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Definition of 'Reinvestment'
Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash.
1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares.
2. In terms of mutual funds, it is the reinvestment of distributions and dividends to purchase additional units of that fund.
3. In terms of tax gain/loss harvesting, it is the realization of losses to offset a capital gains liability.
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