Have you been saving your savings to your bank the whole time? If yes, then your interest bearing money in the bank would have generated enough to keep up with the inflation right. However, in real world and the current inflation rate, your money eventually depreciates. It depreciates even faster since interests are taxable, further eroding the amount that would have add up to compounding of interest. Common interest rates for savings account on commercial banks is less than 1% quarterly given. 2016 inflation is 2%. Tax at 20% on interest. 

Worry no more, as the Pag-IBIG Fund or Pagtutulungan Ikaw Bangko Industriya at Gobyerno provides more option to alleviate poor interest rates on savings accounts. Pag-IBIG Fund provides various services such as affordable home loan and salary loan. They also offer calamity loan, and multipurpose loan. In 2010, they started providing the Modified Pag-IBIG MP2 savings program that has higher “dividend” rate which based on 2015 is 5.44% creditted annually. You will be able to sign up to the Pag-IBIG MP2 program if you are already an existing PagIBIG 1 member. The two programs are different since the Pag-IBIG 1 is a government mandated program for employed individuals with a minimum of two hundred peso monthly contribution with one hundred comming from the employer and the other one hundred from the member employee. You could not avail the MP2 without Pag-IBIG 1 and also Pag-IBIG 1 needs to be current to contribute to Mp2.


There will be a minimum monthly contribution of five hundred pesos and no maximum limit. I would suggest contibuting a good startup amount as the monthly contribution can vary. For example, you can contribute five thousand and next month another five thousand. If you dont have that much projected spending in the next five years, starting a good starting contribution will help propel the earned interest for compounding on the succeeding years. It makes sense since the reason you signed up is to save, and you would have a cash at hand or at bank for use in case of dire need. Pag-IBIG MP2 is lucrative compared to the interest provided by banks even with time deposit accounts which is less than 2% interest. This Pag-IBIG MP2 would be a great way to diversify your investment portfolio as your money really grows, and passively generate income.

Monthly Contributions
5 Years
10 Years
Php 500.00
34,484.17
79,553.59
1,000.00
68,968.33
159,107.18
1,500.00
103,452.50
238,660.78
2,000
137,936.66
318,214.37
3,000
206,905.00
477,321.56
4,000.00
275,873.32
636,428.74
5,000.00
344,841.65
795,535.92

Checking on the news articles this 2017 about the 2016 Pag-IBIG fund income is notable which could be found at http://www.philstar.com/business/2017/01/31/1667428/pag-ibig-marks-banner-year-2016.

By Kyle

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