As freelancers we enjoy the freedom of working from anywhere, having some extra time doing what’s more important in our lives.
Enjoying the perks is awesome but we also need to watch out for uncertainties that may slow us down in reaching our personal goals. It might be losing a client, acquiring debts, health challenges, or natural and man-made calamities.
But it’s really our responsibility to prepare for these uncertainties. There are several ways such as not wasting all our hard-earned income, living within our means, and of course the magic word - S-A-V-I-N-G.
There are some questions that may pop into your head such as ... “Is there a way to save money but earn at the same time, wherein you won’t be tempted to withdraw anytime soon? Is there a not-so-complicated investment that I can put my money on without being scammed?” Based on my own experience, I would say, try the Pag-ibig MP2 Savings!
We all know that Pag-ibig Fund is a government controlled corporation which aims to provide affordable shelter financing for all Filipino workers and help its members to save more for their future.
In January 2010, Pag-ibig Fund launched another type of voluntary savings program for its active members. The great thing about this is you can earn higher dividends than the regular Pag-IBIG Savings Program which is also known as Pag-ibig MP1 (wherein you’ll be a mandatory member if you are formally employed). This new savings program is known as Pag-ibig MP2.
In Pag-ibig MP2 your dividends are derived from no less than 70% of the Pag-IBIG Fund’s annual net income. And according to its government site the average MP2 dividend rate in the past three years (2016-2018) is at 7.65%.
Whoa, 7.65% is not bad compared to the 0-4% interest rate that you’ll get if you put your money in a bank or time deposit.
Almost everyone! If you’re a Filipino who is at least 18 years old and above, whether you are currently employed or unemployed, OFW, housewife, student, or a retired individual you are welcome to join this program. But of course, you have to register first to become an Active Pag-ibig Member with 1 contribution in the last 6 months.
And the good thing about this, you just need an initial deposit of P500! But if you want to put more, that would be great! The more money you give, the more you receive after its 5-year maturity period (which is shorter than MP1 that has a maturity period ranging from 10-20 years).
I would strongly suggest that you let your money sit in with a 5-year maturity period so that you can withdraw every cent of it together with its compounded earnings. It’s better, compared to withdrawing it annually, wherein you can only get the earnings (which is not compounded anymore) but your capital will stay in the savings until the maturity period ends.
Your MP2 dividends are credited to your savings or checking account enrolled in any of Pag-IBIG Fund accredited banks. These are: Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP). For OFW members who have chosen annual dividend payout but have no Philippine bank account, MP2 Dividends shall be released to them in the form of checks.
Okay, I’m becoming boring right now so let’s get into other interesting stuff. What are the advantages of the Pag-ibig MP2 Savings program for a freelancer like me.
After getting to know this government type of investment via research and listening to the financial gurus like Marvin Germo and Vince Rapisura, I came up with the Top 5 Reasons Why Pag-ibig MP2 Savings is Beneficial to Freelancers.
1. It’s Hassle-free.
From enrollment to payment, your contribution can all be done at the comforts of your home. How amazing is that?
No need to commute going to your nearest Pag-ibig branch office and no need to ask your client if you can change your working schedule or move the deadline of your task for that day, so you can have the time to invest and be a member of this program. The whole process is easy-peasy and hassle-free!
If you have 5-10 minutes, you can definitely start your investing journey with Pag-ibig MP2. Allow me to guide you on how to do this. Let’s start with the first step - Enrollment.
Depositing your Contributions via Gcash
When you have chosen “THRU ANY ACCREDITED PAG-IBIG COLLECTIONS” as your mode of payment, you can definitely deposit money via Gcash. Sounds exciting? Here’s how you do it.
Congratulations! You’re now a certified member of the Modified Pag-ibig II Program.
2. No Tax Deduction At All
Yes, you heard it right. Pag-ibig MP2 Savings is TAX FREE! Unlike in stocks, whenever you do a buy and sell transaction there would be transaction fees and other taxes that you need to pay for. The same for bonds wherein there is a withholding tax for the interest you’ll receive on your investment. But in the Pag-ibig MP2 investment, you’ll get your capital + the interest in full, without any deductions at all. This is a goldmine for freelancers like us!
3. It’s Guaranteed Safe by the Philippine Government
You'll never lose money in this kind of investment since your capital is guaranteed by the government. It's by law that the government should give back dividends to its members. But please keep in mind the dividend rate that you'll receive really depends on the performance of the fund.
Your patience is really important for Pag-ibig MP2 savings, because as you know, the economy is fluctuating. There are times when your dividends will grow a lot, but there might be times the increase of the dividend rate is just so-so. One main cause is the effect of the current pandemic in the standing of every business in our country, resulting in fewer Filipinos having the opportunity to take a loan or pay Pag-ibig contributions.
But anything can happen in 5 years. There’s no harm in giving it a shot and allowing your investment to grow. And besides as freelancers we have mastered the art of waiting (especially waiting for the right client referred as “the one”) and growing as a person, so I believe patience is really a virtue for us. Do you agree?
4. Does not give you monthly obligations
As freelancers we have a lot of responsibilities and obligations that we need to tend to everyday. As you start your day, you need to check your to-do list, prioritize the tasks or deliverables that need to be submitted to your clients but still you need to make sure that your house is in order, you’re still giving time to your family, eating, and having enough sleep.
When you are swamped with a lot of things to do, it’s understandable that you may forget to complete other stuff on your checklist, just like paying the bills, insurance or fees for your child’s online classes. I admit I’m one of those forgetful people, but the great thing about Pag-ibig MP2 Savings is its flexibility in depositing your funds. You can put money in the program on a weekly, monthly or yearly basis. It doesn’t matter if you’ll put P1,000, P10,000 or P1,000,000 as long as it is not less than P500. The possibility of saving and earning more is really in your power. As long as you’re a member and you have provided the minimum amount on your account, you don’t need to worry about any monthly payment obligations.
5. You’ll Definitely Earn, Even Without Doing Anything
Most freelancers have mastered time management and multitasking. We keep improving our skills and knowledge related to our chosen niche. As a result, we may have minimal time to study other stuff like the behavior of financial markets, understand the charts or price actions and build strategies to increase your investment. If you are a type of investor who is not that aggressive and would want to put your hard-earned money in a safer savings but gives a fairly impressive gain, I think Pag-ibig MP2 is the best one out there. Please take a look at my basic computation below, that shows how the compounded dividend increases your savings.
And yes, you’ll definitely earn, even without doing anything after you’ve completed these two important things: 1st is to deposit money as much as you can (if possible) and then wait after 5 years until you can withdraw your capital including its compounded dividend. That’s all there is to it!
I hope my top 5 reasons for considering Pag-ibig Mp2 Savings has enlightened you about it and convinced you to save money to prepare for your future. You may not see it as the best investment out there, but if you are like me who wants to grow your money without worrying about the possibility of losing it because of a lot of risks, then I highly recommend that you give this government program a chance. We may all have different financial goals and plans as we get older, but the important thing is we should know how to manage our money and achieve financial freedom someday.
Want to earn a steady income as a freelancer so you too can start saving? Check out the VA Bootcamp Courses. They're perfect for those who want to learn all the skills and fool-proof strategies needed in order to become a full-on freelancer. That's also where I started.