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Reinvestment Plan

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Reinvestment Plan
A practice or agreement in which dividends on a security are used to buy more of the same security, rather than disbursed to the investor in cash. A reinvestment plan is relatively common in mutual funds; investors agree to use dividends and other capital gains to reinvest in more shares of the mutual fund. While this involves assuming more risk in the mutual fund, it carries the possibility of higher returns.
reinvestment plan
See dividend reinvestment plan.
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