Saturday, December 25, 2010

Reinvestment

The term reinvestment refers to investors using capital gain, dividends and other income distributions from the fund to purchase additional units in the fund. It allows investors to take advantage of the concept of compounding growth (i.e. dividends reinvested will earn more dividends, and so-on). Many fund providers will offer automatic reinvestment schemes. For investors that don't require income from their investments, reinvesting income distributions can be a good strategy for building wealth.

Synonyms: Automatic reinvestment, Dividend reinvestment, Reinvestment plan, Compounding growth
 
Comments?
If you have any questions, or disagree with the definition, or if you have anything to add then please do add your comments in the box below.

No comments:

Post a Comment