The Power of Money Market Fund in Saving

By Joel Korir

Head of Retail Distribution

Jubilee Asset Management

Saving is the bedrock of investing. It provides a foundation for building a pool of resources essential for the investment journey. Building a substantial pool of savings provides financial cushion and the flexibility to explore various investment opportunities with confidence and security. Individuals who are keen to grow their money must begin by saving.

Successful saving is significantly influenced by the choice of saving vehicle an individual selects. The vast amount of information about saving and the multitude of available saving channels can sometimes make it difficult for individuals to make informed decisions.

I would like to share some key factors that you should consider when choosing a suitable savings channel.

1. Interest rates – Select an investment avenue that provides competitive interest rates to augment the value of your invested funds. Remember, letting your money sit idle is similar to stalling its potential growth.
2. Accessibility – Evaluate how quickly you can access your funds. Sometimes, financial needs arise unexpectedly, or circumstances change. Having accessibility to your savings provides flexibility to adapt to these changes without facing penalties or restrictions. Additionally, if you have short-term financial goals like a vacation, home renovation, or purchasing a car, a savings vehicle with accessibility ensures you can reach these goals without having to wait for a lengthy withdrawal process.
3. Goals and time horizon – Align your choice of saving vehicle with your financial goals and time horizon. Short-term goals might benefit from highly liquid accounts, while long-term goals could be better served by options with higher returns and potentially more risk.

Why is the Money Market Fund one of the best savings vehicle?

Money Market Fund is one of the products under the umbrella ‘Collective Investment Schemes (CIS) or what is commonly referred to as Mutual Funds or Unit Trusts. These are pooled funds that are managed on behalf of investors by a Fund Manager. The products under Collective Investment Schemes are; Money Market Funds, Bond/Fixed Income Funds, Equity Funds, Balanced Funds, Special Funds, USD Funds and Real Estate Investment Trust (REITS).

The main benefits of the Money Market Fund are:

• Good returns above fixed deposits and savings accounts.
• Interest is earned daily and compounded on a monthly basis.
• Stability and diversification because money is invested in different institutions as well as short term instruments such as Fixed Deposits in tier 1 banks, T-Bills, T-Bonds and secured commercial paper.
• Liquidity and flexibility as there is no lock-in period or restrictions on deposits or withdrawals.

How does Money Market Fund Work?

When you invest your money in a Money Market Fund, the money goes through the fund manager who has a team of Investment Analysts and Portfolio Managers. This team does market research to ensure that your money is invested well guaranteeing a stable return. The money goes through a Custodian bank who also acts as the Fund Trustee. They receive the funds and act on instructions from the Fund Manager on where to invest the funds.

The Jubilee Money Market Fund is one of the top performing MMF in Kenya. You can set up Money Market Fund account with as little as Kes 5,000. Simply click: Top Performing Money Market Fund in Kenya  to sign up online, or dial *706*3#.