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. Accumulation Plan

    1. A general financial strategy in which an investor attempts ...
  3. Retained Earnings

    The percentage of net earnings not paid out as dividends, but ...
  4. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  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 FAQS
  1. Why should investors pay attention to a corporation's selling, general and administrative ...

    Selling, general and administrative expenses (SG&A) are significant elements of many companies' income statements. These ... Read Full Answer >>
  2. How does the combined ratio measure the financial health of insurance companies?

    The combined ratio measures the profitability of an insurance company by examining its earned premium from its policyholders ... Read Full Answer >>
  3. What should you take into consideration when choosing a portfolio management service?

    Hiring a portfolio management service or a portfolio manager should be a logical decision based on topics of consideration ... Read Full Answer >>
  4. How is reconciliation treated under generally accepted accounting principles (GAAP)?

    The generally accepted accounting principles, or GAAP, provide different reconciliation rules for balancing many kinds of ... Read Full Answer >>
  5. What are some popular mutual funds that give exposure to the drugs sector?

    The pharmaceutical industry has experienced outstanding growth in the 10 years leading up to 2015, consistently outperforming ... Read Full Answer >>
  6. How much of the profitability in the Internet sector is concentrated in the few major ...

    Outside of any limiting, narrow interpretations concerning what constitutes the Internet sector, there is very little industry ... Read Full Answer >>
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. Fundamental Analysis

    Explaining Expected Return

    The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome.
  6. Mutual Funds & ETFs

    U.S. Investors Are Seeking Opportunities Overseas

    A latest analysis leads to believe that many investors are applying a spring cleaning approach to their portfolios, rebalancing as the 1st quarter ended.
  7. Investing

    Three Portfolio Moves To Consider Now

    What portfolio moves should you consider making as the 2nd quarter kicks off? Before we focus on the future, let’s first reflect on the 1st Q surprises.
  8. Investing Basics

    Manage Investments And Modern Portfolio Theory

    Modern Portfolio Theory suggests a static allocation which could be detrimental in declining markets, making it necessary for continuous risk assessment. Downside risk protection may not be the ...
  9. Investing

    Why Cash Management Is Key To Business Success

    Businesses need to generate a healthy cash flow to survive, but not hold too much so that inventory suffers or investment opportunities are missed.
  10. Mutual Funds & ETFs

    Is Amazon a Prime Pick for Your Portfolio?

    Eyeing Amazon? Thanks to innovation and diversification, it has high odds of being a long-term winner. Here's why.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center