Voluntarily Contribution to Medisave

[teerance85]

Hi people here,

Just a show of hands, anybody here does a voluntary contribution to their CPF Medisave accounts?

I have personally thought of doing a 1k top up to Medisave account to reduce my taxes, though i dont really earn much. But im thinking whether i should as the 1k could come in handy any time though.

 

[IronMac]

Well, I have to do an involuntary contribution to Medisave...I'm self-employed.

Are you fully insured yet for medical expenses?

 

[teerance85]

Yeah, im fully insured for medical expenses. Bought a rider plan as well. But i thought of contributing to Medisave to make full use of the 4% returns, and yet at the same time, get tax deductible.

 

[lzydata]

Yes I have, VC to Medisave is my favourite tax relief option, and in the current environment a 4-5% risk-free rate is very attractive as an investment too.

But yes, you must be quite sure that you won't need the money because you cannot take it out. First build up your funds in accessible accounts for emergencies e.g. unemployment, medical and medium-term goals e.g. car, marriage.

 

[jinmuddy]

It is good but always remember its a one way thing. 4% or 40% interest, little chance u can touch the money again unless chiu fall sick.

Money in hand is liquid.

 

[IronMac]

Yeah, im fully insured for medical expenses. Bought a rider plan as well. But i thought of contributing to Medisave to make full use of the 4% returns, and yet at the same time, get tax deductible.

izy and jin make good points.

Another question then...what tax bracket are you in? If you're in a low tax bracket then it may not be worth it. You may be able to put your money to better use elsewhere.

For me, the 4% interest rate and tax deduction helps to cushion the blow of being forced to put money toward Medisave.