Education Plan or MP2: Which Is The Better Savings Program?

The parenting journey is filled with countless decisions to make, from children's growth to financial responsibilities. This is where the Smart Parenting Village, a community of over 100,000 Filipino parents, steps in to provide a safe and supportive space.

At Smart Parenting Village, parents come together to share their experiences, offer advice, and open their hearts to one another. Recently, the community has become a valuable resource for a parent seeking financial guidance, particularly when it comes to saving up for their children's education.

In one anonymous post, a parent expressed the common dilemma faced by many: How does one save up for their kids’ tuition fund, especially in this economy? The post asks, "Worth it po bang mag-invest ng educational plan sa mga insurance company? I would like to seek insights from my co-parents rather than sa financial advisor. Baka kasi they won’t give us the ups and downs of investing sa educational plan, just for the sake of sales."

The parent further shared, "I'm still contemplating whether to go for the educational plan or save up in MP2 (Pag-IBIG Fund's Modified Pag-IBIG 2 savings program). By the way, my son is 3 years old."

This query resonated with some parents who are also navigating the tricky path of securing their children's future. Below are some answers the other parents in the community shared.

Education Plan Through Insurance Companies or MP2: Parents Weigh In

Here are the direct responses from parents (some edited for spelling, punctuation and brevity).

Answer: MP2

“Go for MP2. Mas ideal ‘yan if you are low risk investor. Tsaka ka na mag explore sa mga insurances if you have both MP2 and bank time deposit. Then you can put up another insurance sa kids mo with investment.” - Jo-an L.

“I understand how you feel. I am a Financial Advisor and also a mom of two young kids. We moms just wants to make sure we are able to provide the best for our kids. And you are right you can invest in MP2 for educ fund of your child since it is fairly safe and tax free. You also consider time deposits or bonds since long term naman goal natin. I would only recommend insurance for educationa plan as a safety net. In case something happens sa atin as parents, sigurado tayo meron pa rin educational fund mare-receive anak natin.”  - Jen L.

“Hindi siya worth it (educational plan via insurance companies). Insurance agent na ako at totoo sinasabi ko. Mas better na mayroong insurance parents. At mas maganda na may health insurance naman si baby. Go for MP2, mas malaki ang returns.” - Paul V.

“MP2 mas okay, less risk.” - Rose A.

“Better invest in MP2 and real estate. Para ‘pag nag-college na anak mo.. Pwd mo n paupahan or ibenta and real estate.” - Rosel V.

Answer: BOTH!

“It's good to diversify. Get MP2, Get also (life) insurance because if you'll be taken out of the picture, who will support your child's education? Insurance is a ready money.” - June E.

“If the budget permits; get both. While guaranteed ang MP2; tayo bilang tao ang hindi guaranteed. That's where the life insurance comes in. But mas maigi to get both of even invest pa in other places. Hindi lang isa.” - Rann M.

“Ako po ay FA (financial advisor) pero ang sasabihin ko po ay no bias. Mayroon pong insurance na Guaranteed and Not Guaranteed ang benefits. For the Guaranteed - dahil guaranteed, medyo pricey ito compared sa not guaranteed. For the Not Guaranteed - dito pumapasok ‘yung VUL - insurance with investment. Since its investment (stocks, bonds or mix), kaya NOT Guaranteed magiging return. Bakit may Insurance pang kasama? Kasi if we have all the time in the world, we can invest and save up for our children’s college education BUT kung hindi na natin abutin yun - the life insurance will provide lump sum money that the family can use for education.

Pros - flexible payment terms, FORCED savings, may safety net through the insurance

Cons - NOT guaranteed, affected by market/economic issues, lifetime charges for the insurance. Ok naman po ang MP2 for education kasi safe yung fund/capital mo basta save regularly. But please get a life insurance. Kasi as long as you are living, maiipon mo yung fund na target mo for your child’s education. But in case of untimely death, your child will just get whatever is in your MP2. Pero kung may life insurance ka, it creates money na hindi mo pa naiipon.” - Villa A.

“We have MP2 and insurance (VUL) for educ funder and bank saving para sa anak namin. Good option si MP2 since you can save kung magkano yung kaya mo i-spare month on month, pwede taasan ‘pag kaya. Then, okay din naman yung annual dividend niya, averaging to 7%. Bank savings naman can be used for emergencies since ito yung easiest to access. While si VUL naman is safety net mo in case something happens to you, you can rest assured na may matatanggap ang anak mo to fund his education in the future. You can start kung saan ka more comfortable and confident. Then, you can add the others ‘pag kaya na. All you have to do is start somewhere. Assess your needs, priorities and capacity din.” - Bervelyn D.

What's the Best Way to Save for Your Child's Education?

When it comes to securing your child's educational future, there is no one-size-fits-all solution. The formula for financial preparedness is highly personalized, taking into account your own unique circumstances, goals, and risk tolerance.

As our anonymous parent from the Smart Parenting Village community rightly pointed out, there are several options to consider - from educational plans offered by insurance companies to the Pag-IBIG Fund's Modified Pag-IBIG 2 (MP2) savings program. The key is to carefully assess which approach aligns best with your financial capacity and long-term objectives.

Our Smart Parenting advice would start with Step 1: Step back muna moms and dads, then take a holistic view of your situation. Evaluate your current budget, projected expenses, and savings potential. Then, explore the pros and cons of the various investment or savings programs available. It’s smart not to put your money in one basket, but for others, diversifying finances is not as simple as their circumstance may dictate.

There is no, one right answer. The best choice is the one that empowers you to consistently contribute to your child's education fund, while also accounting for your other financial commitments and priorities. Don't be afraid to seek guidance from financial experts, but also do your due diligence.

Remember, building a secure financial future for your child is a marathon, not a sprint.