Voluntary Accumulation Plan

DEFINITION of 'Voluntary Accumulation Plan'

An investment method in which a retail investor periodically invests (at its discretion) relatively small amounts of funds into a mutual fund, building a large position over an extended period.

BREAKING DOWN 'Voluntary Accumulation Plan'

By investing savings into a mutual fund gradually over time with a voluntary accumulation plan, an investor can build a large investment at his or her own pace. Contributions are voluntary, although common practice is to invest a fixed amount at specified intervals. By spreading the contributions over a period of time, investors reap the benefits of dollar-cost averaging, as the fixed contributions will buy more shares of a mutual fund when its price is low than when it is high.

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