Pag-ibig MP2: 4 Tips to make the most out of Pag-ibig MP2

Having laid down the ultimate basics of Pag-ibig MP2 (click HERE) , we shall now take it up a notch higher for the advanced investors.

**Note: Please read the basics of Pag-ibig MP2 first and then you can always come back to this post for the tips.

4 Tips to make the most out of Pag-ibig MP2

1. Compounded Savings

Pag-ibig MP2 is an easy investment for 5 years which we can consider as a low-risk investment but with better-earning potential. After 5 years, it’s up to you to invest it for another five years or withdraw.

Here’s a simple question to assess if “Compounded Savings” suits your investment horizon: Do you have any medium-term goals you’ve been eyeing out after 5 years? If you answer YES, then why not opt for Pag-ibig MP2?

I mean, sure…. you can always invest in bonds, time deposits, UITFs, mutual funds, cryptocurrencies and the stock market that are aligned for your medium-termed goals of 5 years. But here’s another question: Wouldn’t it be nice to save more without all the risk and volatility of stocks and all the other assets mentioned above? And I believe it is worth repeating that Pag-ibig MP2 is backed up by the government.

Time deposits? Naaah! In my previous post about MP2, I showed you a table of how Pag-ibig MP2 dividend rates clearly outstrips the low time deposits rates of banks.

Study the 2 tables below showing an estimated growth of P500 and P1,000 monthly savings.

Notice that the annual dividends are being added to the next year’s cumulative savings and can only be withdrawn on the 5th year (maturity).

How does the Compounded Savings work?

  • Open a MP2 savings account
  • Save monthly, yearly or one-time.
  • Withdraw at the end of the 5 years.
  • Reap the benefits of compound interest

Where can the Compounded savings be used for?

  • Downpayment for property or vehicle
  • Capital for Business or franchise
  • Out-of-the-country trips
  • Wedding, Anniversaries and special events

2. Annual Dividend Pay-out

Pag-ibig allows you to receive your dividends either at the end of 5 years or each year. How awesome would it be to get to reap your dividends every year with just little effort? Have a look at how much dividends you can potentially earn every year with investing P500 and P1000 every month, respectively.

MP2 Dividend rate set at 6.96% p.a
MP2 Dividend rate set at 6.96% p.a

**Past performance does not guarantee future returns**

The table below shows how you can potentially earn yearly if you made a one-time contribution of P1,000,000:

MP2 Dividend rate set at 6.96% p.a

Now imagine if you have more than a million pesos in your MP2, you can virtually retire and live off with just your annual dividend payouts. Amazing!

How does the Annual Dividend payout work?

  • Open an MP2 savings account
  • In the account opening form, indicate that you’d like to receive your dividend yearly.
  • Enroll a bank account to where your dividend will be credited.
  • Receive your annual dividend.
  • Withdraw your capital upon maturity.

Where can the Annual Dividend Payout be used for?

  • Vacation trips
  • Birthdays, Anniversaries or yearly events
  • Car insurance, amortization
  • Yearly membership fees
  • Supplement to your retirement plan
  • Home repairs, renovations

3. Leveling MP2 Strategy

This Leveling MP2 strategy makes use of the fact that you are allowed to open MORE THAN ONE MP2 savings account. This tip can be used if you foresee grand expenses you’ll be having in the succeeding years.

How does the Leveling Strategy work?

  • Open an MP2 savings account on your 1st year
  • Open your next MP2 account on your 2nd year. This goes on every year until you reach your fifth account
  • Upon the 5th year, withdraw your first MP2 Savings
  • On the 6th year, withdraw your second MP2 savings. Again, this goes on until you withdraw your fifth MP2 savings
  • You can contribute monthly or annually

Did you notice that for every year you open an MP2 savings account, you will be able to withdraw the same accounts every year after the 5-year maturity of each account?

Where can the Leveling strategy be used for?

With this tip, you can invest as early as now to avoid the stress and anxiety of funding huge expenses 5-10years from now:

  • Child’s college tuition fee
  • Mortgage or any other loan payables

4. MP2 Rollover

This tip is suitable for people who have no plans in touching their Pag-ibig MP2 investments for the next 5-10 years or those with a long-term investing horizon.

How does MP2 Rollover work?

  • Open an MP2 savings account
  • Wait for 5 years
  • Upon the 5th year (maturity), withdraw your MP2 savings plus the dividends
  • Open a new MP2 savings account
  • Fund it back with the MP2 savings and dividends you just withdrew from the previous account
  • Repeat every 5 years

Where can the MP2 Rollover be used for?

  • Retirement. You can repeat this cycle every 5 years until you reach your retirement age to which you would have taken maximum advantage of compounded interest.

PERA (Personal Equity and Retirement Account) is another retirement method I’ve written about. But if you’re not fully convinced about it for your golden years then Pag-ibig MP2 might just be the right one for you.

  • Perhaps a monetary gift for your child when he/she reaches 18 years old.

Let me reiterate that as to date, there is NO AUTOMATIC rollover provided by Pag-ibig.

After 5 years, if you do not re-apply for another MP2 account, your Savings will continue to earn dividends which is based on the regular Pag-IBIG Savings Program’s (P1) rates for two or more years. After that, it will no longer earn dividends.

Thus, opening a new MP2 account is required. So the downside of the this MP2 rollover tip is that some people might find it very inconvenient to have to close and open accounts every 5 years.

Have I been using any of these tips?

Yes. My husband and I have agreed to use the leveling strategy to maximize the earning potential for our child’s college education. As of this writing, this is what we have decided upon. But still, we are open for more investing ideas.

Time is of the essence. Time is our best ally. If you’re someone who wants to look beyond the typical strategy of merely parking your money in the bank, I think Pag-ibig MP2 is a better and stronger alternative. It’s also another way for growing your money and diversifying your portfolio if you’re already investing in stocks, mutual funds, UITFs, and other popular investment vehicles.

If you found this post informative, please share it to your family & friends.


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Pag-ibig MP2: 4 Tips to make the most out of Pag-ibig MP2

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.

2 thoughts on “Pag-ibig MP2: 4 Tips to make the most out of Pag-ibig MP2”
  1. When I learned about theMP2 fund, it was a no-brainer decision. My suggestion to Beautiful Bride was to set up what you labeled as “the leveling strategy.” Her biggest worry since we married was having enough tuition money for the “mini-troopers” in the home. My suggestion was to treat these accounts as a bond ladder with the maturity date a few weeks before tuition time each year to give her time to assess if any money will be needed for school expense. If there is no need to withdraw, roll it over for another five year term. We certainly hope there will be no interruption in the cash flow of our business as we experienced in 2020 with the COVID lockdowns. If that sort of event did happen again, the MP2 will cover the bills. If there is never a need for the cash, my wife will have some get your retirement started right funds!

    1. Love this! Same sentiments with the retirement funds started right! And thanks for sharing your strategy. Hoping readers of this article will get to know your insights too 🙂

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