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Benefits of One-Time Mandate in SIP

mutual fundmutual fund accountmutual fund investmentSIP
04 Oct 20246 mins readBy MOFSL

Introduction

Popular wealth builders in the present times are system investment plan investors. While investing in a SIP from an online interface, you typically can select a mutual fund scheme. Subsequent investments shall be made through the same medium: account debits, digital payment methods, or direct debit orders. Therefore, while it is easy to invest regularly, acquiring subsequent payments will still be necessary. That's why this One-Time Mandate facilitates it all. Let's get into what an OTM is and its many benefits.

What is a One-Time Mandate?

A one-time mandate, short form OTM, is a one-time setup from your bank where authorization is given to automatically deduct a pre-specified amount regularly from your account for your SIP investments. Therefore, once you register for an OTM, you do not have to repeat the payment process each time for any instalment of the SIP, which makes it very convenient.

Benefits of Using a One-Time Mandate for SIPs

 

Setting up an OTM for your SIP investments has several advantages:

1. Ease and Convenience: The name says it all about the OTM, which is hassle-free. Under this facility, you can choose one central bank account to be attached to your SIP investments. Once that is done, further payments automatically work for you.

2. Direct Debits: You give your bank standing instructions to debit the amount directly from your account each month. That way, you ensure that the contributions made under your SIP go toward the mutual fund of your choice without any further effort.

3. Improved Safety: The OTM process is safer than any other type of online payment. Online payments sometimes get technical, and hence, the payment process fails. With OTM, the chances of missing contributions are significantly reduced.

4. Multiple SIP Registrations: Any number of SIPs can be selected for registration under an OTM. However, at any given time, the SIPs registered under that specific OTM shall not be more than the number indicated in your mandate. It allows any number of investment options in just one go while keeping the payment process streamlined.

5. Disciplined Investing: SIP payments ensure you invest towards your goal regularly. An OTM induces periodic and uninterrupted contributions, thereby inculcating disciplined investment behaviour.

How to Automate Your SIPs

You can automate your SIP investments in one of two ways:

1. Autopay: The feature saves you time and hassle because your SIPs would be automatically deducted from your account month after month. Once you have activated the Autopay facility, it will take care of all future payments automatically; thus, you never have to forget to pay. This service sets up and secures your investment in timely as well as effective manners.

2. Form-based Autopay, or OTM: One sets up the mandate only once through a NACH form. Such an option is suitable for investors who cannot access online or are against the online idea of making their SIPs.

Conclusion

Having a one-time mandate is of immense value when investing in SIPs. It helps a lot, like an e-wallet, so that you can invest minus all the hassle involved in the payment processes for each transaction. Adding an OTM to your SIP investments lets you focus more on your financial goals and less on payment logistics. The next time you invest in an SIP, remember to set up the One-Time Mandate for a hassle-free investment. Enjoy the relief and discipline of an auto-debited contribution for your financial future.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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