How to make the most of Pag-ibig MP2 earnings

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Pag-ibig MP2 or Modified Pag-ibig Savings Program 2 is one of the passive income in the market that’s open to almost anybody to invest. The way it earns is not hard to understand, and it is also relatively easy to start an account just by visiting the nearest Pag-ibig branch.

Also it has historically been beating savings account and time deposit. The one advantage is that the capital that you put in is guaranteed by the Philippine government. If you haven’t already, you can read all about Pag-ibig MP2 savings program and then you can get back here.

First, is MP2 right for you?

Surprisingly, it may appeal most to conservative investors because of little risk of capital loss. It is considered relatively safe because the capital that you put up is government-backed, and it’s been posting tax-free dividends. The earliest I can find is the MP2 past dividend from 2010, and until 2018 the average compounded annual growth rate is 5.82%.

MP2 dividend rate from 2010 to 2018

YearMP2 dividend rate

However, there is a lock-in period of 5 years. While you can withdraw any time, you can get back the savings but the dividends that would be issued to your account may not be the full rate. Nonetheless, it’s an alternative savings vehicle aside from those offered by banks and cooperatives.

Making the most out of MP2

Now that you see the potential earnings, you might wonder what are the ways to save up and whether there is one strategy that gives you the most out of Pag-ibig MP2 program? In this article, I am going to try to answer three things.

  • Do you get bigger returns when saving monthly or annually?
  • Which has higher return on investment (ROI): investing one-time or regularly?
  • Would it make sense to get the dividends every year or at the end of lock-in period?

MP2: monthly versus annually

Does it make sense to save every month or just once at the start of the year? To answer this question, let’s look at the math. The minimum amount to begin saving is ‎₱500 so let’s assume that you’re going to contribute either ‎₱500 monthly or ‎₱6,000 every year.

Next, use the average dividend rate for the past 5 years. This is appropriate to be used and not the recent one as the forecast is going to be 5 years into the future, which also corresponds to MP2’s lock-in period. Besides, it also captures the highs and lows of the rate through the years. Again, past rate does not guarantee future returns.

Here’s how the money is forecast to grow in 5 years.


As you can see, saving annually gives you better gains than saving monthly in the long run. Even when in both situations, your total saving is technically the same (‎₱30,000).

By saying that, this does not mean that you should set aside ‎₱500 in a piggy bank each month and make a contribution after it reaches ‎₱6,000. Why? Because your piggy bank makes your money sit idle, and it wouldn’t earn anything extra that it could’ve earned had it been invested elsewhere while it’s accumulating. If it is within your means to save ‎₱500 every month, then the better strategy is to put it in MP2 rather than in a piggy bank.

All in all, annual contribution is ideal for people who can expect windfall each year like 13th month bonus, incentives, or Christmas gifts from godparents. Instead of spending your extra cash, you can contribute them to your MP2.

MP2: Investing regularly versus investing one-time

The second question is about choosing between periodic and one-time investments in Pag-ibig MP2. Which strategy gives you the most bang for your buck?

Again to answer this question, math is going to be used. For regular investing, let’s say that you’re contributing ‎₱500 monthly. Since the lock-in period is 5 years, the one-time contribution is set at ‎₱30,000. That’s ‎₱500 x 12 months x 5 years. Just like the previous example, the same average dividend rate is used to make projection for the next five years.

212,00012,860 34,084
318,00019,952 36,330
424,00027,525 38,725
530,00035,614 41,277

From the table, it is clear.

Investing one-time lump sum amount gives superior return on investment (ROI) than regular monthly contribution. At the end of 5 years there’s a potential to earn ‎₱41,276.57 versus ‎₱35,613.64 from the monthly saving.

How about annual contribution versus one-time? The story is the same. The one-time strategy has the edge. From the previous example, the total amount for annual strategy at the end of the lock-in period is ‎₱36,478.58, which is still lower than what you could expect from the one-time strategy.

What does this all mean?

If you have the money that you can afford to set aside for the next half a decade, then putting it into MP2 one-time makes sense. So if you’ve been given an inheritance, made a huge commission or got a windfall, this strategy can be a way to grow your money.

However if you can only do regular saving, then that’s fine too. Don’t feel bad. It’s also worth repeating that you’re better off putting in a small amount monthly into MP2 rather than saving in a piggy-bank and only invest when it reaches ‎₱30,000. You’re going to miss so much opportunity for passive income.

MP2: Annual or compounded dividend?

As you may already know, after reading the guide on Pag-ibig MP2, you are given two choices on how to receive your dividends. You can either get it straight to your bank account every year or wait until the end of the lock-in period of 5 years. Are you going to have bigger net returns when you let the dividend compound your savings or when you get the dividend at the end of each year?

