sinking-fund

A company sets aside money each year into a sinking-fund for future bond repayments.

Definition

1. Noun (Finance):
   • A sinking-fund is a fund accumulated by regularly setting aside money to repay a debt or replace a depreciating asset. It is typically established by a corporation or government to ensure funds are available when a bond or loan matures.

Usage Examples

• (A fund created to pay off debt gradually.)
• (A fund designated for debt repayment.)
• (A financial mechanism to ensure debt is repaid.)

Advanced Usage

• "To raid the sinking-fund": To use the money from a sinking-fund for other purposes, often considered financially irresponsible.

  • The treasurer was criticized for raiding the sinking-fund to cover operational expenses. (Misusing the fund intended for debt repayment.)

• "Sinking-fund provision": A clause in a bond indenture requiring the issuer to set aside money regularly to redeem bonds before maturity.

  • The bond contract included a sinking-fund provision to protect investors. (A contractual requirement for debt repayment.)

Variants and Related Words

• Sinking (adj): referring to the gradual reduction or repayment of debt.
  • The sinking schedule showed annual payments to the fund. (The plan for reducing debt over time.)
• Fund (n): a sum of money saved or made available for a specific purpose.
  • The fund was managed by a trustee to ensure compliance. (The money set aside for the sinking-fund.)

Synonyms

• Amortization fund: a fund used to gradually pay off a debt.
• Redemption fund: a fund designated for redeeming bonds or loans.
• Depreciation fund: a fund set aside to replace an asset as it loses value.

Related Idioms

• "To sink money into something": To invest or spend money on something, often with the idea of gradual recovery.

  • They sank money into the sinking-fund to secure future payments. (Invested funds for long-term debt repayment.)

• "To fund a sinking": To provide resources for the gradual repayment of debt.

  • The corporation funded the sinking by allocating annual profits. (Supported the debt-reduction process.)