define sinking fund.
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a fund formed by periodically setting aside money for the gradual repayment of a debt or replacement of a wasting asset.
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A sinking fund is the name given to a long-term savings account that a group of people (the contributors) set up for paying off something at a future date. They contribute monthly deposits to build up the fund over time. The deposits are usually a fixed sum and the contributors only pay for their contributions due. The fund depletes completely ("sinks") when full payment is made on due date. The sinking fund is a way for people not to get hit with large bills when full payment is due for some work. In other words, it's a gradually built up fund for a future payment in a lump sum.
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