5 Strategies to Get the Most out of Pagibig MP2

In our initial blog post, “The Ultimate Guide to Pag-IBIG MP2,”5 strategies to get the most out of PAGibig MP2 we provided an overview of the pros and cons of investing in Pag-IBIG MP2. In our upcoming article, we will delve into a comparison of the various investment options available for Pag-IBIG MP2, including monthly, yearly, and one-time investments. Additionally, we will explore the details of calculating Pag-IBIG MP2 dividends. Finally, we are excited to share with you the top five strategies to optimize your investment in Pag-IBIG MP2. Check your earning through Pagibig MP2 Calculator.

3 conditions

Before that, let me share the three conditions used for the 5 strategies to maximize Pag-ibig MP2.

1. Minimum investment

This means that the minimum monthly investment amount allowed is ‎₱500. If you invest ‎₱500 every month, that will add up to ‎₱6,000 in a year and ‎₱30,000 in five years. So, if you open five MP2 accounts, the total investment amount would be ‎₱150,000.

2. Average dividend rate

To conduct a comparative analysis, we have used the 7.5% dividend rate which is the same as the official Pag-ibig MP2 examples. However, for a more comprehensive analysis, you may want to consider using the average dividend rate for the past five years. This approach will take into account the highs and lows of investment performance in MP2. You can access information on the past performance of MP2 and view the average dividend rate for the same period.

3. Simple and compound interest formula

Simple and compound interest formula is used to project the earnings.

5 Strategies to Maximize Pag-IBIG MP2

The following are simply suggestions and may or may not be suitable for your situation. Therefore, it’s advisable to use your own discretion.

Here are five tactics to maximize the benefits of Pag-ibig MP2.

1. Dividend Payout

The first strategy is the dividend payout. As the name implies, this method involves receiving your dividends annually. If you’re looking for a steady stream of income to finance your needs, there are several reasons why you might consider this approach.

For example, it could be for yearly vacation expenses, fees, memberships, and more.

 

The first strategy is the dividend payout. As the name implies, this method involves receiving your dividends annually. If you’re looking for a steady stream of income to finance your needs, there are several reasons why you might consider this approach.

For example, it could be for yearly vacation expenses, fees, memberships, and more.

 

How does it work?

Here’s a rephrased version of the given text in English:

1. Begin by opening an MP2 savings account.
2. Make your contributions on a monthly or yearly basis.
3. Choose to receive your dividends annually.
4. When opening your MP2 account, specify a bank account where your dividends can be easily deposited.
5. Your capital will be returned to you after 5 years.

You can repeat this process as necessary.

2. Compounded Dividend

The second strategy is best for medium to long-term investors. As the name implies, you will get your money and dividends after 5 years. But if you chose to reinvest your money, you must be a long-term investor who wants capital growth.

But you may also consider other aggressive investments. It can be mutual funds, UITF, VUL such as single pay VUL (SPVUL), stock market, forex, etc., that have a history of outperforming Pag-ibig MP2 in the past.

 

How does it work?

• Capital and interest earn dividends
• If you don’t need the money then let it stay here for better returns
• Get your capital and dividends after 5 years
• Repeat until you reach your financial goals

3. Tiered

In comparing the first two approaches, the compounded dividends yielded a significantly higher return. If you intend to use the funds in several years, it may be worthwhile to open additional accounts. You can do this annually, and after five years, you can begin receiving the annual maturity of your MP2 accounts. Ultimately, who wouldn’t want to receive a yearly payout?

What this strategy is for?

This investment option is ideal for individuals who are long-term investors seeking both capital growth and security. It is particularly suitable for those who are willing to invest a progressively larger amount each year. However, it requires time and patience to manually open an MP2 account annually

YEAR	SAVINGS	1ST MP2	2ND MP2	3RD MP2	4TH MP2	5TH MP2
1	6,000	6,244
2	12,000	12,956	6,244
3	18,000	20,171	12,956	6,244
4	24,000	27,928	20,171	12,956	6,244
5	30,000	36,266	27,928	20,171	12,956	6,244
6	(24,000)		36,266	27,928	20,171	12,956
7	(18,000)			36,266	27,928	20,171
8	(12,000)				36,266	27,928
9	(6,000)					36,266
Total	90,000	12,266	18,266	24,266	30,266	36,266

How does it work?

• • Start an MP2 account and choose between monthly or yearly contributions.
  • The yearly contribution is Php 6,000 and will increase by the same amount every year.
  • You can repeat this strategy for multiple years, beyond the example of 9 years.

Feel free to adjust and customize the contribution frequency and amount to your satisfaction.

