12 tricks to help you save and reach your financial goals faster

There is always an opportunity to save money to help you reach your goals faster. Here are some tricks you can use to help you save a little bit more if you are having difficulties finding money to save or in addition to your regular savings schedule 

1. Save automatically before you spend. 

When you get your income, before you do anything else, deduct your savings and put them into a savings account. To make it even easier, set up a check-off system from your employer (payroll department) to a money market fund or Sacco savings account or set up a standing order from your current/salary account to a savings account so that money is deducted automatically from your main account and transferred to your savings account before you touch it. Saving automatically is the best way to save without a struggle. 

For those who pay income tax (pay as you earn/PAYE), doesn’t the government take off 30% or so before you even touch your salary? And after the government and NHIF, NSSF, insurance, loans and everyone else has taken their cut, they leave the rest to you and you learn how to budget around it. Why not include yourself in the group of people who get their cut first, before you distribute what is left to your landlord, school and all those other people who are waiting for a chunk of your income? 

If you say that you will save after you have finished paying the bills, you will never have any money left to save, so prioritise and automate your savings. 

2. Save your loose change. At the end of every day, I empty my purse and divide the various coin denominations I find in there into two. For example all 10 bobs are put into two piles, then all 20 bobs and all 5 bobs. The first pile goes back into my purse, and the second pile goes into the piggy bank I use for saving coins. When it fills up, I top up if I need to and transfer it to my money market fund account.

 

3. Save all 50 bobs or all 100 bobs that pass through your hands. Just like in (2) above, you can decide to save all the Sh50 or Sh100 or any other denomination of your choice that pass through your wallet. 

4. When you finish paying off a loan, don't stop. What do I mean? Take that money you've been paying a loan with and set up an automatic standing order to a savings account or set up a check-off system to a money market fund. So say you've been paying Sh5, 500 for a loan every month and you have just finished paying your loan, instead of finding ways to spend that Sh5, 500, start saving it, preferably using an automatic standing order or check-off system. If you save that Sh5, 500 you used to pay your now paid-up loan with for 12 months, you will have Sh66, 000 to help you reach your savings goals faster. 

5. Save your salary increment. If you get a raise (salary increment) at work, instead of adjusting your budget/lifestyle upwards to absorb that money, continue living on the same amount you were living on before (as if you are still earning the old salary) and save the extra amount your employer has given you. So say you get a Sh6, 000 raise, you can set up a standing order to save that money automatically and in 12 months, you’d have Sh72, 000 in savings. This is the same principle in number (4) above. 

6. The same applies to if you “find” money. Finding money means getting money you were not expecting, such as a refund, a discount, reimbursement of costs by your employer, or even finding a Sh1, 000 note in a trouser pocket you had forgotten long ago. Instead of using that money, put it directly into your savings account without second thought. 

7. Save your lunch money. Carry lunch to work a few days a week and save your lunch money. For instance, if you usually buy lunch at work for Sh300, you can decide that on Mondays and Thursdays you will carry lunch from home, so that week, you save Sh600 and put it into your savings account. You could decide to carry lunch three days a week, so that week you'll save Sh900. You could decide to carry lunch the whole week, so that week you'll save Sh1,500 or more.

 

8. Save your fuel. You could do the same with your car. If public transport is cheaper than using your car, you could decide that three days a week, you'll take a matatu home and save the amount you would have spent on fuel on those three days. You could also decide that that whole week, you'll take a matatu and put the amount of money you would have used on fuel into your savings. 

9. Do a spending fast. In religious circles, to fast is to abstain from food/eating for a specified period of time during which one says fervent prayers for a specific purpose. You can apply this principle to personal finance to help you save. This is basically the principle behind point (5) and (6) above and it basically means cutting off everything that you don’t need to survive and saving the money that you would normally use on the non-essentials. 

To be able to do a proper spending fast, you have to first know where exactly all your money is going -- every last coin -- so first track your expenses for a month and then evaluate what you actually need (essentials/things that you honestly cannot live without) and things you can actually do without. 

Once you see where exactly your money is going, you can cut back on the non-essentials and the money you save by not spending, should go directly to your savings account. This could mean carrying lunch instead of buying lunch every day (if you carry lunch from home for a full month, and you usually spend Sh300 on lunch every day, you’ll be able to save Sh6, 000 or more that month. Put it into your savings account). You can also cut back on coffee and alcohol, you won’t die without them (unless you are addicted). Say you spend Sh3, 000 on alcohol every weekend, if you decide to reduce that amount to Sh1, 000, you will save Sh8, 000 that month. If you decide to do an alcohol-free month, you will save Sh12, 000 that month. You can even decide to do without DSTV for a month, you won’t die from not watching pay TV. 

I’m not saying that you shouldn’t have fun; saving is not all gloom and doom; on the contrary, if you learn how to optimise your spending, you will not only have more fun and less stress, but you will also be able to achieve those things you only used to dream about, but thought that you could never afford them. 

Secondly, if you do your spending in moderation and do your spending fast for limited periods of time (rather than forever -- that would make you a miserable miser), you will find money to boost your savings. (We’ll talk about having fun while still being able to save in another post.) 

