Reserve Fund

AAA

DEFINITION of 'Reserve Fund'

An account set aside by an individual or business to meet any unexpected costs that may arise in the future as well as the future costs of upkeep. In most cases, the fund is simply a savings account or another highly liquid asset, as it is impossible to predict when an unexpected cost may arise. However, if the fund is set up to meet the costs of scheduled upgrades, less liquid assets may be used.

BREAKING DOWN 'Reserve Fund'

An individual, for example, may put money into a reserve account to save money in case of unexpected unemployment. A business, such as one dealing with rental properties, will put some rental income into a fund used to pay for any unexpected repairs to the properties. Condominiums often will set up reserve funds in which condo owners pay a set monthly amount to maintain the quality of the condominium.

RELATED TERMS
  1. Cooperative Insurance - Co-Op Insurance

    An insurance for owners of co-op apartments that covers losses ...
  2. Non-Borrowed Reserves

    A measure of the reserves in the banking system. Non-borrowed ...
  3. Savings Account

    A deposit account held at a bank or other financial institution ...
  4. Expense

    1. The economic costs that a business incurs through its operations ...
  5. Liquidity

    1. The degree to which an asset or security can be bought or ...
  6. Budget

    An estimation of the revenue and expenses over a specified future ...
Related Articles
  1. Home & Auto

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  2. Retirement

    Building An Emergency Fund

    Do you have enough savings to cover the costs of unforeseen crises? We show you how to plan ahead.
  3. Budgeting

    The Beauty Of Budgeting

    Make it to the end of the month, before you run out of money.
  4. Home & Auto

    An Introduction To Buying A Condominium

    This real estate investment provides unique advantages - and challenges.
  5. Home & Auto

    Basics and Differences of Co-ops, Condos & Condops

    Before purchasing a condo or a co-op (or the rarer condop) apartment, here are some basics every purchaser needs to understand.
  6. Personal Finance

    How To Buy A Beach Condo In The Philippines

    Foreigners can't buy land in the Philippines – but they can buy condos. Here's how to get one at the beach.
  7. Personal Finance

    Manhattan Luxury Condos As Investments

    New York City real estate is a trending investment for foreign investors.
  8. Retirement

    Does Condo Life Suit You?

    Association fees and disputes with neighbors could spoil your move if you're unprepared.
  9. Home & Auto

    4 Overlooked Homeownership Costs

    Mortgage payments aren't the only expense. Find what else you'll be on the hook for.
  10. Retirement

    Downsize Your Home To Downsize Expenses

    Learn how to cut your mortgage, tax, gas and utilities bills.
RELATED FAQS
  1. What is the difference between capitalization rate and rent?

    Rent and capitalization rate are both factors that determine whether a real estate purchase is a wise investment. Rent is ... Read Full Answer >>
  2. Can real estate agents help renters find rental property?

    While real estate agents often exclusively service those in the market to buy or sell a home, some can also be excellent ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
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!