This low-risk investment tool has quickly replaced the idea of people, groups or organizations opening a savings account at the bank to save for a rainy day. With today's economic liquidity, money has become a very volatile asset that has created various business opportunities where one may invest his or her savings in.
What are Money Market Funds?
Money Market Funds (MMF's) are mutual funds that invest in short term investments such as government securities and commercial papers. They are used to finance and maintain highly valued assets through pooling of financial resources from investors and paying them profits in form of dividends.
How do MMF's they work?
They offer a 4% -10% interest rate p.a on investment, depending on the fund manager you invest in.
Photo Credits: Svndance Ke
The interest earned is added to your account at the end of every month, with the option of reinvesting it into the fund for maximum returns on your investment. Most funds allow a initial deposit of Kshs 1000 and a minimal monthly investment of the same value or higher.
This is twice or thrice the rate of bank savings accounts, if you do your research ~Internet.
Your funds are always readily available for withdrawal. Once you put in a request it takes 3 -5 days before your request is confirmed and processed.
About Money Market Funds...
Be careful when choosing the appropriate fund you want to start investing in. Some funds have a high-valued, or rather aggressive, investing strategy that might put your investment at risk.
If a fund is offering returns that are 3% upwards higher than its peers, it may be pursuing an aggressive investment strategy that may put your investment at risk ~Kellie, Rookie Manager.
Be sure to ask away about detailed pointers such as: Rates, Management Fee, Minimum deposits, Withdrawal Charges, Instruments they will invest in and other hidden charges.
Here are some MMFs in Kenya you can familiarize yourself with:
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