accumulation

ac·cu·mu·la·tion   (ə-kyōōm'yə-lā'shən)    n.   The act of gathering or amassing, as into a heap or pile: "Little things grew by continual accumulation" (Samuel Johnson). The process of growing into a large amount or heap: the steady accumulation of knowledge. An amount that has accumulated or been accumulated: an accumulation of debt; an accumulation of rubbish.

accumulation 

Accumulation

1) In the context of individual investing, it is the process of contributing cash 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) In institutional investing, it is the action of a large investor buying up many shares of a public company over an extended period of time.

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

Investopedia Commentary

1) When an individual investor is attempting to build up the value of their portfolio, they are 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, since they deal with large numbers of shares which would drive the price of a security up if ordered all at once. In order to completely buy their intended number of shares, institutional investors spread their accumulation of shares over a period of time.

3) Rather than pay dividends out to investors, accumulation of earnings within the corporation boosts the ability for business expansion and growth, hopefully producing extra value for shareholders in the long run.

Related Links

Evaluating Retained Earnings: What Gets Kept Counts
Institutional Investors And Fundamentals: What's The Link?
Keeping An Eye On The Activities Of Insiders And Institutions

See also: Accumulation Plan, Capital Base, Capital Gain, Compounding, Dividend, Elephants, Institutional Investor, Retained Earnings

Also spelled: accumulating, accumulate

accumulation

The purchase of a particular security throughout a period of time. For example, the accumulation of a substantial quantity of a stock by a portfolio manager may take place over a period of several weeks or months in order to avoid driving up the price of the stock. An individual's accumulation of shares of a mutual fund may occur over a period of many years.

Main Entry: ac·cu·mu·la·tion
Function: noun
: increase or growth by addition esp. when continuous or repeated; specifically : an increase in the amount of a fund or property by the continuous addition to it of the income or interest it generates accumulation —W. M. McGovern, Junior et al.> —see also accumulation trust at TRUST
NOTE: Because they prevent the enjoyment and benefit of wealth, accumulations are deemed contrary to public policy. A provision in a will for an accumulation will be invalidated if found to be unreasonable by the court.