How to compute Pag-ibig MP2 dividends?

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 interestβ€”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 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 πŸ™‚

READ: 5 Strategies to Get the Most Out of Pag-ibig MP2

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44 comments… add one
  • Iya Link Reply

    Sir, can I still add my contribution even when I did a One-time payment of MP2 savings

    • Hi Iya. Yes, you may add at any time. One-time payment is more of a personal choice. In reality, you may add at any time within the 5 yrs term.

  • Kat Canlapan Link Reply

    Hi sir. What if I made a one time contribution every year? For example, i invested 50k for jan 2021, then another 50k in jan 2022, 2023, 2024, 2025. Is this possible?

  • Mylen Link Reply

    Hi Sir Federico. I would like to ask for the recommendation which is a better option between one-time payment, annually, or monthly payment every year? Thank you so much!

  • Thessa Obdamen Link Reply

    Hi Sir Federico. How to compute the dividend let’s say I started saving in February, but I failed to deposit for the month of April, but on the next month (May), I deposited an amount that will cover both April and May.

    I tried to create an Excel file for this, but the dividend that reflect on my virtual Pag Ibig is not tally, compared to the dividend that was generated on the Excel file. By the way, I followed the steps/computation here.

    • Hi Thessa. It should be the same. Of course, just put zero if you missed any month and if you add more then indicate the additional investment. Just follow the steps and you should be able to compute for the dividends. Thanks πŸ™‚

  • July Dafyu Link Reply

    Hi Sir. You gave an example of 7.5% rate throughout 5 years. However, for Compound Savings for 5 years, I started saving on PAGIBIG way past 2016 which has a rate of 7.43% and 2017 – 8.11%.

    Base on your computation for Compound Savings of 5 years, what rate will I use? Is it 7.43% throughout 2016-2021? Or is it based on yearly dividend rate? Thank you for your answer.

    • Hi July. It will actually depend on you. As mentioned, the computations are only made to forecast the investment return. So you may use any rate you are most comfortable with, be it the 7.5% or the average rate for the past 5 years. The examples here with a 7.5% rate are only aligned to the official samples shared by Pag-ibig. Thanks πŸ™‚

  • Marits DV Link Reply

    Wow your a math genius…

  • Paulo Aquino Hernandez Link Reply

    Hello Sir,

    I deposited my first MP2 contribution last May 2019, then I stopped. I just made another contribution to my MP2 account just this month, January 2021.

    The maturity year remains to be 2024, 5 years after 2019, is that correct?

    The crediting of the annual dividends will also be the same, every month of May?

    That means, anything I saved during the 5-year period will be available for withdrawal on May 2024?

    Thanks in advance πŸ™‚

    • Hi Paulo. It’s correct, your money and dividends if any will be available after 5 years. Thanks πŸ™‚

  • Joanne Cabadido Link Reply

    Hi Sir Federico. I started to open my mp2 account last Dec. 2019. The last year 2020 I saw how much dividend I earned from the year 2019. And I continue to save from January, March, and December 2020 with different amounts. I am checking on the Pag-ibig virtual how much dividend I earned for the year 2020 but it didn’t show. Is there a another possible way for me to check my dividend from my previous year? Thank you.

    • Hi Joanne. You should see it once it is available. The dividend rate for 2020 was only announced this March 2021. Thanks πŸ™‚

  • Roberto Link Reply

    Hi Sir Federico, if I start off with a lump sum of 100,000, can I top-up anytime or do I need to enroll in another savings account? Tnx.

  • Joel Dorego Link Reply

    When I opened an MP2 account two years ago, it was not specified if the dividends would be withdrawn annually or after 5 years…I continue contributing, anyways… what’s your take on this, sir?

    • Hi Joel. You may visit your portal to check which one is elected. Maybe you forgot what you’ve chosen since it has been 2 years πŸ™‚

  • Cynthia D. Trobanos Link Reply

    How can I see the computation in MP2, example if I invest 100,000 . I want to see the divident of this amount .

    Thank you
    Cynthia

    • Hi Cynthia. You have to compute it yourself just follow the steps presented here. As mentioned, you will also make an assumption of the average return that you will be using for the computation whether it’s the last year’s return, the last 5 years, and so on. Thanks πŸ™‚

  • Jhun Barrera Link Reply

    Hi Sir,

    For a Yearly Contribution, does it matter if you are going to put in the money one time is January or one time in June, or One time in December? Thanks!

    • Hi Jhun. You may start at any month. The only good thing about starting in January is that you’ll get a full year’s worth of dividend. Well, of course, aside from starting the year right. Thanks πŸ™‚

  • Mac Binas Link Reply

    If I decide to invest a lump sum of Php 300,000 for the first month plus Php 5,000 and in the succeeding months you decide to add the same Php 5,000 monthly. How much would I get?

    • Hi Mac. You may follow the steps above. It’s fairly simple to do. Thanks πŸ™‚

      • Joseph Galve Link Reply

        Yung interest na yan Sir bawas na ba ang tax dyan. Thanks.

        • The examples shown are only paralleled with the official samples released by Pag-ibig which are tax-free. Thanks πŸ™‚

  • Jeah Link Reply

    Thanks, it helps a lot! Here’s the rest of the computation, not sure if I did it right.

    2nd-year dividend = Php693.75 + (Php243.75)*0.075 = Php712.03
    3rd-year dividendΒ = Php1,143.75 + (Php712.03 + Php243.75) * 0.075 =Β Php1,215.43
    4th-year dividendΒ = Php1,593.75 + (Php1,215.23 + Php712.03 + Php243.75) * 0.075 =Β Php1,756.59
    5th-year dividendΒ = Php2,043.75 + (Php1,756.59 + Php1,215.23 + Php712.03 + Php243.75) * 0.075 =Β Php2338.34

  • Arnold Tiu Link Reply

    Hi Sir Federico. Could you illustrate monthly and yearly contributions with compounding savings whereas, the 1st month of the 1st year would have 100,000.00 and the succeeding 11 months each with 1,000.00. Say the subsequent 4 years, all with 1,000.00 monthly contributions. Thanks!

  • 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 πŸ™‚

  • 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 πŸ™‚

      • Al Link Reply

        Hello Sir Federico I’ve noticed some of the people here like you to become their calculator. They don’t like to compute for themself.

        • Hi Al. Maybe because it’s a long read and to save time, they just tend to ask. However, investing is part of personal finance, and it’s something everyone should learn, especially if they’re planning to invest in MP2. Thanks, by the way πŸ™‚

  • 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 πŸ™‚

      • Mark Angel Link Reply

        Hi Sir Federico. Does that mean I need to divide the 7.5% to 12. I’m getting lost. Can you show how you get 243.75?

        • Hi Mark Angel. The step to get the 243.75 is already there. You just have to follow it.

          1. Get the total for the first year which is 39,000.
          2. Compute for the average by dividing 39,000 by 12.
          3. Dividend is equal to Average Accumulated Monthly Saving (AAMS) multiplied by 7.5%

          I hope you can now paint the picture. Thanks πŸ™‚

    • Joel Dorego Link Reply

      If I pawn a jewelry with a 3% interest and deposit the money in MP2, does it make sense, sir?

      • Hi Joel. I think the 3% interest you are talking about is monthly. So in a year that’s 36% vs. let say 7% of Pag-ibig MP2. I do not think it’s a good idea.

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