What are the Benefits of a One Time Mandate in SIP?
When you invest in a Systematic Investment Plan (SIP) online, you select the scheme and make the first investment into it through any digital payment mode. After making the first contribution, you need to make provisions for the subsequent contributions. This provision is a mandate wherein you instruct your bank account to deduct the SIP amount automatically whenever it is due.
The OTM (one time mandate) facility is one of the most convenient facilities for investing in SIPs. Let’s understand what it is and what are the benefits provided –
What is a One Time Mandate?
A One Time Mandate (OTM) is a one-time registration through which you instruct your bank account to deduct a specified amount of money from your account daily towards investing into a SIP portfolio. Once you register for OTM, you don’t have to follow the payment process every time you invest in the SIP.
Benefits of Adding One Time Mandate in SIPs
To ensure that your SIP investments continue non-stop, you have to submit a mandate to your bank account for the deduction of the SIP amount every month. Choosing OTM as the mandate is beneficial because of the following reasons –
- As the name suggests, this is a one time effort. The steps are simple; you select a primary bank account that you want to link with your future investments.
- You need to give a mandate or standing instructions to the primary bank to automatically deduct the amount from your bank account equal to the SIP amount, and the proceeds will be directed towards the chosen mutual fund scheme.
- The One Time Mandate facility is safe and there are less chances of the failure of payments which might happen with other online payment channels due to technical issues.
- You can register multiple SIPs under a single One Time Mandate. However, the aggregate value of the SIPs registered should not exceed the specified limit on the mandate
- Automating your SIPs will ensure you are investing towards your goals in a disciplined manner as the process will happen on it’s own periodically.
How To Automate Your SIPs?
On Groww, the mandate can be given in two ways: autopay via OTP and autopay via the form. Here is what you should know:
1. Autopay via OTP
AutoPay is the next iteration of the biller mandate but it is more convenient than before. It helps in automating the monthly payments towards your SIPs.
Once the AutoPay is done, your monthly payments towards SIP will be done automatically without any intervention. It saves you the hassle of manually making payments towards your SIP. Also, it is quick to set up and completely safe.
Read more on Groww: How to Set-up Autopay via OTP on Groww
2. Autopay via Form
The Auto-pay via Form (previously known as OTM) is a one time process to setup a mandate, to enable recurring payments through a NACH form. This process is suitable for investors who, for some reason, do not have access to net banking facilities or simply wish to go this route.
Read more on Groww: How to Set-up Autopay via Form on Groww
The One Time Mandate, therefore, is a beneficial way of investing in SIPs. It acts like an e-wallet for investing in SIPs wherein your investments are done with the easiest payment mode and you don’t have to go through the payment process for every investment. So, the next time you opt for a SIP, add the One Time Mandate to your folio and transact with ease.
Happy Investing!
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.