Singapore Financial Planning Glossary

The minimum amount CPF requires in your Retirement Account to participate in CPF LIFE at the lowest payout tier. In 2025, the BRS is SGD 106,500. Members who own a property with remaining lease covering them to age 95 need only the BRS. Monthly payouts are approximately SGD 900 to SGD 1,000.

Singapore's mandatory social security savings scheme. Working Singaporeans and PRs contribute a percentage of their monthly salary to three accounts: Ordinary (OA), Special (SA), and MediSave (MA). Funds are used for housing, healthcare, and retirement.

The CPF account used for housing, education, insurance, and investment. Earns 2.5% per year. Can be used to pay for HDB flats, private properties, and approved investments under the CPF Investment Scheme (CPFIS).

The CPF retirement account. Earns 4% per year. Cannot be used for housing. At age 55, the SA is closed and its balance (up to the FRS) is transferred to the Retirement Account.

The CPF account for approved medical expenses and MediShield Life premiums. Earns 4% per year. Has an annual cap called the Basic Healthcare Sum (BHS). Excess flows into the OA or SA.

Created at age 55 by combining savings from the OA and SA. Funds CPF LIFE monthly payouts from age 65. The RA balance at 55 determines your CPF LIFE payout tier.

Singapore's national annuity scheme. Converts your Retirement Account savings into monthly payouts for life from age 65. Three plan options: Basic, Standard, and Escalating. Payout amount depends on your RA balance and chosen plan.

A legal instruction specifying who receives your CPF savings when you die. Without a nomination, CPF balance is distributed by the Public Trustee's Office under intestacy rules, after deducting administrative fees. A will does not cover CPF monies. Nominations are made online via the CPF website.

Insurance that pays a lump sum upon diagnosis of a specified serious illness such as cancer, heart attack, or stroke. Singapore's Life Insurance Association (LIA) standardises 37 covered conditions. The standard survival period is 14 days post-diagnosis.

Investing a fixed dollar amount at regular intervals regardless of price. When prices fall, your amount buys more units; when prices rise, it buys fewer. Smooths out the average purchase price over time. Does not guarantee profit or protect against loss in a sustained decline.

A framework for calculating life insurance needs. DIME stands for: Debt (outstanding debts), Income (annual income x years to retirement), Mortgage (remaining home loan), Education (projected children's education costs). Add all four for a rough cover requirement.

Annual dividend payment as a percentage of current price. Formula: (Annual Dividend Per Share ÷ Current Price) × 100. A 5% yield means a stock paying SGD 0.10 annually trades at SGD 2.00. A high yield can signal good income or a falling price. Past dividends do not guarantee future distributions.

A life insurance savings product with a fixed maturity date. Premiums are paid for a set period and you receive a guaranteed sum plus non-guaranteed bonuses at maturity. Guaranteed returns in Singapore typically range from 2% to 3.5% per year. Often compared unfavourably to direct investing over long horizons due to lower net returns and inflexibility.

The maximum amount you can hold in your CPF Retirement Account for CPF LIFE. In 2025, the ERS is SGD 426,000 (four times the BRS, expanded from three times in January 2025). Monthly payouts are approximately SGD 3,300 to SGD 3,500.

A fund that tracks an index, sector, or asset class and trades on a stock exchange like a share. ETFs typically carry management fees of 0.03% to 0.5% per year, far lower than actively managed unit trusts. Common Singapore investor choices include the SPDR S&P 500 ETF and the Nikko AM STI ETF.

A legal arrangement where assets are transferred to a trustee to manage for named beneficiaries. Used in Singapore for estate planning, asset protection, and generational wealth transfer. Setup costs range from SGD 5,000 to SGD 50,000 or more. Annual trustee fees apply. Income within the trust is subject to Singapore income tax.

Twice the Basic Retirement Sum. In 2025, the FRS is SGD 213,000. The most common CPF LIFE tier for members without a property pledge. Monthly payouts are approximately SGD 1,600 to SGD 1,800.

A retirement withdrawal guideline: withdraw 4% of your portfolio in year one, then adjust for inflation annually. Based on US historical market data (Trinity Study, 1994). Used as a rough planning benchmark in Singapore. Actual safe withdrawal rates depend on portfolio composition, local inflation, and spending patterns. Past performance does not guarantee future results.

A life insurance product that combines coverage with investment in sub-funds. Multiple layers of charges apply: mortality charges, fund management fees (1% to 2%), and bid-offer spreads (3% to 5%). These charges compound over time and significantly reduce net returns compared to buying term insurance separately and investing the difference.

