 # How to compute Pag-ibig MP2 dividends?

If you already read my post about Pag-ibig MP2 and how to maximize it, then you might be wondering how the computations were done. I’ll be honest, it took me a while to understand it, and you’ll know why later. But after several hours, now I can confidently share with you how to compute for Pag-ibig MP2 dividends.

## What are the things to prepare?

It is just my recommendation to you so that you’ll have an easier time following the steps. Actually, you may skip this part, but trust me, it could save you more time and some brain cells too.

1. Pen and paper
2. Calculator
3. Excel Sheet or Google Sheet
4. Simple and compound interest formula

If you’ll go for the manual method, prepare for a pen and paper so you can easily jot down the results. You may use any calculator, but a scientific calculator is more efficient, especially if you know how to use the summation function.

You may also use an excel sheet to make the job easier. But remember to familiarize yourself with the simple and compound interest formulas.

## How to compute Pag-ibig MP2 dividends?

What I’ll be showing with you is the computation for the examples provided by Pag-ibig on its official website. The dividend rate used is 7.5%. Again, it is just an example because the actual dividend rate will still depend on the actual performance of the Pag-ibig fund.

However, for your personal computations, you may use the average dividend rate for the past 5 years.

READ: 5 Steps to Achieve Financial Freedom

So here’s how to compute for Pag-ibig MP2 dividends.

### 1. Monthly contribution with yearly dividend payout

You’ll earn Php 5,718.75 if you will continuously invest Php 500 per month for the next 5 years and opted for the yearly dividend payout. That’s around 19% earnings from 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 Pag-ibig 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

The first step is to get the Average Accumulated Monthly Saving (AAMS) for each year. Secondly, use the simple interest formula to get the dividends. It is done by multiplying the result from the first step by 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 case, “t” is equal to one since we will be computing for the yearly dividends.

So, for example, in the first year, the AAMS is equal to Php 3,250. And then, multiply it by the dividend rate of 7.5%. The result is the dividend for the first year, which is 243.75.

The dividends for the succeeding years are computed the same way. I’ll just leave it with you as an exercise.

### 2. Monthly contribution with compounded savings

It is where things can get a little complicated if you opt for a monthly contribution with compounded savings. But fret not, I have a clear demonstration of how to get 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

The general idea is, in the first year, you’ll just compute for the simple interest earned. In the second and succeeding years, you have to get the simple interest for that year and the interest from the previously earned dividends.

Thus, it is called compounding of interest because your interest gets to earn interest.

But before the computation, here is the summary of dividends on the first example:

1. 243.75
2. 693.75
3. 1,143.75
4. 1,593.75
5. 2,043.75

Again, the dividend in the first year is Php243.75. It is the same as the first example.

In the second year, it will be the 2nd year dividend from the first example plus the interest earned from the dividend in the first year. So here’s how it will look in an equation.

2nd-year dividend = Php693.75 + (Php243.75)*0.075 = Php712.03

In the 3rd year, it will be the 3rd year dividend from the first example plus the interest earned from the first and second year dividends.

3rd-year dividend = Php1,143.75 + (Php712.03 + Php243.75) * 0.075 = Php1,215.43

Again, I will just leave the remaining years as an exercise.

### 3. One-time contribution with yearly dividend payout

If you are planning to make a one-time investment with yearly dividend payout, then this computation can help you forecast your earnings in the next 5 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

It is the most simple and straightforward computation. You will just have to multiply the capital with the dividend rate.

So, in this example, the dividend is equal to Php 75,000.

As you can see, the dividend for each year is the same because the Total Accumulated Value (TAV) stays the same. It is a different case if you choose to compound your savings.

### 4. One-time contribution with compounding savings

If you read my article on how you can maximize the Pag-ibig MP2 dividends, you will know that this computation will give you the highest earnings.

Basically, there are two key points behind it.

• The capital is already earning the full dividend rate for each year. Unlike with monthly savings, where you will only get a fraction of the rate for each monthly contribution.
• The interest gets to earn interestcompound 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 for 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 for the future value of your one-time investment after 5 years.

FV = 1,000,000 * (1 + 0.075) ^ 5 = Php 1,435,629.33

It is a growth of 43.6% on your capital compared to 37.5% if you opt to get your dividends each year.

You might be thinking, “the difference is small.”

It is true. But, it is still a 6.1% difference.

However small, the difference will become more evident if you are planning to invest beyond 5 years.

Happy investing 🙂

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• Charlene Link Reply Hi good day
I started saving last sep and saves monthly
Im planning this jan 2021 to make it yearly
Is it possible?
What should i put to the covered period jan 2021-jan2021 or jan2021 – dec 2021?

• Hi Charlene. Yes, you can pay it yearly. MP2 is very flexible and you may do it your way. Thanks 🙂

• Marlon Link Reply “The first step is to get the Average Accumulated Monthly Saving (AAMS) for each year.
So, for example, in the first year, the AAMS is equal to Php 3,250”

I am lost here, u mention some steps. but no computation how. don’t understand how to derive it in the table also, kinda new. can explain how to get 3250?

• Hi Marlon! You can get it using the arithmetic average or simply adding the monthly accumulated contribution. So for the first year, you add 500, 1000, 1500, …, 6000, and then divide the sum by 12. I hope it helped you. Thanks 🙂

• John Cruz Link Reply 2. Monthly contribution with compounded savings
The dividend earned in the first year is incorrect. If the rate used is 7.5% like the other samples, it should be 450 php and not 243.75 php. The dividend 243.75 php is computed at 4.06% rate only. Thanks!

• Hi John. You’re correct, the dividend rate is 7.5% as mentioned. So how did I arrive with the 1st year dividend of Php243.75?

The contribution is monthly, so for example, for the month of January you will get the full 7.5%, and it will only be 11/12 of 7.5% for February, 10/12 of 7.5% for March, and so on. It is why we cannot simply multiply the Php 6,000 by 7.5%. I hope it helped you. Thanks 🙂