Demystifying the “Tiered Strategy“

To begin with, you can open an MP2 savings account by making a yearly contribution of Php 6,000, and the dividends will be compounded. In the second year, you can open another MP2 savings account, which means your contribution for that year will be Php 12,000. In the third year, you can contribute Php 18,000, while in the fourth year, the contribution will be Php 24,000, and finally, in the fifth year, you can contribute Php 30,000.

This is where things can get a little confusing.

After 5 years, your first MP2 account will reach maturity, resulting in a payout of Php 36,266. However, it’s important to keep in mind that you still have four MP2 accounts to pay off.

Therefore, in that particular year, you will only receive a total of Php 12,266.

At the end of the 6th year, you will receive Php 18,266, which is the matured amount of Php 36,266 minus the remaining balance of Php 18,000 for the remaining 3 MP2 accounts. This pattern will continue until the end of the 9th year.

What’s the total contribution?

The complete contribution is only Php 90,000 for the first 5 years. After this period, you will no longer need to invest more cash as your initial MP2 contribution will mature. Some articles suggest that the total investment over 9 years is Php 150,000, but I disagree. Once you receive your first MP2 account, you can use the same funds to pay for your remaining 4 MP2 accounts. As a result, your total investment will only be Php 90,000 because your MP2 account will be self-sustaining after 5 years.

What happens if I continue opening an MP2 account per year?

Do you wonder what will happen if you keep opening an MP2 account? Well, it’s simple – at the end of the 5th year, you’ll start receiving yearly dividends of only Php 6,266. This calculation is based on a matured MP2 account minus inactive MP2 accounts. So if you keep opening MP2 accounts, your dividend will be Php 6,266 based on the remaining amount of Php 36,266 (Php 90,000 investment minus 5 years of Php 6,000).

4. The Rollover

his approach is ideal for investors who can afford to invest a large amount of money and have a long-term investment horizon. It works in a similar way to compounded dividends, where you choose to receive both your initial investment and dividends at the end of the 5th year.

Upon maturity, you can reinvest your initial investment and dividends into MP2. You can repeat this process until you reach your investment objective. For instance, you may want to establish an education fund for your children, or plan for your retirement.

YEAR	SAVINGS	1st MP2	2nd MP2
1	1,000,000	1,075,000
2		1,155,625
3		1,242,297
4		1,335,469
5		1,435,629
6			1,543,302
7			1,659,049
8			1,783,477
9			1,917,239
10			2,061,032
Total	1,000,000		2,061,032

 

How does it work?

 

1. Start an MP2 account by making a one-time investment.
2. Receive your money back plus earnings when the investment matures.
3. Open another MP2 account.
4. Reinvest your initial investment and the earnings it generated.

Repeat the process until you achieve your financial objectives. Things to consider: It’s important to claim your money when it reaches maturity, as otherwise, it will earn a lower interest rate. Additionally, you need to open a new MP2 account every 5 years. Based on the experiences of other members, it may take some time before you receive your money.

Demystifying the “Rollover Strategy“

• To put it differently, the plan is simple: invest in an MP2 account and keep it for 5 years before closing it. Then, take the funds and earnings and reinvest them in another MP2 account. By doing this, you can double your investment in just 10 years, which means a capital growth of approximately 106%.
• It’s important to note that the dividend rate used in this example is 7.5%, which is higher than the average rate over the past 5 years. However, even if the actual rate differs, the concept illustrated here remains valid for comparison purposes.

5. The Combo

• What if we merge all four strategies to maximize Pag-IBIG MP2 and determine which one yields the highest returns? However, it’s important to note that the combinations presented are not the only options available. In reality, individuals may not follow the strategies outlined here and may opt for a different approach, such as switching from monthly to yearly payments or adding funds to an existing MP2 account. Therefore, please refrain from criticizing these strategies.

Combo 1: Monthly, Tier, and Rollover

1. One possible paraphrase could be: “The initial strategy involves investing Php 500 per month or Php 6,000 annually and subsequently opening a new MP2 account each year. After 5 years, when the investment matures, the accumulated amount of Php 36,266 can then be used to open a sixth MP2 account.