10. Carry only the exact amount of money you need. This goes hand-in-hand with the spending fast. So say my fare is usually constant at Sh200 for the trip to work and back and I use Sh200 for lunch, that day I will carry exactly Sh400 in my purse or Sh500. I will make sure that my Mpesa balance is zero (and resist the temptation to opt into Fuliza), that my bank accounts are not linked with mobile money, so I can’t transact from my phone, that I don’t carry ATM cards, etc. This means that even if I am tempted to buy things on impulse, I simply cannot because I don’t have any money on me to spend. (We’ll tackle impulse buying in another post). 

11. Round it up. When you buy something and the cost does not end in 0 (zero), save the amount of money it would take to get the cost to end with 0 (zero). For example, if you buy something costing Sh42, put the 8 bob change in a piggy bank or transfer an equivalent amount to your Mshwari Lock account. If you use a piggy bank, when it fills up, you can transfer the full amount to your savings account or money market fund. 

12. Lastly, make it difficult to access your savings. A savings account without a debit card (ATM withdrawal card) and with limited withdrawals, is best. I have a Sacco savings account that only allows you to withdraw money at the end of the year. 

I have a money market fund account where withdrawing money takes like three days and where the first withdrawal is free, but subsequent withdrawals are charged Sh1,000 per withdrawal. 

When I think of paying Sh1,000 to withdraw, I just let my savings be unless I have actually accumulated the exact amount I need to meet a certain goal, then I can withdraw and pay for my goal without feeling the pinch. So do whatever it takes to create a barrier between you and your savings, to make it hard for you to withdraw your savings anyhow and any time. You are saving for a purpose and you cannot achieve your financial goals if at all you can withdraw your savings randomly to buy things on a whim. 

I hope these tips help you save more money, and if there are additional tips you use, please share in the comments. Happy saving! 

*These tips were first shared in the 52-Week Savings Challenge Kenya in 2016

What you need to know about WhatsApp import groups

By MJC

If you have been on Facebook for a while, you may have noticed an influx of WhatsApp import groups. These groups are formed to get many people together to import few pieces of merchandise each collectively, so as to attain minimum order quantity (MOQ). Coming together to import goods in this manner has helped a lot of people who are starting out with little capital, and who can’t meet the MOQ by themselves.

However, having been a member of many such groups, there are a few negative aspects I have noted as explained below: 

1. The buying price and/or shipping charges might be slightly or grossly inflated. The founders/admins of these groups are more often than not, doing it to make money. This is not necessarily a bad thing, but most act like they are doing it from the goodness of their heart, when in fact they are there to make money out of it. They make money by slightly or grossly inflating the buying price as well as the shipping charges. Not forgetting pesa ya kutoa that you will add as you send the money via Mpesa.

2. Quality is not guaranteed. Most of the admins of these groups do not first get samples of the items to check quality. So sometimes you will get very poor quality items and you the member, will just have to take the loss –  a huge one if you dared make a large order.

3. There might be no compensation for items lost before they get to you. If an item is lost whether at the point of being packed by the supplier, in transit or at arrival shauri yako! There may be no compensation for you. And if compensated it either takes a long time to get the compensation or you are compensated with something totally different from what you wanted.

4. Dishonesty. Like I said most people who come up with these groups (the admins) are there to make money, which they won't tell you. The intense kind of work that's needed when putting together these group orders simply cannot be done for free. You will pay for it in one way or another. Some will combine different shipments and charge the group for the whole shipment yet the group’s merchandise was only a part of the shipment. Some will use the money you pay them for something else and then pay for your items much later. This means your items will arrive months late because the money for your items was diverted to other things. Which is not so bad if you are buying for personal consumption, but detrimental if you are buying for business because by the time you get your items, the market will likely be saturated with the “unique” item that your WhatsApp group ordered.

5. Poor customer service. In some groups you will be treated very poorly. If you question anything you feel is off you will be berated, sometimes even insulted. Some admins don't even answer your questions within the group or if you contact them directly.

6. Con men. There are a few con men and women who have managed to swindle people out of their money using these import groups. I have seen it in two groups.

7. Undisclosed storage fees. Some of the admins  of the import groups don't have shops in town (Nairobi CBD) which means they have to store items in other people's shops who then charge you daily storage fees. The longer you take to pick your items, the higher the storage fee you pay. So, if you take several days to pick your consignment you may end up having paid retail prices for the items after including storage fees in the mark-up, which means you can’t sell your items at a competitive price. Often you are given a day or two to pick your items before storage charges start to apply, but in some cases, the charges apply from the first day.

8. Herd mentality that makes you buy worthless or hard-to-sell products. It's normal human behaviour to gravitate towards things that seem to be popular. But take your time to actually research about that popular product, check if there is a market for it before you order several pieces that you will be stuck with.

 I did encounter a group where the admin was very honest, was kind enough to teach us the process of importing for ourselves, did not inflate prices, made sure everyone got their order,  so there is still hope you may yet find a group that's a good fit. (Unfortunately she quit group orders after a couple of times. I told you the work involved is too intense to be free).

