5 Factors to Consider Before Choosing Perfect Money Market Fund Companies In Kenya

There are many Money Market Fund companies in Kenya one can choose from. Before choosing a company in Kenya to invest in, one should consider various factors. If you have no idea what Money Market Fund (MMF) are, read our previous article Money Market Fund In Kenya: A Beginner Understanding

Factors to Consider Before Choosing Money Market Fund Companies In Kenya

• The kind of things the company invests in 

You have the right as an investor to ask for the company’s portfolio. You wouldn’t consider investing in a company that invests in high-risk businesses that will put your hard-earned money to risk.

• The flexibility of one withdrawing money

Money Market Fund companies in Kenya allow you to easily withdraw money, hence are considered flexible. However, you have to inquire more from them to fully understand their terms and conditions on withdrawal of money. Like for example how many days it takes for you to get the money you have requested to withdraw and how much fees they charge when making a withdrawal.

Some companies will state that it takes 3-5 working days while others will have you get your money immediately depending on your urgency. On the issue of fees, some companies allow their investors to withdraw money fees-free at least once a month and others charge a certain amount. As a beginner in Money Market Fund, I will consider the companies that allow free withdrawal.

• The company’s age and its past performances

Some Money Market Fund companies in Kenya started many years ago while others just started recently. As a new investor it’s advisable to consider companies that started many years ago. Moreover, a good record is a value-added bonus and a go-for. If a company has a consistent record of good performance of delivering what they promise, they are highly recommendable unlike those that are inconsistent.

• Their minimum investment required and how much fee the company charges

Ask the company you choose to invest in how much is required as a first deposit and how much one is required to do as a top-up so that you can plan your finances. The good thing with the Money Market Fund companies in Kenya is that there are no penalties when you don’t make a top-up.

You have heard about Money Managers, right? The money managers charge a certain fee when investing money for you. There is a processing fee, transaction fee, management fee, penalties, and others. Maximally the fee should be 2%. Therefore, when you see a company charging something less than that, you should consider it. The withdrawal fee should also be around 1-1.5%. Notably, this is a factor that you should also be careful about when signing the agreement. These charges can ‘eat up’ all your savings without you realizing it.

• The company’s interest rate and if they offer deposit protection

If a company offers higher interest rates that’s better and you should consider it but you must be very careful not to choose one that quotes a higher interest than what is the Market average. If a company also offers more than what other companies offer, I mean like 3% higher than what others offer should also be a red flag. That might put your investments at risk. You might lose all your investments or make small returns if you choose a high-risk investment.

For you to be on the safer side, in terms of your investments, choose a company that offers you deposit protection. One of the biggest considerations you should put in mind is that you should be able to get your money back and then the interest gained.

How To Invest In Money Market Fund companies in Kenya

• First, you should pick a qualified or rather professional fund manager. 

Many companies offer Money Market Fund investment and it is important to first have enough knowledge of the company you want to invest in. You can read newspapers or do online research about the company to be informed on the trends in investments of various Unit Trust fund in the country. Or ask around from people who have invested in the companies before picking one before you fully commit to one. Make sure to ask about their good and bad sides in terms of investments. 

• Fill in all the application forms and provide your required documents.

It is easy to invest in Money Market Fund companies in Kenya. You only need to fill in the application form that a company gives you and provide all the personal documents required.

The documents required might include;

1. Copy of your national ID or a copy of your passport.

2. Your KRA PIN certificate.

3. Your bank details.

Some companies also require a copy of a utility bill and current residential details. You will also have a complete risk assessment so that the company can determine how much risk you can take up. For most companies, you do not need to visit their stores physically; you can do the registration online.

• The money

For you to invest, you first need money. For Money Market Fund companies in Kenya, you do not need a lot of money to start. In fact, you need as low as KES 3,000 to start your investment journey. Some companies may ask lower than that and others will let you know of their limits.

Why You Should Consider Investing In Money Market Fund companies in Kenya Than Investing Directly In Treasury Bills/Bonds

• Liquidity

For Money Market Fund you are allowed to withdraw your money anytime you need to use it while for Treasury bills, one has to wait until the money you invested matures.

• Capital Needed

For Money Market Fund you do not need a lot of money to start your investment journey. You can start with as low as KES 3,000 and other monthly deposits are not so high unlike Treasury bills where one needs a lot of money to be allowed to invest. For one to buy Treasury bills, you require a minimum of KES 100,000 while Treasury bonds require at least KES 50,000.

• Time Factor

For Money Market Fund, one can just register with a company from the comfort of his/her home; hence, it is less time-consuming. However, for Treasury bills/bonds, one needs to submit forms to the Central Bank of Kenya, place, and bid, and wait. In fact, it is time consuming to say the least.

Frequently asked question:

Can Money Market Fund lose money too? The answer is YES. 

Just like any other investment Money Market Fund can give negative returns, making the investors lose money. It is important for you to always keep that in mind, but again that does not mean you should not invest with them.

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