Wadau,I have seen some financial advisors recommending Money Market Funds as areas that one can venture…now my big question is whether depositing cash periodically ie every other month can be considered as saving or it falls under the category of investing (assuming the interest is compounded monthly at 9% p.a)
If you are young say 25 years
Look for a good/stable Unit trust.
start with 50k, Every month deposit 10k. When you will be 40 years you will have 4m.
That amount can help you pay for university abroad for your kid.
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Compounding Interest has been claimed to be Wonder of the World
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From my example above do you think 15 years is long?
That is just 2005.
Imagine a person who started this investment now he has 4m.
Let nobody cheat you about inflation.
My bro bought a NZE on 2008 for around 900k fresh import KBE. I remember very well.
NZE now is like Axio, Axio now is around 1,100,000.
If he saved the 900k in such a fund WITHOUT CONTRIBUTING ANYTHING monthly after 12 year now in 2020 HE WOULD HAVE 2.6M.
That NZE aliuza 650k after 4 years.
Now see the difference of small decisions.
COMPOUNDING interest is the mother of all investment. Understanding it is most important investment you can do.
Nice example.
Other investment options apart from unit trusts?? Also is there something shorter/flexible that you can withdraw some of the cash for an emergency ??
Maneno ya tbills/bonds na fixed deposits unaonaje??
Compound interest is your friend, so a money market fund is a a hybrid of the two in my opinion. Best of both worlds with capital preservation and modest interest rates.
Those financial advisors are just trying to earn their daily bread, they have no money in those funds.
Sasa, jua hivi, for you to park your money there, you must have huge amounts of money, which cannot be invested in other places.
io ni mahali ya wazee wenye washamaliza kuzaa na kusomesha, wenye wako comfortable na interest tu kidogo ya kukula na kukeep up na inflation.
weka pesa kwa mmf kama wewe ni kiwete ama unafanya kazi somalia na hauna time ama uwezo wa kufanya biashara
If you are 25 years, and start a shop with 50k, amd every month you inject 10k into the shop, on top of the earned profits, kitambo ufike 40 you will be a lord of the land, sharing table with other owners of capital as equals. Hapana weka pesa parking.
Kama ukona 1m mbele nyuma don’t. But some people have some chums to do many things with.
About inflation a car 2005 which was 900k a NZE
If I parked the 900k on a unit trust of 9% WITHOUT ADDING anything today I would have 2.6m. Who has not beaten inflation. What car can I buy with 2.6m now??
Your problem is you think everybody has just 50k mbele nyuma, or someone has nothing else to do than doing hio kiosk, that your business will always make profit, that whatever you will ever do you will succeed :D:D:D:D:D:Dyour assumptions are too many, his assumption is only a 9% rate + the company doesn’t go down.
Its not a secret that even when you follow on successions court cases you will hear about considerable amount of funds are on fixed accounts by rich people.
It reaches a point in a man’s life you need to have many investment vehicles.
Have you heard of a Government Bond security being repossessed? Never. What about the land being repossessed, business being demolished, KRA coming for you, apartments being demolished.
Everything has its own risk. Most important thing is getting a strategy of making wealth.
One sure way of making wealth is using compounding interest world over.
If you want to make money ever then do other things.
Why is it generally people get money from business and they park it on rentals?
Compounding at its best. Wealth creation.
Wacha kumislead kijana, at2
Lol.
You talk like those guys who sell insurance saving and investment policies. I only believe in land investment. An acre bought for 350k in the outskirts of Eldy in 2008 is now worth 10M.
Be very careful because in Kenya it’s not risk free. Amana capital’s money market fund has virtually collapsed with people’s money. They claim that it’s because they invested in Nakumatt’s corporate bonds but I don’t know about that.
I think investing in reputable firms like CIC can serve to minimize the risk
Mmf is a high risk,try a mutual trust fund.From Understanding of MMF is it’s liquidity accessibility when the need ofwithdrawing arises ,that’s why people use it .However, you need to do your shopping when finding a reliable MMF broker.
Nice thread, please elders bring more insight
I think MMF can work well for a person who want to save his/her money but instead of stashing it in the bank where it will get little or no interest.Also as one gets to enjoy the power of compound interest since MMF like CIC compound the cash invested monthly.
Just buy CBK T-bills and T-bonds yourself. Interest is the same. Why risk someone else keeping your money?
Watu wa cyton wanalia Kwa choo
It is not a saving scheme, it is a low risk-low return investment, as part of your diversification strategy, you must allocate around 20% or more of your investments to this category and the percentage should go up the older you get as your risk tolerance drops
how do you compare it with investments like real estate rental flats who ROI in the most ideal case is 10%?