Money Market Fund In Kenya
Should I save in a Sacco or in a Money Market Fund, (MMF)?
This is one question we get from a number of investors. Our advice is that a Sacco and a Money Market Fund serve very different purpose in one’s financial goals.
Some of the Main Differences are;
In a Sacco you save with an aim of borrowing a loan. Most Sacco’s will give you a loan worth 3 times of your savings. A Money Market Fund gives you a platform where you save for short term or a long term goal while earning interest on the savings, it doesn’t give you a loan.
- In a Sacco you make monthly contributions while in a Money Market Fund you have a choice of a single lump sum deposit, regular or irregular top ups.
- Savings in a Sacco are locked and only accessible as a loan or complete withdrawal from the Sacco while in a MMF you can access your money on short notice within 2-3 working days.
- A Sacco gives you annual dividends on share capital and member's savings while in a MMF you earn daily interest compounded monthly.
- MMF is ideal for an Emergency Fund, accumulating project financing, flexible savings plan, Capital preservation for a project, while a Sacco or a Savings plan gives you the best platform for long term goals.
- Sacco’s are Regulated by, Sacco Societies Regulatory Authority, (SASRA) while Money Market Fund is regulated by Capital Markets Authority, CMA.
Our recommendation is that both are important depending on the goals you are setting to achieve.
Contact us to share more details on Money market Fund and help you open your investment account.
Is my Money Safe?
Every investment, involves some percentage of risk. However, you can control the level of risk you are exposed to. Money Market Fund is one of the safest investment option available in Kenya.
MMF invests mostly in Treasury Bills, Fixed Deposits, Call-Deposits and on corporate papers. These are short term, conservative and low risk opportunities. In addition to these secure avenues, the fund
managers are regulated by the Capital Market Authority, (CMA). They have trustees who ensure all investment processes and due diligence is followed to protect the investors funds. The fund manager also has a Custodian who is responsible for the safe keeping of the pooled fund. The custodian is usually a bank where the funds is deposited. This custody account is separate from the bank balance sheet/operational accounts. CMA requires that a Fund manager can only invest up to a maximum of 25% on a single channel.
Does the interest Percentage change?
Interest rates on the Money Market Fund slightly fluctuates with the changing rates of treasury bills and the bank lending rates. The interest is earned on a daily basis, compounded at end of every month and a statement shared on email. The Current interest rate with our preferred fund manager CIC Asset Management LTD is an average of 9% per year.
Is my money Locked/Fixed?
Money Market Fund is among the safe avenues you earn interest without fixing /locking your money. Instead of keeping your money in a current bank account or a fixed account, this is the best alternative and interest bearing avenue where you can invest and be able to access your funds easily within 3 days upon request.
How do I start investing in MMF?
The procedure is very simple, fill an application form, attach a copy of ID, Pin, passport photo and proof of bank details. Share this on email or WhatsApp (Email and whatsapp link for earnest). By the following working day you will receive a member number on your email and sms with a guide on how to make the deposits.
How do I withdraw my Money?
The process is very simple and smooth, you can withdraw via Email request or the Mobile App provided by the Fund manager. The money is usually sent back to your bank account which you provide when filling the application form. This takes 2-3 working days.