The rule of 72 is a simple mathematical formula that can be used to estimate the time it will take for an investment to double in value based on its interest rate.
To use the rule of 72 for your Pag-IBIG MP2 investment, you can follow these steps:
Step 1. Determine Pag-IBIG MP2’s dividend rate
This rate may vary from year to year, so you will need to check the current rate on the Pag-IBIG website or by contacting a Pag-IBIG representative. However, for purposes of this article, we use the average dividend rate for the last 12 years (i.e., 2011 to 2022) which is 6.00%.
Step 2. Divide the number 72 by the dividend rate
For example, if Pag-IBIG MP2’s dividend rate is 6%, you would divide 72 by 6 to get 12.
The result of this calculation (12 in the example) represents the number of years it would take for your Pag-IBIG MP2 investment to double in value at the given dividend rate.
For instance, if you have invested in 2011 P100,000 in Pag-IBIG MP2 that earns a 6% dividend rate, you can estimate that your investment would double to P200,000 in 2022 (approximately 12 years) using the rule of 72.
Double your money every year thereafter
Say Pag-IBIG MP2 maintains its dividend rate at 6% every year and say you invested P100,000 every year, you will double your money after 12 years and every year thereafter. That’s the power of rule of 72!
However, it’s important to keep in mind that the rule of 72 is just an estimation and does not take into account factors like inflation, taxes, and changes in interest rates.
Additionally, past performance is not a guarantee of future results, so it’s always a good idea to consult with a financial advisor and carefully consider your investment options before making any decisions.
