Explore commonly used personal finance terms.
Automatic reinvestment allows investors to reinvest dividends, interest, or other income earned from an investment back into additional units or shares of the same investment. This compounding effect helps investors grow their holdings over time, as they continuously reinvest income rather than withdrawing it. Automatic reinvestment plans are often offered by mutual funds or brokerage accounts, allowing investors to accumulate more shares without incurring transaction fees, accelerating the growth of their portfolio.
