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"Equity", "ETF", and "GDP" are the top financial terms Singaporeans don't understand

SINGAPORE: More younger adults in Singapore have become interested in investing , with some starting as early as university. However, new research from forex broker experts at BrokerChooser shows that many still struggle to understand financial jargon. According to the report, 'equity' is the most confusing financial term both globally and in Singapore, with 2,170 searches a month locally and over 247,000 worldwide. Adam Nasli, Head Analyst at BrokerChooser, said the confusion about what equity is comes from its broad usage in different contexts. He defined it as the amount an owner would retain if they sold an asset or business after settling any debts tied to it. 'In simple terms, it's the value you truly own. If you own a house worth $300,000 and you owe $200,000 on the mortgage, your equity in the home is $100,000,' he said, citing an example. Meanwhile, in the stock market, equity usually refers to shares in a company, giving investors partial ownership, potential voting rights, and a share in the profits. 'As with a home, a company's equity represents the difference between its assets and liabilities—what the owners would effectively be left with after selling all assets and settling all obligations,' he added. ETF (Exchange Traded Fund) ranked the second most confusing financial term for Singaporeans, racking up 1,800 local searches and 142,230 globally. While many people are drawn to ETFs because of their low fees, tax efficiency, and flexibility, many still struggle to understand what ETFs are. 'Think of it as a ready-made investment portfolio that trades on the market,' Mr Nasli said. 'Whether you're looking to invest in a specific sector, track a major index like the S&P 500, or gain exposure to gold or tech stocks, there's likely an ETF for it,' he added. Meanwhile, GDP (Gross Domestic Product) ranked third on the list, even though it's often mentioned in the news. Singaporeans search for what it means 1,500 times on a monthly average, while 176,800 do so globally. See also Hedge Funds vs Mutual Funds vs ETFs – Which Should I Invest In? Other financial terms Singaporeans find most confusing include: arrears, correlation, yield, annuity, capital, APR (annual percentage rate), and principal. While 55% of Singaporeans said they are financially illiterate, 52% don't even know how much they spend each month, costing the average Singaporean household between S$1,997 and S$5,410 every year. The study also highlighted that those with low financial literacy are 'worse off', even when they're earning similar income levels compared to their financially literate peers. Mr Nasli said, 'People need to be better equipped not only to manage their money wisely but also to protect themselves from misleading offers and deceptive financial products.' /TISG Read also: More women take seats on the board in Singapore's top 100 SGX-listed companies Featured image by Depositphotos (for illustration purposes only)