A systematic investment plan (SIP) is a plan in which investors make regular, equal payments into a fund, trading account, or retirement account such as a 401(k).
SIPs allow investors to save regularly with a smaller amount of money while benefiting from the long-term advantages of dollar-cost averaging (DCA).
By using a DCA strategy, an investor buys an investment using periodic equal transfers of funds to build wealth or a portfolio over time slowly.
Power of compoundingCompounding occurs when the returns you earn on your investments start earning returns.
This is a simple concept in theory.
When you invest regularly through SIPs, your returns get reinvested.