To answer whether waiting until the end of the lock-in period will give you better return on your money, let us imagine that you open two MP2 accounts with the same one-time savings of ₱30,000 at the same time. With one (1st MP2) account you let the dividend stay and then withdraw everything after 5 years. With the other account (2nd MP2), you get the dividend to a bank account at the end of each year straight. See the table below for the comparison.

Year1st MP2Compound2nd MP2Annual dividendTotal
1 30,000 31,977 30,000 1,977 31,977
2 34,084 1,977 33,954
3 36,330 1,977 35,931
4 38,725 1,977 37,908
5 41,277 1,977 39,885

As you can see, the 1st MP2 is higher. Your total net-home take is ₱41,277. That’s ₱11,277 of total dividends for 5 years. For 2nd MP2, you’d end up getting ₱39,885 with a total of ₱9,885 worth of dividends spread yearly until the lock-in period lapses.

The verdict? Patience indeed is a virtue and it’s a virtue that gets rewarded in the end. If you can, wait until the lock-in period lapses. However, if you think that you would benefit greatly that you’re receiving the dividend each year, such as paying for your child’s tuition or to add to your yearly budget, then go right ahead.


Now, I’m not saying all of us should be doing lump sum investment. (In fact, I’m not saying that you should go with MP2 right this minute. Instead, check your financial circumstances, come up with a financial goal, seek more information about passive income like mutual funds, exchange traded fund, UITF, PERA or VUL, and then compare.)

It is worth repeating that the goal of this article is to review these strategies by using math to forecast future MP2’s savings growth. Again, past performance does not guarantee future dividends. Actual dividend would vary.

What I can do is to show how these strategies would pan out in the long run. So don’t feel bad if you don’t earn and save much. Not all of us have a huge capital to invest one-time big-time or even yearly.

Setting aside a little amount regularly to Pag-ibig MP2 or other investment options if you have a five-year financial goal could still be better than letting your money in a piggy bank.

At the end of the day, how you save and invest your money and where you put it to give you the most return is a decision only you can make. What I can do is to help show you the consequences of such decision.

To wrap up this article, here are the strategies to make the most out of your MP2 savings account.

  • Piggy bank versus MP2? MP2 wins. So, don’t let whatever you can set aside stay in a piggy bank and then only contribute in Pag-ibig once it reached a certain amount. You’re missing the chance to earn a little while you’re building up your savings.
  • When money is tight, there’s no shame to contribute at least the minimum amount each month. Regular saving is better than none at all.
  • If you have an annual windfall like bonuses or Christmas gifts, putting it one-time is a better strategy than spreading it throughout the year .
  • MP2 is also great for one-time saving, which can give higher return than spreading it throughout 5 years.

Read next

Why invest in securities, such as stocks and bonds?

Peso cost averaging vs lumpsum: Which is better?

Is it good to invest in Philippine preferred shares?

Top Philippine UITF Funds of 2019

47 thoughts on “How to make the most of Pag-ibig MP2 earnings”

      1. Hi, clarify ko lang. Yung compounded kaya mas malaki makukuha if I wait in the lock-in period? Tama ba?

      2. Hi Emmanuel,

        Yes, tama po kayo. Pag-ibig MP2 allows you to receive dividend in two ways: after the lock-in period or withdraw it every year straight to a bank account. Compounding happens when you let your dividends stay within the lock-in period, which would give you a higher net take-home balance than when you receive the dividends every year. I hope this answers your question. 🙂

      3. Hello sir tatanong ko lang po, paano kung mas maaga kong natapos yung mp2 ko, wala pa pong 5 yrs tapos na po, pwede na po ba akong mag stop maghulog nun or kailangan talagang 5 yrs yung span ng hulog?

  1. Hello po, good afternoon 🙂
    Ask ko lang po kung magkano ang guaranteed interest return? Wala po bang admin charge?
    Thank you.

    1. Hi Ailyn,

      The capital (the savings that you contributed) is guaranteed, and not the dividend. The dividend varies and depends on the income of Pag-ibig, which makes an announcement in each first quarter of the year. As for the admin charges, there aren’t any mentioned by Pag-ibig.

  2. Hi,

    Thanks for providing a very informative yet simple explanation how MP2 works.

    Is there any other investment you can suggest with passive income?

    1. Hi sir Mark, Pag-ibig has not released how their computation for dividend works, but based on their available information it seems like full dividend is paid if capital is saved for the entire year, and then proportional fraction of the dividend based on the number of months. So to answer your question, it doesn’t matter po. In investing kasi po esp kung interest-based/dividend-based the earlier you commit capital the higher the interest.

