• Reinvestment is when the distribution of income received from investments is put back into these investments instead of receiving cash.

  • Reinvestment works by using dividends received to buy more of these shares or interest payments received to buy more of this bond.
  • Dividend Reinvestment Programs (DRIP) automate the process of accumulating shares from dividend streams.
  • Fixed income and callable securities offer the potential for reinvestment risk when new investments to be made with distributions are less appropriate.