Singapore Personal Finance Glossary

Plain-English definitions of the CPF, property, tax, investing, insurance, and banking terms every young adult in Singapore runs into. Browse all terms below.

• Central Provident Fund (CPF) — Singapore's mandatory social security savings scheme for citizens and permanent residents. Employees contribute 20% of monthly wages and…
• CPF Ordinary Account (OA) — The CPF account used for housing, education, investments, and insurance. Earns 2.5% guaranteed interest (with an extra 1% on the first…
• CPF Special Account (SA) — The CPF account earmarked for retirement income. Earns 4% guaranteed (with an extra 1% on first S$60,000 combined). Funds are merged into…
• CPF MediSave Account (MA) — The CPF account that pays for approved medical expenses, MediShield Life premiums, and CareShield Life. Earns the same 4% as Special…
• CPF Retirement Account (RA) — Account created at age 55, formed by transferring OA + SA up to your chosen Retirement Sum. It funds your CPF LIFE monthly payouts from…
• CPF LIFE — Singapore's national longevity-insurance scheme that pays a monthly income from age 65 for life. Three plans available — Standard…
• Full Retirement Sum (FRS) — The standard CPF Retirement Sum benchmark. Setting aside the FRS in your Retirement Account at age 55 gives you a moderate monthly CPF…
• Basic Retirement Sum (BRS) — Half of the FRS. The minimum you must keep in CPF at age 55 if you own a property in Singapore (with sufficient remaining lease).
• Enhanced Retirement Sum (ERS) — The maximum top-up amount allowed in your Retirement Account at 55, giving the highest CPF LIFE payout. From 2025 the ERS is 4× the BRS.
• RSTU (Retirement Sum Topping-Up Scheme) — Voluntary scheme that lets you top up your own or a family member's Special / Retirement Account. Cash top-ups qualify for income tax…
• Supplementary Retirement Scheme (SRS) — Voluntary tax-deferred retirement savings. Cash contributions reduce taxable income dollar-for-dollar (cap S$15,300/yr for Singaporeans,…
• MediShield Life — Compulsory national health insurance covering large hospital bills and selected outpatient treatments. Premiums are paid from MediSave.
• CareShield Life — Government long-term care insurance paying lifetime monthly cash payouts if you become severely disabled (cannot do ≥ 3 Activities of…
• HDB Concessionary Loan — Direct loan from HDB at a fixed rate of 2.6% (CPF OA rate + 0.1%). Max tenure 25 years, max LTV 75%. Only available to Singaporeans buying…
• Bank Loan (Home Loan) — Mortgage from a commercial bank. Rates are typically 3% – 4.5%, can be fixed or floating (SORA-pegged). Max tenure 30 years (private) or…
• Build-To-Order (BTO) — New HDB flats sold via balloted exercises, priced below resale market and taking ~3–4 years to complete. Subject to Minimum Occupation…
• Executive Condominium (EC) — Hybrid public-private housing developed by private developers but sold with HDB-style restrictions for the first 10 years. Becomes fully…
• Minimum Occupation Period (MOP) — Mandatory 5-year period (BTO and most resale HDB flats) during which owners must live in the flat before selling or renting out the whole…
• Buyer's Stamp Duty (BSD) — Tax payable by the property buyer to IRAS, on the higher of purchase price or market value. Progressive rates from 1% up to 6% (rates…
• Additional Buyer's Stamp Duty (ABSD) — Flat-rate tax on top of BSD that targets second and subsequent home purchases, PRs, foreigners (60%), and entities (65%). Latest revision…
• Seller's Stamp Duty (SSD) — Tax on selling residential property within 3 years of purchase — 12% in year 1, 8% in year 2, 4% in year 3, 0% thereafter (rates from Mar…
• Mortgage Servicing Ratio (MSR) — Cap on monthly mortgage instalments at 30% of gross monthly income. Applies only to HDB flats and Executive Condominiums (during MOP).
• Total Debt Servicing Ratio (TDSR) — Cap on total monthly debt repayments (mortgages + car loans + credit card minimums etc.) at 55% of gross monthly income. Applies to all…
• Loan-to-Value (LTV) — Maximum proportion of property price you can borrow. First housing loan LTV is 75% (private/HDB bank loan), or 80% for HDB concessionary…
• Cash-Over-Valuation (COV) — Amount paid in cash above HDB's valuation of a resale flat. Cannot be financed by CPF or loan — it's pure cash from buyer to seller.