Dying without a valid will. In Singapore, non-Muslim estates follow the Intestate Succession Act; Muslim estates follow AMLA. Under the Act, a spouse and children split the estate 50/50. Your personal wishes are ignored and the estate still goes through probate. A CPF nomination is separate and must be made regardless of whether you have a will.

A hospitalisation insurance plan integrating with MediShield Life for higher coverage limits in private or restructured hospital wards. Sold by private insurers. From April 2026, all ISP riders require at least 5% co-insurance (or SGD 3,000 cap, whichever is lower) on claims.

A life and CI policy owned by a company on the life of a key employee or director. The company pays premiums and receives the payout if that person dies or becomes critically ill. IRAS allows premium deductions for revenue protection purposes. Used to protect businesses from the financial impact of losing a founder or top revenue contributor.

Preparing for the transfer of assets and responsibilities to heirs or beneficiaries. In Singapore, this involves: a valid will, CPF nominations, an LPA, reviewing joint tenancy arrangements, trusts for minor children, and business succession planning. Distinct from retirement planning, which focuses on funding your own lifestyle.

A legal document letting a person appoint trusted individuals to make decisions if they lose mental capacity. Registered with Singapore's Office of the Public Guardian. Covers personal welfare and property/financial affairs. Without an LPA, family members must apply to court for a Deputyship order, which is costly and slow.

Singapore's national health insurance scheme administered by the CPF Board. Covers all Singapore Citizens and PRs for life, including those with pre-existing conditions. Provides basic hospitalisation coverage with defined claim limits, deductibles, and co-insurance. Most working Singaporeans add an Integrated Shield Plan for more comprehensive coverage.

Income requiring little or no active work on an ongoing basis. Common sources for Singapore investors: dividends from stocks and S-REITs, rental income, bond interest, and CPF LIFE payouts. Building passive income to cover living expenses is the core goal of financial independence. Past returns on any asset class do not guarantee future income.

The legal process of validating a deceased person's will and authorising the executor to distribute the estate. In Singapore, granted by the High Court. Typically takes 3 to 6 months for simple estates. Probate fees are charged as a percentage of estate value. CPF monies, jointly held assets, and trust assets bypass probate.

A fund that pools capital to own and operate income-producing real estate. REITs trade on stock exchanges and must distribute at least 90% of taxable income. Singapore's version is the S-REIT. Investors receive regular distributions without needing to buy physical property. Returns are not guaranteed and distributions can be cut.

A listed fund that owns income-producing real estate and distributes at least 90% of taxable income to unit holders. S-REITs are exempt from corporate tax on distributed income. Retail investors receive dividends without withholding tax. Sectors include retail, industrial, hospitality, healthcare, and office. Singapore is Asia's second-largest REIT market.

A 5-step wealth planning framework: Snapshot (audit your position), Heal (fix cash leaks and bad debt), Insure (protect against catastrophic risk), Flow (build income-generating investments), Transfer (plan your estate and legacy). Developed by Umar Yusof as a structured sequence for building and protecting wealth at any income level.

A voluntary scheme letting Singapore residents contribute to a dedicated retirement account and receive income tax relief. Annual cap: SGD 15,300 for Singaporeans/PRs, SGD 35,700 for foreigners. Funds must be invested to grow; the default rate is 0.05%. At statutory retirement age (currently 63), only 50% of withdrawals are taxable, and withdrawals can be spread over 10 years.

Life insurance providing a death benefit for a fixed period (typically 10 to 40 years) at lower premiums than whole life or ILPs. If you die in the term, beneficiaries receive the sum assured. If you outlive the term, the policy ends with no payout. Most commonly recommended for income replacement coverage due to cost efficiency.

A condition where a person is completely and permanently unable to work in any occupation. Most Singapore life insurance policies include a TPD benefit paying out the sum assured if you are disabled before age 65 or 70. Definitions vary: some require inability in any occupation; others require inability to perform three of six Activities of Daily Living (ADLs).

A pooled investment vehicle managed by a professional fund manager. In Singapore, unit trusts typically carry management fees of 1.5% to 2.5% per year plus sales charges of up to 5%. Unlike ETFs, unit trusts are not exchange-traded — bought and redeemed at net asset value (NAV). Most are actively managed and aim to outperform a benchmark index.

Life insurance covering you for your entire life with a cash value component. Premiums are significantly higher than term insurance. Cash value grows at 2% to 3.5% per year in Singapore. Can be surrendered or borrowed against. Best suited for guaranteed coverage needs or legacy planning where coverage is needed regardless of when death occurs.