How to Obtain a Reinvestment Privilege

Investing is all about making a good return on your money. An important detail to note when buying shares is whether or not you obtain a reinvestment privilege. Whether you want to reinvest all of your shares or a percentage of your quarterly dividends, it's important to know how to keep your transactions legal and hassle-free.

Reinvesting Shares

Discuss with your financial adviser if reinvesting all or part of your shares could benefit your long- or short-term goals. You may find there are other investment avenues worth exploring. In this case, it's wise to hold back on reinvesting all of your shares.

Carefully note the reinvestment privilege policies for the stock or fund you're interested in. This information can usually be found by looking on the prospectus or Statement of Additional Information (SAI). Alternatively, you can also contact the company directly to clear up any uncertainties.

Consult with your financial adviser to make sure your transaction is legal and will conform to company policies.

Sell a portion or all of your shares.

Reinvest your shares within the specified time frame, as determined by the company's policies. To obtain this information, check your prospectus or call the management directly.

Reinvesting Dividends

Review your shares to determine whether you are eligible for dividend reinvestment.

Obtain the company's policies on enrolling in their dividend reinvestment privilege program. The easiest way to get this information is by looking over your prospectus.

Fill out your plan authorization form or plan election form. Your dividends will usually be reinvested on the dividend payment date after your form has been received.

Ask about the proper procedure for discontinuing dividend reinvestment. Although most investors are content to have their dividends continually reinvested, the time may come when you're ready to receive your dividends in cash.