Where To Invest Your 13th Month Pay?


Although the holidays are the most wonderful time of the year, there is one thing that everyone looks forward to during this time, but there is also the question, “Where to invest your 13th month pay?” ”

Consider what you need before you spend your money. Avoid impulse purchases and don’t waste your 13th month pay on goods you won’t need. Adulting entails being honest about your expenses, your goals, and the life you have ahead of you. Investing your 13th month pay is one of the best things you can do with it.

Make the best use of your 13th month pay. Continue reading to learn more about your 13th month pay and get some suggestions for where to invest your 13th month pay.

History Of The 13th Month Pay 

The 13th month pay was instituted under the presidency of former Philippine President Ferdinand Marcos. Through Presidential Decree 851, the 13th-month pay was first optimized to address the problem of low-wage workers’ minimum wage at the time.

Employees earning less than ₱1,000 per month were not eligible for the 13th month salary at the time. This changed in 1986, when former President Corazon Aquino signed Memorandum Order 28 requiring all rank-and-file personnel to receive 13th month pay.

Where To Invest Your 13th Month Pay?

1. Unit Investment Trust Funds (UITFs)

You can begin investing in UITFs for as low as ₱1,000. UITFs is a wise choice for where to invest your 13th month pay, and if you’re just getting started, consider these investments.

A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any other appropriate currency, operated and administered by a trust entity, and available through participation. A Declaration of Trust (or Plan Rules) governs each UITF product and provides the UITF’s investment objectives as well as the mechanics for investing, operating, and administering the fund.

The majority of UITFs are regarded as medium to long-term investments. In order to optimize earnings potentials, clients considering investing in UITFs must have the financial capacity to continue involved in them for a suitable period of time. If the funds to be invested are required by the customer in the near future, UITFs may not be a viable investment vehicle.

2. Mutual Funds

A mutual fund is a pool of money that is professionally managed by a Fund Manager. Mutual funds, like UITFs, can be invested for as low as ₱1,000.

Mutual funds are trusts that collect money from a group of participants with similar financial goals and invest it in stocks, bonds, money market instruments, and/or other securities. After deducting appropriate expenses and taxes, the income / profits generated by this collective investment are dispersed proportionately among the investors by determining a scheme’s “Net Asset Value” or NAV. Simply explained, a Mutual Fund is a collection of money contributed by a large number of people.

3. Pag-IBIG MP2

A regular savings from Pag-IBIG is different from the MP2. The former does not promise any returns and is only for the purpose of determining your house loan amount in the long run, and is returned to you in the form of a regular loan with interest. 

Pag-IBIG MP2 is a short- to medium-term investment that allows you to access your funds as early as 5 years after maturity, whereas regular Pag-IBIG is locked in for at least 10 years. If you want to invest on a monthly basis, the minimum monthly amount is ₱500. 

Unlike the ordinary Pag-IBIG program, which is mandatory for all employed and self-employed Filipinos, the MP2 is a voluntary program that offers a larger earning potential than a regular savings account. Pag-IBIG invests your savings and earns dividends on it, just like investing in mutual funds. If you’re thinking about where to invest your 13th month pay that is as low as ₱500, Pag-IBIG MP2 is a good choice. 

4. SSS PESO Fund

The PESO (Personal Equity and Savings Option) Fund allows you to enjoy your post-retirement life by enabling you to pay for everyday expenses, pursue a hobby, and be prepared for emergencies. It allows you to start saving for the future as soon as possible, even if just in small amounts.

PESO Fund is technically a provident fund in which some SSS members voluntarily invest. It is a risk-free investment strategy that employs compound interest to provide investors with assured earnings and tax-free benefits. The minimum monthly investment for the PESO Fund is ₱1,000, which is still affordable.

Consider the PESO Fund to be an enhancement to your regular SSS program. It allows you to save more than the regular SSS program permits. As a result, the more you invest in your early years, the greater the benefits you will gain in the future.

5. Real estate investments

If you’re having a hard time choosing where to invest your 13th month pay, real estate is a best one. Real estate investment in the Philippines is a wise decision, especially since the business is growing and paying off handsomely. Furthermore, because of the country’s steady economy and continued expansion, real estate investments are an excellent way to build wealth. 

Here are some of the reasons why real estate investments are a suitable place to invest your 13th month pay. 

1. Excellent inflation protection

Money supply growth has fueled rapidly rising inflation, which is reducing the purchasing power of your money. Inflation is frequently regarded as a type of hidden taxation, so-called because we do not see the money leaving our pockets.

Real estate prices track increases in the money supply, inflation rate, and wage growth very well over extended periods of time, making it an ideal asset class for protecting against inflation. 

2. Security

Real estate is an excellent investment. When you invest in real estate, you either become a direct or indirect owner of the property, or you acquire a mortgage as collateral for your loan when you lend money to real estate developers. In the worst-case scenario, the collateral can be liquidated to obtain the funds needed to repay your loan.

3. Excellent return

Diversified long-term real estate investments offer high returns that are comparable to or exceed those of traditional asset types. Short-term real estate investments, such as stands, flats, and cluster developments, can give even higher returns.

4. Low volatility

While long-term equity profits are appealing, stock markets are extremely volatile. Real estate is a much more solid asset sector, generating rental income even during a recession. The rationale for real estate’s lower volatility is because buying and selling real estate takes substantially more time and money than buying and selling stocks, therefore the number of transactions is significantly lower and the deals are more cautious.

5. Real estate is more transparent than financial assets.

Understanding the true value of the listed firm may be difficult, requiring extensive industry expertise and financial analysis skills. Real estate investment, on the other hand, is typically very transparent, and it is reasonably simple to analyze the cost and predicted income of a real estate development project. The same is true for rental properties where the lease revenue and costs of ownership and maintenance are not overly complex.

As a whole, real estate is the best choice among the options discussed above for where to invest your 13th month pay. BRIA House and Lot are considered to be one of the best investments because they offer a lot of good returns for you.