What is Accumulation Unit ?
Definition of Accumulation Unit
An Accumulation unit is a type of investment in which the invested money is not returned in the form of cash, but in the form of further investment and funds within the firm.
Brief Explanation of Accumulation Unit
In case of a unit trust, the cash or income is not returned to the investors, but the trust’s income is directly invested into the trust thus multiplying the investments. It offers growth of the company’s fund rather than the income. It is a type of automatic reinvestment within the funds. It is beneficial for the long term investments, in which the investors expect and seek for the capital growth. This investment does not give a better solution for any short-term investments.
The values of the annuity accumulation unit may fluctuate according to the economic and market conditions. It means if the economic condition is not favorable then the value may decrease and if the conditions are favorable then the value of it may increase.