What does reinvestment mean?
Reinvestment means investing money or other resources again, usually by returning income or profits to a business, project, or other undertaking. It is commonly discussed in business and finance, where reinvestment can fund expansion, research, equipment, hiring, or product development instead of distributing profits to owners or shareholders. For example, a company may use part of its earnings to improve its factories, allowing it to increase production and earn more in the future. Reinvestment can also occur at the level of government or international investment, as when revenue is invested again in public services or a business in another country. The term is generally neutral, although it may suggest long-term growth and confidence in future performance. Its meaning differs slightly from ordinary investment because it specifically involves putting existing funds or resources back into an activity rather than making an entirely new commitment.
nounReinvestment is the act of investing money or other resources again, especially profits or income into the same business, project, or asset rather than distributing them.
- The action or process of investing money or resources again, especially by using a business's profits to expand or improve its operations.
- The amount of money or resources invested again in this way.
"The company chose reinvestment over a dividend to fund expansion into new markets."
"Heavy reinvestment in research helped the company develop its next generation of products."
"The report found that reinvestment in employee training was likely to produce long-term gains."
The plural is used for separate acts, amounts, or programs of reinvestment; the word is also often used uncountably for the general practice.
"The company made two major reinvestments, first in its warehouse and then in its delivery fleet."
Reinvestment lets a business compound its own success: profits return to the business and can generate further profits.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does reinvestment come from?
The word combines the prefix re-, meaning “again,” with investment, so its basic sense has been “investment again” since the modern use developed. Investment itself comes through French investissement from investir, “to clothe, equip, or place money in,” ultimately from Latin investire, meaning “to clothe” or “to furnish.” The closely related words invest and investor therefore belong to the same etymological family.
Related word forms
How reinvestment is actually used
The word is especially common in business, finance, economics, and development contexts. It can be used for the general practice of investing again or for a specific reinvested amount.
Easily confused with reinvestment
Investment means putting money or resources into an asset, project, or activity, whereas reinvestment specifically means making another investment with money already earned or already committed to the same or a related activity.