The ability to make money on your contributions to your TSP account, as well as on the government automatic and matching contributions, comes from the power of compound interest. As your investments grow, the earnings generated from your contributions and the government's contributions are reinvested, allowing you to earn returns not just on your initial deposits but also on the accumulated earnings. This compounding effect can significantly increase the value of your retirement savings over time. Additionally, the tax-deferred nature of TSP accounts allows your investments to grow without being taxed until withdrawal, further enhancing the compounding process.
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