A redemption reserve is a financial liability that is created to meet the future redemption of liabilities. This reserve is also known as a sinking fund or a redemption fund. A sinking fund is a fund created by a company to maintain a good credit rating and boost investor confidence. Similarly, a redemption fund is used to retire a debt instrument, such as bonds, and to ensure that the debt is repaid when due. Other synonyms for redemption reserves include reserve fund, debt retirement fund, endowment fund, deposit fund, or contingency fund. These terms are all used to describe financial reserves that are set aside to meet specific obligations or contingencies.