childrens money

[Yachtmaster]

Putting children's money in medisave just sounds dumb. And what's with the long essay saying nothing but 5%pa, not really a high number to lock 50 yrs for only a single use

 

[BBCWatcher]

Putting children's money in medisave just sounds dumb.

Why? Be specific.

And what's with the long essay saying nothing but 5%pa, not really a high number to lock 50 yrs for only a single use

Again, what's with the "50 years"? It's Medisave. It's every year, at $130/year minimum outflow.

Tell us what alternative you suggest that's yielding at least 5%, guaranteed.

 

[dork32]

Why differentiate what's your kid's and what's yours?

Sent from Sony D2533 using GAGT

if your kids are getting a bit older, they will want to have something of their own. it is like you do share your money with your dad and mom.

 

[dork32]

i have never topped up my cpf before. today my sa is at brs and ma is max.

i have used my ma when my wife give birth, my kids hospitalize, i go operation. my ma is still max.

i assume that my kids will not be too far off from me. so if i top up their ma, it will be a long long time before i see it.

 

[dork32]

yes i do agree you need medical coverage. i do have medical insurance other than medishield. because medishield is sucky. i had a small operation which cost a few hundred dollars. medisave covers 98% of the bill. medishield only covers very little.

why do we need so much medical coverage? i have a max ma, my wife already has ma. i still want to top up my kids ma? also i am paying all the medishield thru my account.

 

[dork32]

Why? Be specific.


Again, what's with the "50 years"? It's Medisave. It's every year, at $130/year minimum outflow.

Tell us what alternative you suggest that's yielding at least 5%, guaranteed.

risk free 5% is very good. the problem is it cannot be used for a long long time.

 

[dork32]

also it is only 4%. the extra 1% goes to sa.

 

[dork32]

No, I reject the notion that this is a game only rich people can pay. That's just wrong. Of course I'm assuming that the parent in question already has adequate emergency funds set aside. If not, yes, of course, that's priority one. But medical emergency funds can be and probably should be in the form of high yielding (minimum 5%) Medisave Account funds.

yes, it is the game of the rich. many of us do not have much spare cash left after our expenses.

afterall our salary contribution also goes there. our salary contribution is enough to max it. to many of us, it is putting what little of our spare cash into something that will afterall hit max.

 

[dork32]

Just to pick an example here of how this math works, let's suppose you are considering paying for the next 10 years of your children's MediShield Life premiums -- that's all. Let's assume the MediShield Life premium is $130 and won't increase over the next 10 years. (Probably unrealistic, but let's assume that for now.) If you just follow a "pay as you go" strategy, that's $1,300 per child, paid in annual installments of $130. Another choice is to deposit approximately $1,004 into each of their Medisave Accounts, and that will accomplish exactly the same thing. (Well, there's a bit of variability depending on when the MediShield Life premium is paid relative to when you make the deposit, but that $1,004 figure is what a financial calculator spits out.) That 5% interest generates about $296 over that decade, even as the Medisave Account gets $130/year drained from it. So $1,004 is enough to sustain a $130/year payout for 10 years.

to some of us, it paying 1004 cash vs paying 0 cash to get that insurance coverage.

 

[dork32]

OK, now let's suppose you do exactly the same thing, but you rely on a hypothetical fixed deposit that yields 2%. There is no such account, but let's just assume that. To accomplish exactly the same goal -- to get a 10 year payout of $130/year -- you would need to deposit about $1,168. That's $164 more, per child, because you're only getting 2% instead of 5%. A kid can still have a lot of fun with 164 extra dollars.

ssb gives more than 2%

my kids can have no fun if that $164 is in their ma or sa.

sorry i stand corrected. there are some people that find a lot of fun looking at how much money they have in their cpf sa and ma

 

[BBCWatcher]

ssb gives more than 2%

Yes, barely, if the whole bond is held to maturity. That's not the case with an annual drawdown scenario, as illustrated.

OK, so now I see we've accepted the fact that Medisave won't be a "50 year" proposition, at least at certain account levels. (As if that were a problem anyway. I'm still waiting to learn who plans for his/her child to live only to age 49 or 54, then drop dead, with no heirs he/she cares about.) And obviously the original poster doesn't require this $10,000 for immediate consumption. Otherwise the question never would have been asked about the ways to save that $10,000.

