Is it better to cash out Pag-IBIG MP2 dividends every year or keep them invested for the next 5 years?

The right MP2 dividend payout strategy depends on your financial goal. Each option has its own benefits that help meet certain goals.


Compounded savings option.

Withdrawal of full MP2 savings after five years works for investors who are saving up for a medium-term goal, like any of the following:

  • Dream wedding
  • Capital for a business
  • Down payment for a vehicle or property purchase
  • College education fund
  • An expensive foreign trip

The five-year maturity period is worth the wait because it lets you take advantage of the power of compound interest.


How does compound interest work to your advantage?

Your money will grow faster with compound interest. You earn interest not only on your original investment but also on the interest earned in the previous months.

In short, compound interest can be considered an “interest on interest.”

With your MP2 investment compounded annually and withdrawn after five years, you’ll earn a higher dividend than what you’d get if you chose to receive dividends every year.

For example, if you save Php 1,000 monthly into your MP2 account and opt to receive annual dividends, your total dividend payout will be Php 11,437.50 (with a 7.5% dividend rate). But if you wait for five years before claiming your MP2 savings, you’ll get a higher dividend of Php 12,532.28.

Check out the Pag-IBIG Fund’s sample computation below that shows the difference between the dividends earned through annual dividend payout vs. compounded savings.

pag ibig mp2 annual dividend payout sample

pag ibig mp2 compounded savings sample


Annual dividend payout option.

Even though the annual dividend payout strategy results in a lower total dividend, it’s perfect for people who need regular income to cover an annual expense, such as family trips, birthdays, and anniversaries.

Annual dividend payout also benefits retirees who need to preserve the value of their money while receiving an extra income each year as a supplement to their retirement fund.

However, you should be investing large amounts to reap the benefits of annual dividend payouts. If you’re saving only the minimum of Php 500 per month, you’ll receive minimal dividends ranging from only around Php 200 to Php 2,000.

Go back to the main article: How to Invest in Pag-IBIG MP2 Program: An Ultimate Guide