Capital Accumulation

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DEFINITION of 'Capital Accumulation'

This refers to profits that a company uses to increase its capital base.

Capital accumulation involves acquiring more assets that can be used to create more wealth or that will appreciate in value.

Alternatively, capital accumulation can also refer to when an institutional broker or individual investor acquires a large number of shares of a particular stock or mutual fund over an extended period of time.

INVESTOPEDIA EXPLAINS 'Capital Accumulation'

Institutional brokers may employ this strategy when they find a particular company attractive and want to acquire a significant number of shares of its stock without driving up the price. Investors employ this strategy through regular investing in a particular mutual fund in which they reinvest dividends and capital gains.

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