YEAR	SAVINGS	1st MP2	2nd MP2	3rd MP2	4th MP2	5th MP2	6th MP2	7th MP2	8th MP2	9th MP2	10th MP2
0	6,000	6,000
1	6,000	6,244	6,000
2	12,000	12,956	6,244	6,000
3	18,000	20,171	12,956	6,244	6,000
4	24,000	27,928	20,171	12,956	6,244	6,000
5	30,000	36,266	27,928	20,171	12,956	6,244	36,266
6	24,000		36,266	27,928	20,171	12,956	38,986	36,266
7	18,000			36,266	27,928	20,171	41,910	38,986	36,266
8	12,000				36,266	27,928	45,053	41,910	38,986	36,266
9	6,000					36,266	48,432	45,053	41,910	38,986	36,266
10	0						52065	48,432	45,053	41,910	38,986
11	0							52065	48,432	45,053	41,910
12	0								52065	48,432	45,053
13	0									52065	48,432
14	0										52065
Total Investment	150,000						52,065	52,065	52,065	52,065	52,065

 

You will notice that this strategy is almost similar to the tiered example above. But there are two main differences:

1. The total investment here is Php 150,000. This is because, in the 6th year, you will open your 6th MP2 account using the Php 36,266 you get from the maturity of your first MP2 account. Then you still have 4 remaining MP2 accounts, so you must invest an additional Php 24,000 for that year. The same goes for the rest of the remaining years.
2. You will start to receive your matured MP2 account in the 10th year.

SO, HOW MUCH IS THE RETURN AFTER 14 YEARS?

The total return on investment will be maturity minus the capital. In an equation, it will look like this.

5 x (Php 52,065) – Php 150,000 = Php 110,325

It is equal to a 74% return in 14 years.

Combo 2: Annual, Tier, and Rollover

In this combo, you will open one MP2 account every year for the next 5 years. Then reinvest the money upon every maturity of MP2 accounts.

YEAR	SAVINGS	1st MP2	2nd MP2	3rd MP2	4th MP2	5th MP2	6th MP2	7th MP2	8th MP2	9th MP2	10th MP2
0	30,000	30,000
1	30,000	32,250	30,000
2	30,000	34,667	32,250	30,000
3	30,000	37,269	34,667	32,250	30,000
4	30,000	40,064	37,269	34,667	32,250	30,000
5	30,000	43,068	40,064	37,269	34,667	32,250	43,068
6			43,068	40,064	37,2694	34,667	46,298	43,068
7				43,068	40,064	37,269	49,770	46,298	43,068
8					43,068	40,064	53,503	49,770	46,298	43,068
9						43,068	57,516	53,503	49,770	46,298	43,068
10							61,830	57,516	53,503	49,770	46,298
11								61,830	57,516	53,503	49,770
12									61,830	57,516	53,503
13										61,830	57,516
14											61,830
Total Investment	150,000						61,830	61,830	61,830	61,830	61,830

 

Again, the total investment is Php 150,000.

The return on investment is Php 159,150. In an equation, it will be like this.

5 x (Php 61,830) – Php 150,000 = Php 159,150

That’s a total of 106% growth in the capital after 14 years.

Combo 3: One time and rollover (simply the “Rollover”)

Lastly, this combo is just the same as the rollover strategy above. The only difference is that the time is extended to 15 years.

You might be raising your eyebrows now. But let me explain first.

The two combos above are only 14 years, right? However, this example is for 15 years simply because the 3rd MP2 will mature after 15 years.

YEAR	SAVINGS	1st MP2	2nd MP2	3rd MP2
0	150,000	150,000
1		161,250
2		173,343
3		186,344
4		200,320
5		215,344
6			231,495
7			248,857
8			267,522
9			287,586
10			309,155
11				332,341
12				357,267
13				384,062
14				412,867
15				443,832
Total Investment	150,000			443,832

 

Same with the rest of the combo, the total investment is Php 150,000.

The return on investment is Php 159,150. In an equation, it will be like this.

Php 443,832 – Php 150,000 = Php 293,832

A possible paraphrase could be: “After 15 years, the capital growth amounts to a total of 196%. It’s not unexpected that the one-time investment yields the highest return, as previously demonstrated in our blog comparing monthly, yearly, and one-time contributions in MP2.”

Let’s wrap it up!

“Congratulations on making it this far! I understand that it has been a lengthy read and some sections may have been challenging to comprehend. Therefore, I suggest taking your time to read the previous blogs on this topic to ensure that you have the necessary knowledge on MP2.

As I mentioned earlier, all strategies discussed in this article are simply recommendations. Identifying the strategy that will yield the highest return does not necessarily mean that it is the appropriate strategy for everyone.”

Keep in mind that our objectives and financial means vary as we strive for optimal returns. Therefore, feel free to adjust your approach to a more practical one and gradually improve it as you advance in life.

Starting small is not a problem. It may take some time, but what matters most is reaching your destination.

Wishing you success in your investment endeavors!