How to compute Pagibig MP2 dividends?
If you have previously read my article regarding PagIBIG MP2 and how to make the most out of it, you may be curious about how the calculations were performed. To be frank, it took me some time to grasp it, and I will explain why later. However,How to compute Pagibig MP2 dividends? after spending several hours, I am now able to confidently explain to you how to compute for PagIBIG MP2 dividends.
What are the things to prepare?
“My suggestion to you is to consider following these steps as it could make the process easier for you. While it’s not mandatory, I highly recommend it as it has the potential to save you a significant amount of time.”
 Pen and paper
 Calculator
 Excel Sheet or Google Sheet
 Simple and compound interest formulaTo use the manual method, ensure that you have a pen and paper ready to record the results. While any calculator can be used, a scientific calculator is recommended as it can be more efficient, particularly if you are familiar with the summation function.Alternatively, you can use an Excel spreadsheet to simplify the process. However, it is important to be familiar with the formulas for simple and compound interest.
How to compute Pagibig MP2 dividends?
I will demonstrate how to compute the examples given by Pagibig on their official website, using a dividend rate of 7.5%. However, it is important to note that this is just an illustration and the actual dividend rate may vary based on the performance of the Pagibig fund.
You can use the average dividend rate over the last 5 years for your own calculations.
So here’s how to compute for Pagibig MP2 dividends.
1. Monthly contribution with yearly dividend payout
If you choose to invest Php 500 per month for the next 5 years and select the yearly dividend payout option, you will earn Php 5,718.75. This is equivalent to approximately 19% of your total capital of Php 30,000.
Year  Monthly Savings (MS)  Accumulated MS per Year  Cumulative Savings  Annual Dividend Payout  Total Accumulated Value TAV) 

1  500  6,000  6,000  243.75  6,000 
2  500  6,000  12,000  693.75  12,000 
3  500  6,000  18,000  1,143.75  18,000 
4  500  6,000  24,000  1,593.75  24,000 
5  500  6,000  30,000  2,043.75  30,000 
TOTAL  –  30,000.00  –  5,718.75  30,000 
Now, let’s compute for the yearly Pagibig MP2 dividends.
I prepared a table below so you can visualize how it is done.
Month  1st Year  2nd Year  3rd Year  4th Year  5th year 

January  500  6,500  12,500  18,500  24,500 
February  1,000  7,000  13,000  19,000  25,000 
March  1,500  7,500  13,500  19,500  25,500 
April  2,000  8,000  14,000  20,000  26,000 
May  2,500  8,500  14,500  20,500  26,500 
June  3,000  9,000  15,000  21,000  27,000 
July  3,500  9,500  15,500  21,500  27,500 
August  4,000  10,000  16,000  22,000  28,000 
September  4,500  10,500  16,500  22,500  28,500 
October  5,000  11,000  17,000  23,000  29,000 
November  5,500  11,500  17,500  23,500  29,500 
December  6,000  12,000  18,000  24,000  30,000 
TOTAL  39,000  111,000  183,000  255,000  327,000 
AVERAGE  3,250  9,250  15,250  21,250  27,250 
DIVIDEND  243.75  693.75  1,143.75  1,593.75  2,043.75

“Firstly, you need to calculate the Average Accumulated Monthly Savings (AAMS) for each year. Then, you can use the simple interest formula to calculate the dividends. This involves multiplying the AAMS with the dividend rate.”
If you forgot, the formula is “I = Prt.”
Where:
I= interest earned
P=Principal
r= rate of interest per year
t= time
In this scenario, the value of “t” is one as we are calculating the yearly dividends. For instance, in the first year, the AAMS is valued at Php 3,250. We need to multiply it by the dividend rate of 7.5%, which results in a dividend of Php 243.75 for the first year. The calculation method for the dividends of the following years is identical. I will leave it to you as an exercise to perform the calculations.
2. Monthly contribution with compounded savings
If you choose to make monthly contributions with compounded savings, things can become a bit complex. However, don’t worry, I can provide a clear explanation on how to calculate the numbers.
.
RELATED: The Rule of 72  Compounding of Interest Made Easy
Year  Monthly Savings (MS)  Accumulated MS per Year  Cumulative Savings  Dividend Amount  Total Accumulated Value (TAV) 

