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What Is a Systematic Investment Plan (SIP)? A systematic investment plan (SIP) is a plan in which investors make regular, equal payments into a mutual 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. How SIPs Work Mutual funds and other investment companies offer investors a variety of investment options including systematic investment plans. SIPs give investors a chance to invest small sums of money over a longer period of time rather than having to make large lump sums all at once. Most SIPs require payments into the plans on a consistent basis—whether that’s weekly, monthly, or quarterly. The principle of systematic investing is simple. It works on regular and periodic purchases o...