The power of compounding is one of the most powerful principles in mutual fund SIP (Systematic Investment Plan) investing. It means that the returns you earn on your investment don’t just sit idle—they start generating additional returns over time. When you invest regularly through SIP, each contribution earns interest or returns. These returns are then reinvested, and they too begin to earn returns. Over the long term, this creates a snowball effect, where your money grows faster and faster—especially if you stay invested consistently and for a longer duration. In simple terms, the earlier you start and the longer you stay invested, the greater your wealth can grow—not just because of how much you invest, but because of how compounding accelerates your earnings over time.