Many people like to use their Medisave savings, whenever they have the opportunity, e.g. to pay the hospital bills or buy expensive medical insurance.
I wish to make this suggestion: if you can afford to pay your hospital bill by cash, it is better to pay cash and keep your Medisave intact.
Why?
Your money in the Medisave account will earn interest at 4% plus 1% (for the first $20,000). This is much higher than the interest that you can earn on fixed deposit. It is better to keep your money in Medisave to earn a higher rate of interest.
When your Medisave exceeds the cap, it will be transferred into your special and ordinary account. It can be withdrawn when you reach age 55, if you wish to use the money. If not, you can keep it in the retirement account and earn 4% plus 1%.
Lesson: Keep your money in Medisave to earn a higher rate of interest. Do not withdraw it, unless you have no other way to pay your hospital bills. Do not overspend on your medical insurance.
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