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.
Table of Contents
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.
- Pen and paper
- Calculator
- Excel Sheet or Google Sheet
- 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:
- 243.75
- 693.75
- 1,143.75
- 1,593.75
- 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 interest—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 🙂
READ: 5 Strategies to Get the Most Out of Pag-ibig MP2
****
Federico is an electronics engineer, financial blogger, insurance agent, and a certified investment solicitor. A multi-awarded financial advisor with clients ranging from lawyers, doctors, engineers, accountants, business owners, company directors, and OFWs to minimum wage earners had sought advice from him in achieving lifetime financial freedom.
hi Sir gonna ask lang If I choose annually dividend payout does it mean I will get annual dividend for 5 years? or just that for only 1 year? sorry I’m kind of confuse hehe
You will get it every year until it gets matured 🙂
Hi sir. On your TABLE 2 where contribution of 500 per month were listed down, how come the total contribution for year 1 is 39000? Isn’t it just 6000? And since the dividend is computed to the average contribution the dividend would be based on 500, hence,
Y1 = 37.5php
Y2 = 75.23
Y3 =113. 20
Y4 = 151. 41
Y5 = 227.36
So total earning for 5 yrs would 604.70 pesos. Please correct me sir if i did not get it.
All the results shown in this blog are actually based on the official pub mat released by Pag-IBIG. You can check the validity of the computation versus the said material.
The computation is simple but rather tricky. The “total” I was referring to was the total accumulated monthly savings. You just have to know your cumulative investment every month,
So for example, you saved 500 per month then for the month of January your cumulative investment is 500. By February, it will be 500 from January PLUS your new investment of 500, i.e. Php 1000. For March it will be Feb plus 500 or simply 1,500 and so on. Now, when you finished the year, add the cumulative monthly investment.
500 + 1000 + 1,500 + 2,000 + 2,500 + … = 39,000
Then get the average by dividing 39,000 by 12 (months).
Why are we doing this? Because your money is compounded monthly. Oops…I think this will get a bit more technical. I’m planning on creating a video about this and I’ll also release a Pag-IBIG MP2 calculator.
But for now, I hope it helped you. Thanks 🙂
If for example my monthly savings is 1000, can I deposit 2000 on the second month?
Yes, you can do that.
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.
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?
Hi Kat. You mean you will add yearly in a single MP2 account or open one (1) account each year? Either way, it is possible.
I have a similar blog about the strategies to maximize Pag-ibig MP2, I share the link below, and hopefully, it may help you.
http://www.thewiseguyph.com/5-strategies-to-get-most-out-pagibig-mp2/
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!
Hi Mylen. You may read “How to Maximize Earnings in Pag-ibig MP2” for more info. Based on sample computations, one-time investment will give the highest earning. Thanks 🙂
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 🙂
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 🙂
Wow your a math genius…
Not really Marits, haha it is just that we cannot take the computations from investing 🙂
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 🙂
Hi Paulo. It’s correct, your money and dividends if any will be available after 5 years. Thanks 🙂
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 🙂
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.
Hi Roberto. Yes, you may add anytime 🙂
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 🙂
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 🙂
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 🙂
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 🙂
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 🙂
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 dividend = Php1,143.75 + (Php712.03 + Php243.75) * 0.075 = Php1,215.43
4th-year dividend = Php1,593.75 + (Php1,215.23 + Php712.03 + Php243.75) * 0.075 = Php1,756.59
5th-year dividend = Php2,043.75 + (Php1,756.59 + Php1,215.23 + Php712.03 + Php243.75) * 0.075 = Php2338.34
You’re welcome, Jeah. Yes, you did it right 🙂
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!
Hi Arnold. You can follow the steps here and compute it right anyway and maybe play around with the different scenarios. Btw, I have a new blog about 5 strategies to get the most out of Pag-ibig MP2. Please check it out. Thanks 🙂
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 🙂
“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 🙂
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 🙂
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 🙂
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 🙂
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.