What is "sinking fund"

Fund \Fund\, n. [OF. font, fond, nom. fonz, bottom, ground, F. fond bottom, foundation, fonds fund, fr. L. fundus bottom, ground, foundation, piece of land. See Found to establish.]

1. An aggregation or deposit of resources from which supplies are or may be drawn for carrying on any work, or for maintaining existence.

2. A stock or capital; a sum of money appropriated as the foundation of some commercial or other operation undertaken with a view to profit; that reserve by means of which expenses and credit are supported; as, the fund of a bank, commercial house, manufacturing corporation, etc.

3. pl. The stock of a national debt; public securities; evidences (stocks or bonds) of money lent to government, for which interest is paid at prescribed intervals; -- called also public funds.

4. An invested sum, whose income is devoted to a specific object; as, the fund of an ecclesiastical society; a fund for the maintenance of lectures or poor students; also, money systematically collected to meet the expenses of some permanent object.

5. A store laid up, from which one may draw at pleasure; a supply; a full provision of resources; as, a fund of wisdom or good sense.

   An inexhaustible fund of stories.
   --Macaulay.

   Sinking fund, the aggregate of sums of money set apart and invested, usually at fixed intervals, for the extinguishment of the debt of a government, or of a corporation, by the accumulation of interest.

Sinking \Sink"ing\, a. & n. from Sink.

Sinking fund. See under Fund.

Sinking head (Founding), a riser from which the mold is fed as the casting shrinks. See Riser, n., 4.

Sinking pump, a pump which can be lowered in a well or a mine shaft as the level of the water sinks.

n. A fund established by an economic entity by setting aside revenue over a period of time to fund a future capital expense, or repayment of a long-term debt.

n. a fund accumulated regularly in a separate account and used to redeem debt securities

A sinking fund is a fund established by an economic entity by setting aside revenue over a period of time to fund a future capital expense, or repayment of a long-term debt.

In North America and elsewhere where it is common for public and private corporations to raise funds through the issue of bonds, the term is normally used in this context. However, in the United Kingdom and elsewhere where the issue of bonds (other than government bonds) is unusual, and where long-term leasehold tenancies are common, the term is only normally used in the context of replacement or renewal of capital assets, particularly the common parts of buildings.