There are some business terms you come across that leave you wondering whether you can manage to force your brain capacity to hold any more vocabularies.
So I’m about to introduce a new word people, but trust me you’ll remember this one.The word is ‘ money market fund’
I first heard it from Kennedy whose title on Linkedin read ‘ financial advisor from old mutual’.
At first I thought he wanted to sell an insurance policy to me.If You’ve been to or seen a situation that involves insurance policy selling before.You possibly know that if the answer is not yes,its either I already have one or I am a student or not right now or give me your number ill call when i’m ready.
So after two weeks I dragged myself to old mutual building to listen to this investment opportunities I hadn’t heard of before.
Me : So what does this money market fund do?
(In lay mans language)The money market fund is an investment account that holds your money and at the same time allows it to gain a certain interest just for being in that account.
Wait, you mean my money grows just by sitting pretty?How now?
You see ,when you bring your money the fund invests it in a number of places for you ,like in treasury bills,fixed deposit instruments and near cash holdings in the Kenyan market and that’s how your money gains interest.
Oh ,so my money is not just lying around and mysteriously duplicating itself,how am I sure you won’t loss my money?
The fund is normally exposed to limited risk since the areas we invest your money are for short term returns which substantially reduces the funds exposure to capital erosion and interest rate risk.
So what amount of interest does the money gain?
Returns on money gains an 8%-15% interest every month and is currently at 8.5%
How do you calculate the returns?
The interest is dependent on Market dynamics.Interest is declared daily and paid on a monthly basis.
How much is the minimum amount I can put into the account?
The minimum is ksh1000 to a maximum of one million
Can I add more ?what if I want to pick my money, can i have it immediately or do I have to wait for a certain date ?
This account allows you to be the driver of whatever you do to your money
Wait,the drive what?
It just means you can top up any time and as little as ksh 1,000 to as much as you want.You can pick your money any time.Withdrawals are processed within five working days.
Any charges whatsoever?
No Commission fee or Initial fee for individuals and institutional investors is charged.We offer one FREE withdrawal per month. However ,second and consequent withdrawals within the same month attract a penalty of ksh800 per transaction.
So how will i know what is happening to my account and how can I tell what interest rate has been placed on my money a certain month?
You will get free monthly email statements and market updates that include monthly fact sheets to illustrate how the fund is performing;plus comprehensive monthly and quarterly economic and market reviews.
So let’s try it practically?
lets say you want to save ksh5,000.The returns on your money each month could be ksh 400 to the least or ksh750 to the highest. In an year’s time that will make ksh4,800 to ksh9000.If you do top up to 6,000, 7,000 or which ever amount so do your returns also increase each month.
This to me sounded like that investment opportunity that could work for anyone, from that student who receives an mpesa of ksh 3,000 and they’re so delighted you’d think they won a jackpot,or that employee who wants to keep 10,000 shillings aside each month.or that spendthrift who can only be convinced to spend less by being assured that instead of buying random things they could actually save up to get the latest gadget.
Apparently the money market fund can be found in a number of places from mutual fund organizations ,brokerage firms and credit unions .In Kenya apart from Old Mutual you could visit Britam,CIC insurance,Central Bank of Africa ,Dyer& Blair and a number of other investment agencies where you could find out about the details in terms of interest rates,withdrawal charges etc