Accumulation

AAA

DEFINITION of 'Accumulation'

1. An individual investor's cash contributions to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process.

2. An institutional investor's purchase of a large number of shares in a public company over an extended period of time.

3. The retention of company profits in corporate finance for reinvestment in business operations, as opposed to the payout of earnings as dividends to shareholders.

INVESTOPEDIA EXPLAINS'Accumulation'

1. When an individual investor is attempting to build up the value of a portfolio, he or she is said to be accumulating wealth. The reinvestment of profits over the course of the investment time horizon can greatly boost the pace of accumulation through the benefits of compounding.

2. Large investors and financial institutions are limited in their ability to move in and out of securities because they deal with large numbers of shares that would drive the price of a security up if ordered all at once. In order to buy their intended number of shares, institutional investors spread their accumulation of shares over a period of time.

3. As opposed to paying dividends out to investors, accumulation of earnings within the corporation boosts business expansion and growth and may produce extra value for shareholders in the long run.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Capital Base

    1. The capital acquired during an IPO, or the additional offerings ...
  3. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  4. Elephants

    Slang for large institutions that have the funds to make high ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Compounding

    The ability of an asset to generate earnings, which are then ...
Related Articles
  1. Fundamental Analysis

    Evaluating Retained Earnings: What Gets Kept Counts

    A company's retained earnings matter. Be investment-savvy and learn how to analyze this often overlooked information.
  2. Fundamental Analysis

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  3. Personal Finance

    Revive Your Portfolio

    Increase your annual returns by rebalancing your investments now.
  4. Options & Futures

    Keeping An Eye On The Activities Of Insiders And Institutions

    These transactions reveal much about a stock. We go over what to consider and where to find it.
  5. Mutual Funds & ETFs

    Top ETFs for Investing in Coffee

    Learn about the market for coffee, one of the largest agricultural markets, and two ETFs that investors can use to obtain exposure to the coffee market.
  6. Investing

    Go Green with a Investment in Green Bonds

    If you want to invest in a socially responsible way, green bonds may be for you. And as the market grows retail investment opportunities will grow too.
  7. Mutual Funds & ETFs

    The Top 3 ETFs For Investing in Australia

    Learn about some of the best performing exchange-traded funds that investors use to obtain exposure to stock investments in Australia.
  8. Investing Basics

    Explaining Assets Under Management

    Assets under management is a metric that measures the market value of assets that an investment company manages for investors.
  9. Active Trading Fundamentals

    Five Biggest Obstacles Facing First-Year Traders

    Address these five obstacles and you'll make significant progress as a first-year trader.
  10. Professionals

    Target-Date vs. Index Funds: Is One Better?

    Target-date and index funds are difficult to compare because they differ in both structure and objective, though investors can compare two specific funds.
RELATED FAQS
  1. What is the Trade Volume Index (TVI) formula and how is it calculated?

    The trade volume index (TVI) measures the amount of money flowing in and out of a security or the market. The TVI depends ... Read Full Answer >>
  2. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. What percentage of a diversified portfolio should large cap stocks comprise?

    The percentage of a diversified investment portfolio that should consist of large-cap stocks depends on an individual investor's ... Read Full Answer >>
  6. How can I find net margin by looking a company's financial statements?

    In finance and accounting, financial statements represent the fundamental means of analyzing a company's financial position, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!