• Option-to-Purchase (OTP) — Legal contract a seller grants a buyer that locks in the right to buy at a stated price within an option period (usually 14–21 days), in…
• Housing Protection Scheme (HPS) — Mortgage-reducing term insurance compulsory for HDB owners using CPF to pay their HDB loan. Pays off the outstanding HDB loan if the…
• Annual Value (AV) — IRAS's estimate of your property's gross annual rental, used to compute property tax. Owner-occupied properties enjoy concessionary rates…
• Property Tax — Annual tax payable on all property in Singapore. Owner-occupied residential rates are progressive (0% – 32% of AV); non-owner-occupied…
• Year of Assessment (YA) — The IRAS tax year. YA2024 covers income earned in calendar year 2023, filed and assessed in 2024. Tax bills are issued under the YA…
• Chargeable Income — Your total income minus all eligible deductions and tax reliefs. Tax is calculated on this number using progressive resident rates (or a…
• Tax Relief — Deductions from your assessable income — earned income relief, CPF contributions, NSman, parent / handicapped parent, course fees, SRS,…
• Marginal Tax Rate — The tax rate on the next dollar of income you earn. Singapore's resident rates are progressive: 0% / 2% / 3.5% / 7% / 11.5% / 15% … up to…
• Effective Tax Rate — Total tax paid divided by total chargeable income. Always lower than the marginal rate because lower bands are taxed at lower rates.
• Goods and Services Tax (GST) — Singapore's value-added tax on most goods and services. Currently 9% (from 1 Jan 2024). Foreign tourists can claim GST refunds via the…
• IRAS — Inland Revenue Authority of Singapore — the national tax collector. Administers income tax, GST, property tax, stamp duties, betting…
• Notice of Assessment (NOA) — IRAS's tax bill — confirms your chargeable income and tax payable for a given Year of Assessment. Required for many financial applications…
• Asset Allocation — How an investor divides money across asset classes — stocks, bonds, cash, alternatives. The single biggest driver of long-term portfolio…
• Diversification — Holding many uncorrelated investments to reduce the risk that any single one wrecks your returns. Often called 'the only free lunch in…
• Dollar-Cost Averaging (DCA) — Investing a fixed dollar amount at regular intervals regardless of price. Smooths out entry timing risk; typically used with index funds…
• Lump-Sum Investing — Deploying a one-off pot of capital all at once. Historically beats DCA ~⅔ of the time in rising markets, but exposes you to immediate…
• Compounding — Earning returns on both your original capital and the returns it has already generated. The longer the runway, the more dramatic the…
• Rule of 72 — Quick mental math for doubling time: 72 ÷ annual return = years to double. At 7% returns, money doubles every ~10 years.
• CAGR (Compound Annual Growth Rate) — The constant annual rate that would take an investment from its starting value to its ending value over a given period. The 'right' way to…
• Annualised Return — Return scaled to a 12-month rate, allowing fair comparison of investments with different holding periods.
• Volatility — How much an asset's price swings around its average. Usually measured by standard deviation of returns. Higher volatility = wider possible…
• Sharpe Ratio — Risk-adjusted return: (portfolio return − risk-free rate) ÷ volatility. Higher is better. A long-run Sharpe of 0.5 – 1.0 is solid; above…
• ETF (Exchange-Traded Fund) — A basket of securities (stocks, bonds, commodities) that trades on an exchange like a single stock. Low-cost, transparent, and…
• Index Fund — A fund that mechanically tracks a market index (e.g. S&P 500, MSCI World). No active manager picking stocks — fees are a fraction of a…
• Mutual Fund / Unit Trust — Pooled investment fund managed by a professional, valued daily at NAV. In Singapore, unit trusts often carry 0.5%–2% expense ratios +…
• REIT (Real Estate Investment Trust) — A trust that owns and operates income-producing property and is required to distribute most of its income to unit holders. Singapore is…
• Robo-Advisor — An automated investment platform that allocates your money across a portfolio of ETFs based on a risk profile. Singapore examples include…
• Active vs Passive Investing — Active investors try to beat the market through stock picking or timing. Passive investors buy the market via index funds. Net of fees,…
• Expense Ratio — Annual management fee charged by a fund, expressed as a % of assets. A 1% expense ratio on a 7% gross return takes ~25% of your final…
• Net Asset Value (NAV) — Per-unit price of a fund = (total assets − liabilities) ÷ units in issue. Unit trusts price once a day at NAV. ETFs trade intra-day but…
• Dividend — Portion of company profit distributed to shareholders. Singapore equities are tax-exempt for dividends (one-tier system). Foreign…
• P/E Ratio (Price-to-Earnings) — Share price ÷ earnings per share. Rough gauge of how expensive a stock is relative to its profits. STI has historically traded at 10×–15×…
• Singapore Savings Bond (SSB) — Government-issued retail bond redeemable any month with no penalty. Step-up coupons over 10 years. Backed by full faith of the Singapore…
• Treasury Bill (T-Bill) — Short-term government debt maturing in 6 or 12 months, issued at a discount. CPF OA and SRS funds can be used to buy T-bills.