1  500.00  6,000.00  6,000.00  243.75  6,243.75 
2  500.00  6,000.00  12,243.75  712.03  12,955.78 
3  500.00  6,000.00  18,955.78  1,215.43  20,171.21 
4  500.00  6,000.00  26,171.21  1,756.59  27,927.81 
5  500.00  6,000.00  33,927.81  2,338.34  36,266.14 
TOTAL  –  30,000.00  –  6,266.14  36,266.14 
Initially, you only calculate the interest earned on the principal amount for the first year. From the second year onwards, you need to calculate the interest earned for that year as well as the interest earned from the previous years’ dividends. This process is known as compounding of interest, where your interest generates further interest. However, before starting the calculation, here’s a quick overview of the dividends in the first example.
 243.75
 693.75
 1,143.75
 1,593.75
 2,043.75The dividend amount in the initial year is Php243.75, which is identical to the dividend amount in the first scenario. In the subsequent year, the dividend amount will be the sum of the second year’s dividend amount from the first example and the interest earned from the dividend in the first year. The equation representing this calculation is as follows.2ndyear dividend = Php693.75 + (Php243.75)*0.075 = Php712.03“In the third year, the dividend will consist of the third year’s dividend from the first example, as well as the interest earned from both the first and second year dividends.”3rdyear dividend = Php1,143.75 + (Php712.03 + Php243.75) * 0.075 = Php1,215.43Again, I will just leave the remaining years as an exercise.
3. Onetime contribution with yearly dividend payout
If you’re considering making a single investment that pays dividends annually, this calculation can assist you in predicting your earnings for the next five years.
Year  Monthly Savings (MS)  Accumulated MS per Year  Cumulative Savings  Annual Dividend Payout  Total Accumulated Value TAV) 

1  1,000,000  1,000,000  1,000,000  75,000  1,000,000 
2  0  0  1,000,000  75,000  1,000,000 
3  0  0  1,000,000  75,000  1,000,000 
4  0  0  1,000,000  75,000  1,000,000 
5  0  0  1,000,000  75,000.  1,000,000 
TOTAL  –  1,000,000.00  –  375,000  1,000,000 
Calculating the dividend is a basic and easy calculation. You simply multiply the capital by the dividend rate. For instance, if the dividend rate is 5%, and the capital is Php 1,000, the dividend would be Php 50.
In the given example, the dividend is Php 75,000, and it remains the same for each year because the Total Accumulated Value (TAV) stays constant. However, if you opt to compound your savings, the situation would be different.
4. Onetime contribution with compounding savings
If you have read my previous article about how to maximize your dividends through Pagibig MP2, you would know that this calculation will result in the most significant earnings. The computation is based on two essential factors.
Firstly, the capital amount is already earning the full dividend rate for every year. This is different from monthly savings, where you only earn a fraction of the rate for each monthly contribution.
Secondly, the interest earned on your investment will also earn interest, resulting in compound interest.
Year  Monthly Savings (MS)  Accumulated MS per year  Cumulative Savings  Dividend Amount  Total Accumulated Value TAV) 

1  1,000,000  1,000,000  1,000,000  75,000  1,075,000 
2  0  0  1,075,000  80,625  1,155,625 
3  0  0  1,155,625  86,672  1,242,297 
4  0  0  1,242,297  93,172  1,335,469 
5  0  0  1,335,469  100,160  1,435,629 
TOTAL  –  1,000,000  –  435,629  1,435,629.33 
Now, we’ll use the compound interest formula to compute the dividends.
So here’s the formula.
FV = PV (1 + r) ^ t
Where:
FV = Future Value
PV = Present Value
r = rate of interest per year
t = number of periods lapsed (no. of years)
Let’s use it to compute the future value of your onetime investment after 5 years.
FV = 1,000,000 * (1 + 0.075) ^ 5 = Php 1,435,629.33
If you choose to reinvest your dividends instead of receiving them each year, you can grow your capital by 43.6%, compared to only 37.5% if you opt to receive dividends annually. You may consider this difference as insignificant, but it’s still a 6.1% disparity. Over a period of more than 5 years, even a small difference like this can become more apparent.