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How to Invest in a Money Market Fund in Kenya

Money Market Fund in Kenya

Have you heard of Money Market Funds (MMFS)? Have you been stuck on how to start investing or where to invest? Why let your money sit idle in a bank or under your mattress? Did you know that you could be earning solid returns through a Money Market Fund (MMF)? What are Money Market Funds in Kenya? Ultimate guide on investing in Money Market Fund in Kenya.

Introduction to Investing in Money Market Fund in Kenya

What is an MMF?

A Money Market Fund (MMF) is a type of mutual fund that invests in short-term, high-quality, low-risk securities like government bonds, treasury bills, credit-rated commercial papers and bank deposits.

Money Market Fund (MMF) investments have become significantly popular in Kenya.

They provide a low-risk investment option by focusing on short-term assets, reducing the risk associated with long-term investments.

MMFS offer high liquidity, where investors can quickly access their funds, often within 24-48 hours, making them ideal for short-term financial needs.

Money Market Funds offer higher and better returns compared to traditional savings and current accounts offered by banks, which have low or no interest.

They are a low capital investment, where investors can start investing with as little as Ksh 1,000

They are also flexible, allowing investors to top up with any amount.

Investing in MMfs helps investors diversify their portfolio; instead of investing in only one portfolio, you spread the risks

Why invest in an MMF?

Low Risk

Money market funds make investments in safe, short-term, low-risk financial instruments like commercial paper, Treasury bills, and government bonds.
These investments are a reliable choice for novice investors because they carry less risk than stocks or real estate.
An MMF seeks to provide modest returns while protecting capital.

Good Liquidity/Flexibility

MMFS provide high liquidity, making it simple for investors to access/withdraw their money anytime.
MMFS lets you take your money out fast and penalty-free, unlike other investment options that can force you to lock it in for a longer time.
MMF investment offers a good platform for short-term investment goals.

Safety and Security

MMFs are considered safe. By making investments in low-risk securities, money market funds offer this security.
Additionally, MMFs are regulated by the Capital Markets Authority (CMA). These funds are subject to strict regulations, guaranteeing the stability and quality of the investments they own.

Money market funds are a safer place to start because you are less likely to suffer significant losses compared to more volatile investments like stocks and real estate investments

High returns:

MMFs provide high returns that are compared with traditional savings accounts, like banks, mobile saving platforms like M-Shwari or putting money under the mattress

Best alternatives to leaving your money idle in the bank, earning minimal interest

Diversification:

MMFs investments help investors to diversify their portfolio, spreading risk and potentially improving returns.

How to start investing in Money Market Funds in Kenya

Research on the various Money Market Funds in Kenya, compare their fees and performance and choose which aligns with your interests the most. Open an account with your money market manager of your choice

Requirements to open an MMF account

What you need to invest in the Money Market Fund (Depends on the fund)

Copy of National ID or valid passport, or Alien ID card (for all foreign nationals)
A Copy of KRA PIN Certificate
Provide a Copy of Birth certificate (if for a minor)
Proof of Banking Details: Cancelled cheque, or copy of ATM Card or Certified Bank statement (not more than 3 months old) or Certified letter from the bank confirming account details.

Minimum amount to invest in MMF Kenya

The minimum amount to invest in MMF Kenya varies from one fund to another, but usually ranges from KES 100 – KES 1,000

Top-performing Money Market Fund in Kenya

Gulfcap Money Market Fund
Cytonn Money Market Fund
Nabo Africa Money Market Fund
Etica Money Market Fund (KES)
Madison Money Market Fund
Kuza Money Market Fund

Benefits of Money Market Fund in Kenya

Low investment capital, as little as Ksh 100)
Convenience (mobile apps make it easy)
Liquidity
Low Risks
Competitive returns
Diversification

Parting Shot on Why Invest in a Money Market Fund (MMF)

When you’re new to investing, it’s easy to feel overwhelmed by the numerous options available. It might be difficult to know where to begin, whether to venture into investing in stock markets, bonds, or real estate, among other plans which are there.

However, a Money Market Fund (MMF) can be the best initial investment for novices seeking a low-risk, flexible, and safe choice.

If you haven’t considered investing in a Money Market Fund in Kenya, you might be missing out on one of the easiest, low-risk ways to grow your savings!