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Reinvestment Meaning: Definition, Examples, and Translations

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reinvestment

[riหษชnหˆvษ›stmษ™nt ]

Definition

Context #1 | Noun

financial strategy

Reinvestment refers to the practice of using profits gained from an investment to buy additional assets or investments. This can enhance potential future returns by increasing the overall amount of capital invested. It is commonly used by businesses and investors to grow their investment portfolios over time.

Synonyms

reallocation, reapplication, redeployment.

Examples of usage

  • The company's reinvestment strategy led to significant growth in market share.
  • Investors often choose reinvestment of dividends to maximize their returns.
  • Reinvestment in new technology can drive innovation and profits.

Translations

To see the translation, please select a language from the options available.

Interesting Facts

Economics

  • Reinvestment is crucial for businesses to grow and improve; it allows them to expand operations or innovate.
  • Countries that encourage reinvestment often see increased productivity and higher economic growth rates.
  • Successful reinvestment strategies can lead to compound growth, much like interest on a savings account.

Personal Finance

  • Investing profits back into savings or investment accounts can help individuals build wealth over time.
  • Many people choose to reinvest earnings from dividend-paying stocks for potential future gains.
  • Reinvestment in personal education (like training or courses) is considered an investment in oneself for long-term benefits.

Business Strategy

  • Companies often reinvest profits instead of distributing them as dividends to shareholders to fund new projects.
  • Strategic reinvestment can help a company maintain a competitive advantage in its industry.
  • Startups commonly reinvest early profits to enhance product development and market reach.

Environmental Sustainability

  • Reinvestment in sustainable practices can lead to both profit increases and environmental benefits.
  • Firms that reinvest in green technologies often find they can cut costs associated with waste and energy over time.
  • Community reinvestment often focuses on improving local infrastructure and resources for sustainable living.

Origin of 'reinvestment'

Main points about word origin

  • The term 'reinvestment' comes from 're-', meaning again, and 'investment', from Latin 'vestire', meaning to clothe or put into.
  • The combination underscores the concept of putting money back into something previously invested in.

The term 'reinvestment' originated from the combination of the prefix 're-', meaning 'again' or 'back', and 'investment', which comes from the Latin 'investire', meaning 'to clothe' or 'to put on'. The concept itself has evolved alongside financial markets and investor strategies, becoming prominent in the 20th century as more individuals and businesses began to seek ways to grow their wealth sustainably. The focus on reinvestment reflects a shift from merely extracting profits to employing those profits for further growth. This practice is now a cornerstone of investment philosophy, emphasizing the importance of compounding returns over time and the idea that effectively reinvesting resources can yield substantial long-term financial benefits.

Word Frequency Rank

Positioned at #21,478, this word is part of extensive vocabulary. It's relatively rare in general usage but may be important in specific fields or formal writing.