Hi there! Welcome to Gift-Nifty, where you can explore what is OTM in Mutual fund. What would you do if you had to choose between automating your purchases and starting them by hand through complicated steps? Investors who are good at their jobs would pick robotics.
It can save you time, effort, and money to have your mutual fund payments done automatically! A One Time Mandate (OTM) is one way to do this.
In mutual funds, OTM makes sure that your bank and the AMC are on the same page so that payments are made on time for your lump sum or SIP investment.
We’ll talk about what “OTM” means in mutual funds and why it’s important for you in this piece.
OTM in Mutual Funds
The letters OTM stand for “One Time Mandate” in mutual funds. During the one-time registration process, you give your bank permission to take a certain amount out of your savings account to buy units in a certain mutual fund plan..
Automating the investing process makes choosing an OTM easier.
Thereafter, the bank will take a set amount out of your savings account on a daily basis and add it to your Systematic Investment Plan (SIP) portfolio.
When is OTM Used for Mutual Fund Investments?
If you’re smart, you can already guess some of the ways an OTM can be used. It makes sense for things like SIPs where you want a set amount of money to be taken out every month.
What about moving money between mutual funds or taking money out? Keep reading to find out more.
Used:
- Systematic investment plans, or SIPs, are deposits that are made daily.
- When you buy something with a lump sum, you may get a one-time tax break.
Not Used:
- Systematic Transfer Plans (STPs) move money between mutual fund plans regularly, which needs its own set of rules.
- Systematic Withdrawal Plans (SWPs) involve taking money out of mutual fund purchases regularly, which also needs its own set of rules.
OTM doesn’t work for STP and SWP because they involve regular, often different deals between different mutual fund schemes, and each one needs its own permission.
How to Register an OTM?
We’ve talked about how OTM makes banking easier by letting you only register once.
In other words, you have to let your bank take out a certain amount of money from your account.
Here’s a quick look at how to sign up for OTM:
- Info about the bank account: Enter the name of your bank, the office where you have an account, the account number, the type of account, and the IFSC code. Don’t forget that you can only use one bank account to sign up for OTM.
- Tell them about yourself. Give them your name, date of birth, PAN number, address, phone number, email address, and so on. If you and someone else own the bank account together, include information for each person.
- Set Mandate Limit: Pick the largest amount that can be debited. Any transactions that go over this amount will not be processed.
- Give your folio number and choose either a set amount (good for regular SIP investments) or a maximum amount (best for one-time lump sum payments). Also, say how often your funds will be debited, like once a month, three times a year, every six months, or as needed.
- Signature: Everyone who has an account must sign the OTM form, and the signatures must match the ones the bank has on file.
- The bank will take care of your request after you send in the form. After it’s been processed, you’ll be able to use the OTM service to buy mutual funds.
- Also, OTM can be used on Dhan as AutoPay for both SIP and lump sum payments!
Benefits of OTM in Mutual Funds
OTM in mutual funds offers several benefits:
Simplicity
One Time Mandate (OTM) in mutual funds is simple because it’s easy to sign up for.
When you sign up for OTM, you give your bank permission to take out an amount up to the cap you set for investing in mutual funds.
This process only needs to be done one time, so it’s easy and clear.
One-time Process
It only needs to be done once. When you sign up for OTM, you agree to have money sent automatically and regularly from your bank account to your mutual fund purchases for a certain amount of time.
It makes the investment process easier and faster for you because you don’t have to accept each transaction by hand.
Versatility
You can use over-the-counter (OTC) in mutual funds for both lump sum and SIP trades.
You can use OTM to spend a lump sum (a lot of money all at once) or make regular, smaller investments (SIP).
Because of this, OTM is a flexible tool for mutual fund purchases that lets you pick the investment method that fits your financial goals and risk tolerance the best.
Efficiency
The fact that OTM can automate trades makes it useful for mutual funds.
It will take care of your investments in the chosen plan until you reach your financial goal once you set up OTM.
This saves you time and effort because you don’t have to do it by hand every time.
The OTM system makes sure that your investments are made regularly and effectively, without you having to keep an eye on them all the time.
Also Read: Understanding SIP in Mutual Funds!
Being on time
When it comes to mutual funds, OTM gives you time. There is a better chance that you will get your units on the same day if you start a Systematic Investment Plan (SIP) through OTM.
This is because the money is sent out the same day the deal is made.
This timeliness makes sure that your investment is handled quickly, which could help you profit from changes in the market and make your mutual fund investments more useful.
Hassle-free
Lastly, OTM in mutual funds makes it easy to invest. Investors give OTM their permission just once, and then their purchases are made automatically for the given amount of time.
You don’t have to worry about remembering to invest or doing each deal by hand.
All of this is taken care of by OTM, so you can focus on other important parts of your journey to financial freedom while your mutual fund purchases are taken care of.
Conclusion
In conclusion, buyers should use a One Time Mandate (OTM) in mutual funds. The process of investing is made easier and more automated, which saves time, effort, and money. With OTM, you only have to sign up once, and your bank will take care of all of your mutual fund payments, whether you spend a lump sum or over time. This automation makes sure that your payments are made on time and without any problems. This makes it easier to handle your investments without having to constantly check on them by hand. OTM is a great tool for anyone who wants to make their mutual fund purchases easier because it is simple, flexible, and quick.
FAQs
What is OTM in mutual funds?
One Time Mandate is what OTM stands for. It’s the process of giving your bank permission to take a certain amount out of your savings account every month to invest in mutual funds.
How does OTM benefit mutual fund investors?
OTM makes the investment process easier and more automated, which saves time and work. It makes sure that both lump sum and SIP investments are paid off on time, without anyone having to do anything.
Can OTM be used for all types of mutual fund transactions?
That’s not right. OTM is mostly used for SIPs (Systematic Investment Plans) and one-time purchases. Systematic Transfer Plans (STPs) and Systematic Withdrawal Plans (SWPs) don’t use it because they need their own rules.
How do I register for OTM?
You need to give information about your bank account, yourself, and your pledge limit on a form in order to sign up for OTM. Everyone who has an account must sign the form, and their signatures must match the ones the bank has on file.
What information is required to set up OTM?
Your bank name, branch, account number, account type, IFSC code, name, date of birth, PAN number, address, phone number, email address, and order limit must all be given.