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.
• CPF Ordinary Account (OA): The CPF account used for housing, education, investments, and insurance.
• CPF Special Account (SA): The CPF account earmarked for retirement income. Earns 4% guaranteed (with an extra 1% on first S$60,000 combined).
• CPF MediSave Account (MA): The CPF account that pays for approved medical expenses, MediShield Life premiums, and CareShield Life.
• CPF Retirement Account (RA): Account created at age 55, formed by transferring OA + SA up to your chosen Retirement Sum.
• CPF LIFE: Singapore's national longevity-insurance scheme that pays a monthly income from age 65 for life.
• 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.
• Supplementary Retirement Scheme (SRS): Voluntary tax-deferred retirement savings. Cash contributions reduce taxable income dollar-for-dollar.
• 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%.
• Bank Loan (Home Loan): Mortgage from a commercial bank. Rates are typically 3% to 4.5%, can be fixed or floating (SORA-pegged).
• Build-To-Order (BTO): New HDB flats sold via balloted exercises, priced below resale market and taking ~3–4 years to complete.
• Executive Condominium (EC): Hybrid public-private housing developed by private developers but sold with HDB-style restrictions for the first 10 years.
• 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...
• Buyer's Stamp Duty (BSD): Tax payable by the property buyer to IRAS, on the higher of purchase price or market value.
• 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%).
• 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.
• 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.
• Loan-to-Value (LTV): Maximum proportion of property price you can borrow. First housing loan LTV is 75% (private/HDB bank loan).
• 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).
• Housing Protection Scheme (HPS): Mortgage-reducing term insurance compulsory for HDB owners using CPF to pay their HDB loan.
• Annual Value (AV): IRAS's estimate of your property's gross annual rental, used to compute property tax.
• Property Tax: Annual tax payable on all property in Singapore. Owner-occupied residential rates are progressive (0% to 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.
• 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...
• 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).
• IRAS: Inland Revenue Authority of Singapore: the national tax collector. Administers income tax, GST, property tax, stamp duties, betting taxes.
• Notice of Assessment (NOA): IRAS's tax bill. It confirms your chargeable income and tax payable for a given Year of Assessment.
• Asset Allocation: How an investor divides money across asset classes: stocks, bonds, cash, alternatives.
• Diversification: Holding many uncorrelated investments to reduce the risk that any single one wrecks your returns.
• Dollar-Cost Averaging (DCA): Investing a fixed dollar amount at regular intervals regardless of price.
• Lump-Sum Investing: Deploying a one-off pot of capital all at once. Historically beats DCA ~⅔ of the time in rising markets.
• Compounding: Earning returns on both your original capital and the returns it has already generated.
• 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.
• 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.
• Sharpe Ratio: Risk-adjusted return: (portfolio return − risk-free rate) ÷ volatility. Higher is better.
• ETF (Exchange-Traded Fund): A basket of securities (stocks, bonds, commodities) that trades on an exchange like a single stock.
• Index Fund: A fund that mechanically tracks a market index (e.g. S&P 500, MSCI World). No active manager picking stocks.
• Mutual Fund / Unit Trust: Pooled investment fund managed by a professional, valued daily at NAV.
• 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.
• Robo-Advisor: An automated investment platform that allocates your money across a portfolio of ETFs based on a risk profile.
• Active vs Passive Investing: Active investors try to beat the market through stock picking or timing. Passive investors buy the market via index funds.
• 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.
• Dividend: Portion of company profit distributed to shareholders. Singapore equities are tax-exempt for dividends (one-tier system).
• P/E Ratio (Price-to-Earnings): Share price ÷ earnings per share. Rough gauge of how expensive a stock is relative to its profits.
• Singapore Savings Bond (SSB): Government-issued retail bond redeemable any month with no penalty. Step-up coupons over 10 years.
• 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 to 3yrs) in exchange for a higher rate than savings accounts.
• 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.
• SDIC (Singapore Deposit Insurance Corporation): Government-backed deposit insurance scheme. Insures S$100,000 of bank deposits per depositor per bank, including current, savings.
• Central Depository (CDP): SGX's clearing and depository arm. CDP accounts hold Singapore-listed securities in your own name.
• 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.
• 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.
• Total Permanent Disability (TPD): Payout triggered when the insured can no longer perform any occupation or specified Activities of Daily Living.
• 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.
• 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.
• Effective Interest Rate (EIR): True annual cost of a loan including compounding and most fees. Always higher than the advertised flat rate.
• 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.
• Secured Loan: Loan backed by collateral (property, deposits). Lower rates because the lender can seize the asset on default.
• 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.
• 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.
• Savings Rate: Percentage of take-home income you save and invest each month. Higher savings rate = faster path to financial independence.
• 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.
• Safe Withdrawal Rate (SWR): Annual % you can withdraw from a portfolio with high probability of never running out.
• Emergency Fund: Cash buffer covering 3–6 months of essential expenses, held in instant-access savings.
• 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.
• Opportunity Cost: The value of the next-best alternative you give up when making a choice.
• 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.
• 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.
• Cryptocurrency: Digital asset using cryptography and a distributed ledger (blockchain). Examples: Bitcoin, Ethereum.
• Blockchain: Distributed, append-only ledger maintained by a peer-to-peer network. Each block cryptographically references the previous one.
• Stablecoin: Cryptocurrency whose value is pegged to a reference asset, usually USD. Used as on/off-ramps between fiat and crypto.
• 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).
• Open Market Value (OMV): The base value Singapore Customs assesses for an imported vehicle, covering its purchase price, freight, insurance.
• 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.
• 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.
• 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.
• 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.
• GST Voucher (GSTV): A permanent government scheme that helps lower- and middle-income Singaporeans offset the cost of GST.
• 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.