.”

We were at Old Navy while having this discussion, so I looked up the stock to show her what it would cost to own a piece of the business. What I found was that Old Navy is owned by Gap, and that in 1980, you could have bought shares for as little as 5 cents!

1,000 Shares of The Gap for $50

Yes, if you were 18 or older you could have owned Gap shares for just 5 cents each. And that would have been expensive because they went as low as 3 cents that year!

Knowing this, let’s explore just how rich Baby Boomers could be if they had slowly bought shares from 1980 through 1985, spending only enough to buy 1,000 shares a month. This math will only account for average-ish prices, noting the cost of 12,000 shares each year.

·         1980: 12,000 shares for $600
·         1981: 12,000 shares for $1,000
·         1982: 12,000 shares for $1,500
·         1983: 12,000 shares for $3,100
·         1984: 12,000 shares for $1,900
·         1985: 12,000 shares for $3,000

The Cost v. The Reward

Now, to be fair, I was born in 1982, so I have no idea what kind of income I could have made during this time. But we can all agree that every working person could have figured a way to come up with $50 once a year, if not once a month.

Had someone executed the above purchases, he would have spent $11,100 for 72,000 shares of Gap stock.

Today, that investment would be worth over $2,300,000. And for those who only could have bought 1,000 shares a year, they would have about $192,000 after only risking about $1,000.

Applying This to Today’s Market

Why not find good companies with products and services you use all the time, and slowly acquire shares?

For example, do you use Facebook (FB) every day? Well, if you would have gotten in at the IPO, you’d have more than a 500% gain (just 6 years later!). And if you bought more shares after it slumped to its low in August, 2012, that money would have grown by 1,000%.

Am I saying that Facebook stock will keep going up? No. But history indicates that companies like Facebook have.

It’s the reason why every dollar invested into Johnson & Johnson (JNJ) in 1979 has grown by about 90-100x. The same can be said for Pepsi (PEP). Had you bought Microsoft (MSFT) shares in 1986, they would have only cost you 10 cents each, meaning that $1,000 invested 32 years ago would be worth $900,000 today.

We all want to get rich fast, but could you settle for getting rich within your own lifetime? Because you can.


$1 of Gap stock from 1980 is now worth over $300,
$1 of Facebook stock from August, 2012 is worth $10,
$1 of Johnson & Johnson and Pepsi stock from 1979 is worth about $95.

Eric here.  Thanks, Chris, for this powerful illustration of what your wealth could be if you had invested years ago!  Please, folks, don’t wait another day – get in the market NOW!


My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click here to be taken to its Amazon page.

(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)