      1. Hi sir
        Askq lang po I am A OFW and I want to invest ano pwede ko po gawin? Pwede po ba online?
        Thank you

  3. pa tanong po. walapo option sa form na one time big time na ang savings ko. bali 100,000 na for 5 years. at hindi na ako mag huhulog monthly…

    1. Hi, Sir Ed. You can save however you like po, like 100k and let it compound for 5 years. What this article shows is the growth of money over time base on monthly, yearly, or lump sum strategies. Hope this clarifies.

  4. Its better to get interest on a one time investment right? do you think its better to open an account annually so I can get the a percentage for a one time big time investment and withdrawing after 5 years one at a time at maturity?

    1. Hi Alvin, according to the estimates in the article investing one-time and let it compound for 5 years offers the yield higher than doing it monthly or yearly, but that shouldn’t discourage anyone from saving monthly or yearly. To answer your second question, Pag-ibig allows you to open multiple MP2 accounts so you can open a new MP2 account every year. Check the article on MP2 strategies.

  5. Hello Sir, I would like to ask what dividend rate did you use for ANNUAL VS DIVIDEND. I used 6.59% which is average of 2014-2018 but I can’t seem to manually compute for the values you posted e.g. 6,218.55. I hope you could provide the formula. thanks

    Year 500/mo Compounded Annually
    1 6,000.00 6,218.55 6,218.55
    2 12,000.00 12,859.50 12,832.49
    3 18,000.00 19,951.56 19,841.84
    4 24,000.00 27,525.37 27,246.59
    5 30,000.00 35,613.64 35,046.74

  6. Hello Sir.I just want to clarify..for example ngshare po ako ng one time na worth 10k sa unang taon (year 2020)then magshare ulit ako ng 10k sa 2nd year(year 2021), 10k sa 3rd year(year 2022), 10k sa 4th year(year 2023) and 10k sa 5th year(year 2024)…it means after 5 years of waiting (from year 2024 until year 2029 ay may malulump sum ako. tama po ba? Thank You

    1. Hi, Leiza. Yes. The MP2 account you’re going to open in 2020 can be withdrawn after 5 years, which is by 2024. You don’t have to wait until 2029 to get your capital that you’ve deposited in 2024; the year that the MP2 account was opened is the start of the lock-in period, so you just have to count 5 years from there and any capital you put in between can be withdrawn.

  7. Hi! Can i continue my MP2 account even when i stopped paying it eight months ago? That MP2 is supposed to mature in 2023. Or do i have to apply for a new MP2 account?

  8. Sir, what if mag hulog ako sa MP2 every 12th of the month, may makukuha na ba ako na dividend or the following year pa? Kailangan naka 1 year yung hulog bago mag karoon ng dividend?

    1. Hi, Alex. Pag-ibig generally announces the dividend first quarter of the following year. So it’s expected that the 2019 dividend rate is going to be declared by March or April of this year.

  9. Question. I have default Pag ibig Multi Purpose Loan, any idea kung magiging problem yun sa pag gamit ko ng MP2? Plan to save using Mp2 kasi

    1. Hi, Andrea. I haven’t heard of any requirement about existing Pag-ibig loan in connection with participating in MP2 savings program. To be sure, check your nearest Pag-ibig branch. Thanks.

  10. My Mp2 account will mature this April 2020. What if maglagay po ako ng amount dun for example in Feb or in March? Paano po kaya ang dividend calculation nun? 7.41% in 2019 kaya ang gagamitin sa buong amount? Wala po ako makitang article about maturity in the middle of the year e. Thanks po.

    1. Hi, Jennifer. Thanks for the good question. First question: The 7.41% is the 2018 dividend. They haven’t declared the rate for 2019, which is expected to be announced by the end of the first quarter (March or April). Second question: just like you, I haven’t also found any reference about dividends on amounts that are invested in the middle of the year. Please consider checking with Pag-ibig rep. Thanks.

  11. Hi, what you think is the best option if im planning to invest 200k? Should i put it all in one mp2 account or ill divide it in two and apply two mp2 account 100k each for best yield of earnings? Thank you in advance

    1. Hi, Anthony. Although that is one way to go about diversifying your funds, please check if that strategy is what’s best to reach the financial goals that are tied up to your investment. Cheers!

  12. If i have 50k sir for initial and 10k monthly sir ano po suggestion ninyo. Index fund ng First Metro or MP2 po? Goal ko sana for passive income in the future.
    Salamat po sa reply ninyo?

    1. Hi, Car. The only person who can answer your question is you. What is your risk profile? What are your financial goals? What investment options are you very familiar with? First Metro is a stock brokerage company where you can buy and sell stocks, which are aggressive and there is risk of capital loss with potential for growth. MP2 on the other hand is a conservative option with higher returns than savings account and time deposit. Weigh these factors carefully and come up with a decision. All the best.

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