Reinvestment

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Related to Re-Invested: Reinvested Dividends

Reinvestment

Use of investment income to buy additional securities. Many mutual fund companies and investment services offer the automatic reinvestment of dividends and capital gains distributions as an option investors.

Reinvestment

The act or practice of taking profits or other proceeds from investments and making other investments with them. It nearly always means that one is investing in more of the same security. For example, one may take dividends from a stock and buy more shares with it or may take coupon payments to buy more of the same bond issue. Reinvestment often increases the value of a security.

Reinvestment.

When you own certain stocks and most mutual funds, you can reinvest the dividends or distributions to buy more shares instead of receiving a cash payout.

In a corporate Dividend Reinvestment Plan (DRIP), for example, a company offers you the right to reinvest any cash dividends automatically to buy more stock. When you open a mutual fund account, you're generally offered an automatic reinvestment option as well.

One benefit of reinvestment programs is that in most cases you can make the new investments without incurring the usual sales charges, so it can be a lower cost way to build your investment portfolio.

One potential drawback, if you're reinvesting in a taxable account, is that you acquire shares at different prices, so figuring the cost basis for capital gains or losses when you sell can be more complicated than if you made fewer, larger purchases. It's also true that you owe income or capital gains tax in the year the money is reinvested, which isn't the case in a tax-deferred or tax-free account.

You will also want to consider the impact of reinvestment on the diversification of your portfolio, since buying additional shares increases the percentage of your portfolio that is allocated to a particular stock or mutual fund.

References in periodicals archive ?
Newly-elected Mayor of Mirfield and Kirklees Tory councillor Vivien Lees-Hamilton, said she would fight to ensure any money raised would be re-invested in Mirfield.
You can guarantee that anything that has not been recovered by West Midlands Police will have been moved on within 24 hours and the money will have already been re-invested in the drugs trade.
While 50 percent of the redemptions would be re-invested in 30-year Greek securities, the remaining 20 percent would be invested in a fund made of, supposedly, 'very-high quality' securities.
A total of pounds 5,000 has been raised to be re-invested into a Lozells project, pounds 1,200 from the sale of scrap metal from the scheme and an extra pounds 3,800 donated by Apollo.
After finishing second in the league, transfer fees for Marc Twaddle and Gary Harkins were re-invested in anticipation of success and increased gates.
Furthermore he opined that any capital invested in Sri Lanka should be re-invested in order to allow the formerly war-torn economy to grow, as it should.
This means it can be re-invested in kit, in coaching and facilities -all for the good of local sport.
According to people familiar with the lending case, Inotera, a dynamic random access memory maker re-invested in by Nanya Technology Corp.
Better evaluation of the costs and benefits of EU regulation would save businesses billions, which could be re-invested in areas crucial to Europe's competitiveness, such as R&D and training.
Non-contributing members can contact Steve in order for him to further explain the work of the Fund, all of this in an effort to increase the amount of money that can be re-invested into the sport.
Premier League chief executive Richard Scudamore said: "The Premier League has taken its commercial success and, in the main, re-invested that to put the show on that in some ways is the envy of the world.
These were not typical years because "after years of neglect, federal and provincial governments have re-invested substantially in health care over the past decade.