Congratulations to those of you who have more than enough savings for medical and retirement needs, but the data are clear: that's not most people, and that's not even CPF alone. So if someone is dangling a risk free minimum 5% yield when you save for either or both of those purposes, and you have a windfall you want to save, I recommend you do the math and figure out what makes financial sense. If you've got a child with a zero or low Medisave Account balance, why is this even a question? I'd grab that deal, to some extent anyway.

Along similar lines, you can contribute to a Child Development Account. The CDA is even better if you haven't grabbed all the match yet. There's an age limit, though, so this doesn't work for older children.

 

[dork32]

Yes, barely, if the whole bond is held to maturity. That's not the case with an annual drawdown scenario, as illustrated.

you are correct that if ssb is held to maturity then you get more than 2%. same thing, cpf interest is only realized if you reached 55. For a young kids, 10 years is not too bad. For them to reach 55......

 

[dork32]

Along similar lines, you can contribute to a Child Development Account. The CDA is even better if you haven't grabbed all the match yet. There's an age limit, though, so this doesn't work for older children.

cda is very different. you can use it for child care, doctor. which kid dont see doctor. the money there is very liquid. i stop contributing when my kids hit p1. i also ensure that they have close to 0 in their cda when they hit p1. cda is only useful when they hit poly or uni. from p1 to uni, i rather keep my cash liquid.

 

[dork32]

OK, so now I see we've accepted the fact that Medisave won't be a "50 year" proposition, at least at certain account levels. (As if that were a problem anyway. I'm still waiting to learn who plans for his/her child to live only to age 49 or 54, then drop dead, with no heirs he/she cares about.) And obviously the original poster doesn't require this $10,000 for immediate consumption. Otherwise the question never would have been asked about the ways to save that $10,000.

medisave is a 50 year deal for kids. like i said, i have never contributed anything into my ma. it has paid for all the hospitalization needs. why do i need to contribute more to it? 50 years is a damn long time. even our learned pap leaders do not make 50 years plan

 

[dork32]

it is not about retirement or medical care. some of us do struggle to make ends meet. we need money now. if i cant survive now, who cares about 50 years later.

why do old uncle and aunty go cpf and withdraw 5k when they have so little? 5k is a lot to them.

 

[dork32]

it is not about interest and mathematics.

it is about the 50 years wait.

 

[anfielder]

Just to pick an example here of how this math works, let's suppose you are considering paying for the next 10 years of your children's MediShield Life premiums -- that's all. Let's assume the MediShield Life premium is $130 and won't increase over the next 10 years. (Probably unrealistic, but let's assume that for now.) If you just follow a "pay as you go" strategy, that's $1,300 per child, paid in annual installments of $130. Another choice is to deposit approximately $1,004 into each of their Medisave Accounts, and that will accomplish exactly the same thing. (Well, there's a bit of variability depending on when the MediShield Life premium is paid relative to when you make the deposit, but that $1,004 figure is what a financial calculator spits out.) That 5% interest generates about $296 over that decade, even as the Medisave Account gets $130/year drained from it. So $1,004 is enough to sustain a $130/year payout for 10 years.

Each newborn SG citizen already gets $4k in the medisave account (wef 1 Jan 2015). So the Medishield premiums, additional vaccinations, etc are already covered for their first 10 years at least. No need for additional top up for that purpose.

 

[dork32]

how about this.

you put your money with me. i give you 20% per annum. i issue you a statement how much you have with me every year. but you can only withdraw it 500 years later.

 

[SBC]

I would say this thread or other few threads is about optimizing their returns for the ABOVE AVERAGE. By looking at the name of the TS, you will roughly know who they are.

With a few kids, I could barely save up on a monthly basis. Monthly cash flow will be key to many average guys.

Instead of continuing to get Life Policy for my young kids, I will top up cash to my younger kids to provide a head start for them. This could be done with my year end bonus or at later stage using my spare cash.

As a believer of financial diversity, I also top up to parent RA and my own SRS.

 

[Mecisteus]

yes i do agree you need medical coverage. i do have medical insurance other than medishield. because medishield is sucky. i had a small operation which cost a few hundred dollars. medisave covers 98% of the bill. medishield only covers very little.

why do we need so much medical coverage? i have a max ma, my wife already has ma. i still want to top up my kids ma? also i am paying all the medishield thru my account.

If parents already maxed out their MA, it is really not making sense to top up their children MA.

My children's money is in CIMB.