The term "First Order Today" (FOT) refers to the immediate processing of the first instalment in a Systematic Investment Plan (SIP) for mutual funds, ensuring that the first instalment is debited on the same day and the applicable Net Asset Value (NAV) is allotted. This is an important feature for investors who wish to start their SIP right away, as normally, the first SIP instalment is debited only after two working days (T+2).
How Does FOT Work?
When you set up an SIP, the first instalment typically cannot be processed immediately and is debited after two working days (T+2). However, by opting for First Order Today (FOT), you ensure that your first SIP instalment is debited on the same day the SIP is initiated. Additionally, the NAV applicable on that same day will be allotted to your investment.
Example 1: Starting an SIP Without FOT
Let’s say you decide to start an SIP on April 1st, 2025 but do not opt for First Order Today (FOT). In this case, the first instalment will not be debited immediately. Instead, it will be processed after two working days (T+2), meaning the first instalment will be debited on April 3rd, 2025. The NAV allotted will be based on the day the amount is debited (April 3rd).
Example 2: Starting an SIP With FOT
If you opt for First Order Today (FOT) on April 1st, 2025, the first instalment will be debited immediately on the same day. The NAV applicable to the date, i.e., April 1st, 2025, will be allotted to your investment. This allows you to begin your SIP without any delays, as the first payment is processed immediately.
Subsequent Orders in SIP
Once the first instalment is processed, the following instalments will occur based on the frequency you chose during the SIP setup (e.g., monthly, quarterly).
Example 3: Monthly SIP Deduction on the 1st of Each Month
Let’s assume that you are setting up a monthly SIP with a deduction on the 1st of every month. Here's how the process works:
- SIP Start Date: March 3rd, 2025
- Frequency: Monthly, with deductions on the 1st of every month.
In this example, the SIP is set to start on March 3rd, 2025. Since there must be a minimum gap of 30 days between the SIP start date and the first instalment, the first deduction will not occur on March 3rd. Instead, the first deduction will happen on the 1st of April, 2025.
- The second instalment will be deducted on May 1st, 2025, not on April 1st, as the 30-day gap must be observed between deductions. Therefore, the deduction on April 1st will not take place, and the next instalment will occur on the 1st of the following month, May 1st.
Important Notes:
- Delays in Second Instalment: If you opt for FOT, please note that the second instalment might be delayed, depending on the instructions provided by the fund. This could be due to various reasons, such as the fund's internal processing or the bank's system.
- SIP Frequency Flexibility: You can choose different frequencies for your SIP, such as monthly, quarterly, or others. Your first order today will be debited accordingly, and the subsequent orders will follow the schedule based on the frequency you've chosen.
Conclusion:
In summary, First Order Today (FOT) is a feature that enables you to immediately start your SIP, ensuring the first instalment is debited and the corresponding NAV is allotted on the same day. This can be beneficial for those who wish to begin their SIP investment immediately without the usual T+2 waiting period. After the first instalment, subsequent orders will follow the schedule based on the frequency you selected, with a minimum gap of 30 days between instalments.
For instance, if you're doing a monthly SIP with deductions on the 1st of every month, your first instalment will occur on the 1st of the month after the 30-day gap, and future instalments will continue according to the schedule you set up.
The term "First Order Today" (FOT) refers to the immediate processing of the first instalment in a Systematic Investment Plan (SIP) for mutual funds, ensuring that the first instalment is debited on the same day and the applicable Net Asset Value (NAV) is allotted. This is an important feature for investors who wish to start their SIP right away, as normally, the first SIP instalment is debited only after two working days (T+2).
How Does FOT Work?
When you set up an SIP, the first instalment typically cannot be processed immediately and is debited after two working days (T+2). However, by opting for First Order Today (FOT), you ensure that your first SIP instalment is debited on the same day the SIP is initiated. Additionally, the NAV applicable on that same day will be allotted to your investment.
Example 1: Starting an SIP Without FOT
Let’s say you decide to start an SIP on April 1st, 2025 but do not opt for First Order Today (FOT). In this case, the first instalment will not be debited immediately. Instead, it will be processed after two working days (T+2), meaning the first instalment will be debited on April 3rd, 2025. The NAV allotted will be based on the day the amount is debited (April 3rd).
Example 2: Starting an SIP With FOT
If you opt for First Order Today (FOT) on April 1st, 2025, the first instalment will be debited immediately on the same day. The NAV applicable to the date, i.e., April 1st, 2025, will be allotted to your investment. This allows you to begin your SIP without any delays, as the first payment is processed immediately.
Subsequent Orders in SIP
Once the first instalment is processed, the following instalments will occur based on the frequency you chose during the SIP setup (e.g., monthly, quarterly).
Example 3: Monthly SIP Deduction on the 1st of Each Month
Let’s assume that you are setting up a monthly SIP with a deduction on the 1st of every month. Here's how the process works:
- SIP Start Date: March 3rd, 2025
- Frequency: Monthly, with deductions on the 1st of every month.
In this example, the SIP is set to start on March 3rd, 2025. Since there must be a minimum gap of 30 days between the SIP start date and the first instalment, the first deduction will not occur on March 3rd. Instead, the first deduction will happen on the 1st of April, 2025.
- The second instalment will be deducted on May 1st, 2025, not on April 1st, as the 30-day gap must be observed between deductions. Therefore, the deduction on April 1st will not take place, and the next instalment will occur on the 1st of the following month, May 1st.
Important Notes:
- Delays in Second Instalment: If you opt for FOT, please note that the second instalment might be delayed, depending on the instructions provided by the fund. This could be due to various reasons, such as the fund's internal processing or the bank's system.
- SIP Frequency Flexibility: You can choose different frequencies for your SIP, such as monthly, quarterly, or others. Your first order today will be debited accordingly, and the subsequent orders will follow the schedule based on the frequency you've chosen.
Conclusion:
In summary, First Order Today (FOT) is a feature that enables you to immediately start your SIP, ensuring the first instalment is debited and the corresponding NAV is allotted on the same day. This can be beneficial for those who wish to begin their SIP investment immediately without the usual T+2 waiting period. After the first instalment, subsequent orders will follow the schedule based on the frequency you selected, with a minimum gap of 30 days between instalments.
For instance, if you're doing a monthly SIP with deductions on the 1st of every month, your first instalment will occur on the 1st of the month after the 30-day gap, and future instalments will continue according to the schedule you set up.
