Like any investment, investing in Pag-IBIG MP2 savings program carries a certain level of risk. However, the risk associated with this investment is generally considered to be low.
The Pag-IBIG MP2 program is a government-backed savings scheme, which means that your money is guaranteed by the Philippine government.
The dividend rates offered by the program are also relatively stable and have historically been higher than the rates offered by traditional savings accounts.
Risk No. 1: Inflation
That being said, there are still some risks to consider. One risk is the possibility of inflation, which can erode the purchasing power of your savings over time.
What is inflation?
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
When inflation occurs, the purchasing power of a unit of currency decreases as the same amount of money can buy fewer goods and services.
Inflation is typically measured by calculating the percentage change in a price index, such as the Consumer Price Index (CPI), which tracks the prices of a basket of goods and services consumed by households.
Inflation can be caused by a variety of factors, including an increase in the money supply, rising production costs, supply chain disruptions, or changes in consumer demand.
High inflation can have negative effects on an economy, such as reducing consumer and investor confidence, making it harder for businesses to plan for the future, and increasing the cost of borrowing.
Risk No. 2: Low dividend rates
Another risk in investing in Pag-IBIG MP2 is the possibility that dividend rates may fall, which could reduce the amount of income you earn from your investment.
Good thing to note though, unlike other investments, the principal amount you invest in Pag-IBIG MP2 is generally safe since it is guaranteed by the Philippine government. This means that whatever happens in the economy, the Philippine government will return intact your savings after the maturity period.
It’s important to keep in mind that while the Pag-IBIG MP2 program may offer a higher return than traditional savings accounts, it is not a guaranteed investment (as far as the dividend income is concerned) and there is always some level of risk involved.
Hence, it’s a good idea to do your own research and consult with a financial advisor before making any investment decisions.