• Fixed Deposit (FD) — Bank deposit locked for a fixed tenure (1m – 3yrs) in exchange for a higher rate than savings accounts. Protected up to S$100k per bank by…
• Endowment Plan — Insurance product that combines a savings element with life cover. Returns are a mix of guaranteed and non-guaranteed; pays out at…
• Investment-Linked Policy (ILP) — Insurance product where premiums buy units in investment funds, with a chunk siphoned off to pay for life cover. Front-loaded fees mean…
• SDIC (Singapore Deposit Insurance Corporation) — Government-backed deposit insurance scheme. Insures S$100,000 of bank deposits per depositor per bank — including current, savings, fixed…
• Central Depository (CDP) — SGX's clearing and depository arm. CDP accounts hold Singapore-listed securities in your own name (vs broker-custodied, where shares are…
• Bull Market — Sustained period of rising prices, typically 20%+ from a recent low. Investor sentiment is optimistic and risk appetite high.
• Bear Market — Sustained decline of 20%+ from recent highs. Often triggered by recession, rate hikes, or shocks. Median bear market lasts ~9 months.
• Term Life Insurance — Pure life cover for a fixed term (10/20/30 years or to age X). No cash value — premiums are low. Pays out only if you die within the term.
• Whole Life Insurance — Lifetime life cover with a savings component that builds cash value. Premiums are far higher than term, in exchange for guaranteed…
• Critical Illness Cover (CI) — Lump sum payable upon diagnosis of a defined critical illness (cancer, heart attack, stroke, etc.). Industry covers 37 standard CIs.
• Early Critical Illness (ECI) — Expanded CI cover paying out at earlier or less severe stages of an illness. Premiums are materially higher than standard CI for the same…
• Total Permanent Disability (TPD) — Payout triggered when the insured can no longer perform any occupation or specified Activities of Daily Living. Usually bundled into life…
• Integrated Shield Plan (IP) — MediShield Life + private add-on covering Class A wards or private hospitals. Riders can further reduce co-payments and deductibles.
• Sum Assured — The contractual payout amount on a successful claim. The most important number on any policy.
• Premium — Amount paid (monthly, quarterly, or annually) to keep an insurance policy in force.
• Rider — Optional add-on that expands a base policy's coverage — e.g. CI rider on a term policy, or as-charged rider on an Integrated Shield Plan.
• Deductible — Fixed amount you pay out-of-pocket before insurance starts covering costs. Common in hospitalisation and motor policies.
• Co-Insurance — Percentage of the bill (after deductible) that you still pay. MediShield Life co-insurance is typically 10%.
• Free Look Period — Mandatory 14-day window (in Singapore) after a new life policy is issued, during which you can cancel for a full refund minus medicals.
• Participating Policy — Policy whose returns depend on bonuses (reversionary and terminal) declared by the insurer's participating fund. Returns are partly…
• Reversionary Bonus — Annual bonus declared on participating policies. Once declared, it forms part of the guaranteed cash value of the policy.
• Lapse — When a policy is cancelled by the insurer because premiums went unpaid past the grace period. Term lapses leave you uninsured; whole-life…
• Effective Interest Rate (EIR) — True annual cost of a loan including compounding and most fees. Always higher than the advertised flat rate. Singapore lenders are…
• SORA (Singapore Overnight Rate Average) — Volume-weighted average of overnight unsecured interbank SGD lending. Replaced SIBOR as the benchmark for floating-rate home loans in…
• SIBOR (Singapore Interbank Offered Rate) — Legacy benchmark interest rate at which banks lent each other in SGD. Discontinued at end-2024 — all SIBOR loans converted to SORA.
• Refinancing — Replacing an existing home loan with a new one — usually for a lower rate or different lock-in. In Singapore you typically refinance every…
• Secured Loan — Loan backed by collateral (property, deposits). Lower rates because the lender can seize the asset on default. Mortgages and car loans are…
• Unsecured Loan — Loan with no collateral — approval and rate depend on credit score and income. Credit cards and personal loans are unsecured.
