Why invest in a Money Market Fund

Benefits of money market funds in Kenya

Money Market Funds in Kenya

Money market funds (MMFs) are a great way to grow your wealth in Kenya.

Most money market funds in Kenya will automatically compound your investment every month. Examples of such are:

• CIC Money Market Fund

• Sanlam Money Market Fund

They do this by crediting your daily interest into your money market account at the end of the month.

This means that in the next month, your credited interest will earn you more interest! Before you know it you are a millionaire :)

See below how various amounts invested in a money market fund would compound over time:

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If you want to find out how a specific amount would compound over time, use the compound interest calculator.

Here are some of the benefits of investing in a money market fund:

• As mentioned above, you get to use the power of compound interest to grow your money

• You will enjoy high liquidity. For example, in case of an emergency you can withdraw and have the funds in your bank within a minimum of 3 working days. There are no penalties for withdrawing funds.

• It is easy to start investing with MMFs. You can start with as low as Ksh 2,500!

• You also get access to a professional fund manager despite the low starting capital!

• It is also easy to top up your account if you want. The minimum for most MMFs is Kshs 1,000.

• Due to their low risk nature, MMFs are a great way to preserve your capital while earning higher returns than a bank savings account.

• Money market funds are a great source of monthly passive income.

• You also get access to the performance of the investment via monthly statements. Most MMFs in Kenya also have online portals and apps that you can use to access the same.

• There is flexibility to move from a money market fund to another riskier but potentially more rewarding unit trust such as an equity fund or a balanced fund.

• Most MMFs in Kenya are tax exempt. This means your investment within the fund gets to grow tax free within the fund hence earning even more returns! However, please note as an individual you are subject to 15% withholding tax on the interest earned on your money market fund investment. This is still better than the 30% tax charged on employment income.

How to join a money market fund in Kenya

You will need the following documents to open a money market account:

1. Copy of your ID Card or Passport

2. Copy of your KRA PIN Certificate

3. Passport photo

4. Copy of your Kenyan bank details (original cancelled cheque or ATM card or bank statement)

5. Filled in money market fund application forms

CIC Money Market is the largest money market fund by assets under management. This makes it the best money market fund in Kenya. It has a market share of over 40%, meaning most Kenyans trust their money with them.

Here is a link to step by step guidance on how to join CIC Money Market Fund

If you are looking for an alternative, you can opt for the Sanlam Money Market Fund which is known for its excellent customer service.

Here is a link to step by step guidance on how to join Sanlam Money Market Fund

If you would like more information, check out the frequently asked questions regarding money market funds in Kenya.

Incase of any questions, feel free to send me an email (nashthuo@gmail.com) or a WhatsApp (+254724823266).

See below video tutorials on Money Market Fund in Kenya:

• The Power of Compounding: How to Grow Wealth in Kenya

• How to invest with Money Market Funds in Kenya

• How Calculate the True Daily Yield of Money Market Funds in Kenya - Part 1

• How Calculate the True Daily Yield of Money Market Funds in Kenya Part 2

• How to fill the CIC Money Market Fund Application form - the Easy way!

• How to complete the Sanlam Money Market Fund Individual Application Form

See you in the next one :)

1. The image above uses the current return of 7.6% (net of management fees and withholding tax).

2. It also assumes that funds invested are allowed to compound over the period i.e. No withdrawals