13th Month Pay: What Will You Do With It?

13th Month Pay is 1/12th of the basic salary of an employee within a calendar year.

Under PD 851, a law enacted during the time of President Ferdinand Marcos, also known as

Such employees are entitled to the benefit regardless of their designation or employment status and irrespective of the method by which their wages are paid, provided that they have worked for at least 1 month during a calendar year.

Most people equate the 13th month’s pay to a Christmas bonus since it should be given before December 24 of each year.

But what will you do with it once you receive it?

Most of you might say that at last, I will now be able to buy that long-overdue smartphone of mine.

Some of you might say that you will put it in a savings account deposit so you may have something to lean on in case of emergency.

13th month pay

All of those mentioned above make sense but If I will receive my 13th-month pay today, I will spend it on the following:

  1. Pay My Debt
  2. Invest My Money In Mutual Fund
  3. Invest My Money In Stocks
  4. Invest My Money In UITF
  5. Put My Money In Time Deposit

Pay Your Debts First

Do you have an existing debt that you pay monthly like

  • Housing loan
  • Car loan
  • SSS loan
  • Credit card loan

then upon receiving your 13th month’s pay, pay these debts first.

Refrain from borrowing more money while your old debts are still outstanding or you have not yet fully paid.

Don’t get your debt out of control.

Invest Your Money In Mutual Funds

A Mutual Fund is an investment company that pools together money from different investors and invests them in various securities depending on the investment objective of the fund.

The mutual fund company issues shares to the public that represents their holdings in the fund.

How You Can earn from Mutual Funds?

If the NAVPS of the mutual fund you are invested in increases or appreciates, you can sell your mutual fund shares for a profit.

In the same way, if the NAVPS of the mutual fund you are invested in decreases or depreciates, you may realize a loss if you redeem.

Like any other investment instrument, mutual funds are best-held long-term, especially for mutual funds that have investment objectives of capital growth such as equity funds.

Invest Your Money In UITF

A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any acceptable currency, which is operated and administered by a trust entity and made available by participation.

Each UITF product is governed by a Declaration of Trust (or Plan Rules) which contains the investment objectives of the UITF as well as the mechanics for investing, operating, and administering the fund.

Most UITFs are considered medium to long-term investments. Clients considering investing in UITFs must have the financial resources to stay invested in them for a reasonable period of time in order to maximize earnings potential.

If the funds to be invested will be needed by the client in the immediate future, the UITFs may not be a suitable investment vehicle for such a client.

Put Your Money In Time Deposit

A savings account or certificate of deposit (CD) is held for a fixed term, with the understanding that the depositor can make a withdrawal only by giving notice.

A time deposit is an interest-bearing bank deposit that has a specified date of maturity.

Almost all Philippine banks offer these products.

Upon receiving your 13th month’s pay, please consider the above options to place your hard-earned money.

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