Reinvesting dividends is the practice of using the cash dividends paid out by a stock or mutual fund to purchase additional shares instead of taking the cash. This strategy allows investors to grow their investment portfolio over time, compounding returns and potentially leading to significant wealth accumulation. By reinvesting dividends, individuals not only increase their ownership in a company but also benefit from the effects of compound interest, which can greatly enhance their overall financial health.
congrats on reading the definition of Reinvesting Dividends. now let's actually learn it.