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automatic reinvestment

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Automatic reinvestment

automatic reinvestment
The automatic purchase of additional shares of an open-end investment company using any dividends and capital gains distributions that are made by the firm. This option (in lieu of actually receiving payments) permits a mutual fund shareholder to increase his or her holdings in the fund. Taxes must be paid on the amount reinvested even though no funds are received directly. See also dividend reinvestment plan (DRIP).

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Routine events like automatic reinvestment of dividends or regular payroll-deduction contributions to an employee-sponsored savings program didn't count as transactions.
Since the Williamses have to take most of their money and put it back into their business for now, they should start with at least $50 a month, taking advantage of an automatic reinvestment plan.
Unitholders have the option of receiving their distributions either in cash or in the form of additional Fund Units by way of automatic reinvestment.
 
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