• Balance Transfer — Moving credit card debt to a card or installment plan with a lower (often 0%) promo rate for a fixed period. Useful for paying down…
• Net Worth — Total assets minus total liabilities. The single best snapshot of financial health.
• Asset — Anything with monetary value: cash, investments, property, vehicles, valuables. Productive assets generate income; consumption assets don't.
• Liability — Anything you owe — mortgages, car loans, credit card balances, student loans. Bad liabilities fund consumption; arguably-good liabilities…
• Savings Rate — Percentage of take-home income you save and invest each month. Higher savings rate = faster path to financial independence. 20% is…
• 50/30/20 Rule — Budget framework: 50% of take-home on needs, 30% on wants, 20% on savings and debt repayment. A starting point, not a law.
• FIRE (Financial Independence, Retire Early) — Movement built on extreme savings rates and disciplined investing, aiming to retire decades earlier than the conventional age. FI number =…
• Safe Withdrawal Rate (SWR) — Annual % you can withdraw from a portfolio with high probability of never running out. The Trinity Study popularised 4%; conservative…
• Emergency Fund — Cash buffer covering 3–6 months of essential expenses, held in instant-access savings. The foundation that lets every other financial…
• Inflation — General rise in prices over time, which reduces the purchasing power of money. Singapore CPI has averaged ~2%–3% over the long run.
• Recession — Sustained decline in economic activity, conventionally defined as two consecutive quarters of negative GDP growth.
• Time Value of Money (TVM) — A dollar today is worth more than a dollar tomorrow because of its earning potential. Underpins compound interest, present value, future…
• Opportunity Cost — The value of the next-best alternative you give up when making a choice. Spending S$1,000 now means giving up its future-value at your…
• Lifestyle Inflation — Tendency to spend more as income rises, keeping savings rate flat. The silent killer of wealth-building plans.
• Lasting Power of Attorney (LPA) — Legal document appointing someone (a 'donee') to make personal and financial decisions on your behalf if you lose mental capacity.
• Estate Planning — Arranging how your assets and obligations will be handled during incapacity and after death — wills, CPF nominations, insurance…
• CPF Nomination — Form specifying who receives your CPF savings on death. Without one, distribution follows intestacy rules and goes through Public Trustee…
• Will — Legal document directing how non-CPF, non-insurance-nominated assets are distributed on death. CPF and nominated insurance pass outside…
• Cryptocurrency — Digital asset using cryptography and a distributed ledger (blockchain). Examples: Bitcoin, Ethereum. MAS regulates digital payment token…
• Blockchain — Distributed, append-only ledger maintained by a peer-to-peer network. Each block cryptographically references the previous one, making…
• Stablecoin — Cryptocurrency whose value is pegged to a reference asset, usually USD. Used as on/off-ramps between fiat and crypto. Reserve quality…
• Certificate of Entitlement (COE) — A licence that gives you the right to own and use a vehicle in Singapore for 10 years, bid for in twice-monthly LTA bidding exercises.…
• Additional Registration Fee (ARF) — A tiered tax payable to LTA when registering a vehicle in Singapore, calculated as a percentage of the car's Open Market Value (OMV). It…
• Open Market Value (OMV) — The base value Singapore Customs assesses for an imported vehicle, covering its purchase price, freight, insurance, and other costs of…
• CPF Investment Scheme (CPFIS) — A scheme that lets you invest part of your CPF savings (above the minimum balances you must keep) in approved products such as unit…
• CPF Accrued Interest — The interest your CPF Ordinary Account would have earned if you had not withdrawn it to pay for property. When you sell the property, you…
• Enhanced CPF Housing Grant (EHG) — A means-tested grant that helps lower- and middle-income Singaporean households buy their first HDB flat, whether new or resale. The…
• Property Cooling Measures — Government policies introduced to keep the Singapore property market stable and affordable by curbing speculative or excessive borrowing.…
• Singapore Government Securities (SGS) Bond — Tradable bonds issued by the Singapore government that pay a fixed coupon twice a year and return the principal at maturity, with tenures…
• Property Decoupling — A strategy where one co-owner of a property buys out the other's share so that one owner no longer counts as a property owner, usually to…
• GST Voucher (GSTV) — A permanent government scheme that helps lower- and middle-income Singaporeans offset the cost of GST. It comes in components such as cash…
• CDC Vouchers — Vouchers issued to Singaporean households through the Community Development Councils that can be spent at participating heartland…
• SGFinDex — Singapore's national digital infrastructure that lets you consolidate your financial information, such as bank accounts, CPF, HDB loan,…