In conclusion, WhatsApp import groups can be of great help, but you have to go in with your eyes wide open. Be ready for all the things I've listed.

• Demand for accountability and better customer care because contrary to what the admins of these groups want you to believe, it is a business and you are their customer.
• Research and know the wholesale prices for the items you want. This is easy especially if you are importing from China. Go to Alibaba and contact a few suppliers and they will give you quotations that you can use to compare with what your WhatsApp import group admin is offering.

Money mistakes beginners make in business and in life

photo | pexels.com

By Steve Umeme

Financial discipline is fundamental for any individual and business, yet it can be as challenging as it is rewarding. Read these money mistakes that rookies make that we should all avoid.

#Money Mistake 1:
Never borrow money that accrues interest to start a business (except if you are paying for it through your salary); only borrow to grow your business. This is because business takes a long time to gain ground and begin making profit, yet most loans repayments have to be made within a month of taking the loan or even earlier. Therefore, never borrow money to start a business expecting that the business will generate income to pay back the borrowed money plus the interest.

#Money Mistake 2:
Never spend money you haven't received. Don't even promise someone money based on a promise you have from someone else. If someone tells you: "Ezra, come to my office tomorrow at 9am and pick Sh30K"don't go out to buy items on credit based on this promise, with the hope that you will pay off your creditor when the promised money comes; it may not come as promised and this will leave you in problems with your creditors.

#Money Mistakes 3:
If you want to save, whenever you receive money, don’t start spending hoping that you’ll save what remains. Normally what remains is zero because as long as money to spend is available, the numerous things you can spend it on are also available. And things to spend on even incite their 'relatives' so that you spend even more than you had planned. When money to spend is not available, we naturally find a way of doing without it. That's why I've learnt to save with an INVESTMENT CLUB. Once I send money there I assume I no longer have it. Before you spend any money, put your savings aside then spend what is left after saving.

#Money Mistake 4:
When you get an opportunity to meet a very wealthy person, never ask for money. Ask for ideas on how to make money. They may even choose to give you money on their own after seeing that your ideas are great, but let getting money from them never be your objective.

#Money Mistake 5:
Keeping your seed instead of planting it. Many people stop at saving. It's very, very difficult to save and have all you need to maintain your lifestyle especially after retirement. When you save, your savings are seed; plant it. When you just keep the seed (saving money) some seeds begin to die (eaten by inflation and the like). That's why I recommend that you read about the different types of investment vehicles you can use to grow your savings. I am not necessarily talking about putting the money in a business, because you can easily lose money in  business. I am talking about putting it in an investment.

#Money Mistake 6:
Never lend someone money you are not willing to lose. By the time you lend someone money, be contented in your heart that should the person fail to pay, you will not die. You should not even lose that person's friendship if they fail to repay the money you lent them. If you feel the person might fail to pay you and this will not affect your relationship with them, then lend them money. If their failure to pay would make you hate this person’s entire clan, please advise the person to go to the bank.

#Money Mistake 7:
Never append your signature to guarantee someone on a financial matter if you are not willing or able to pay the money on their behalf. Do I have to explain that one? No, it's self-explanatory.

#Money Mistake 8:
Avoid keeping money you don't intend to use in the short-term within easy reach. For instance, don’t walk with Sh100K in your pocket when all you plan to do in a day costs Sh20K. Like I mentioned in Money Mistake 3, there are always expenses available to gobble any money that is within reach, so if you don't want to lose it, put it away in a safe place.

#Money Mistake 9:
Avoid keeping money in inappropriate places e.g. in socks, under the pillow, in a pit, in the sitting room, in the bra, in a travel bag that you will place somewhere in a bus ... impulse buying is a devil that will keep you busy!

#Money Mistake 10:
Spending money on an item that you can do without (at least for the time being). These days when I pick money from my pocket or wallet, before paying for something I ask myself: What would happen if I didn’t buy this? If I find I can live with the consequences of not having that thing, I smile and walk away.

#Money Mistake 11:
Paying an amount for something that's not the minimum you can get that same value for. In other words, if you are along Tom Mboya Street and you pay Sh5K for a shoe that you can get at Sh3K at Muthurwa, that's a money mistake except for those who have achieved financial freedom.

#Money Mistake 12:
Wanting to be the savior of the world by helping everyone in financial need. My sister, my brother,  you are not Jesus. If you find it so hard to say no to a financial demand, you may think you are practising generosity when in actual sense you are committing (financial) suicide. We are not learning to be miserable here; we are learning to live within the boundaries of reality.

#Money Mistake 13:
Consistently spending all you earn or more than you earn. It's like having a drum where you have an inlet that's smaller than the outlet. It will never get full. And should the inlet ever reduce significantly the drum will run dry. If you do it the other way round and the inlet is bigger, it will get full and even overflow. Hence, we have to always ensure we are widening the inlet while narrowing the outlet – all the time. Your side hustle comes in handy!

#Money Mistake 14:
Thinking about short-term only and forgetting about long-term or thinking about the long-term and forgetting about the short-term. For instance, Lydia was told that there's money in land. She saved money over a long period of time and bought 30 acres of land. Now she has the land but she is always broke. She is always complaining. She's disgruntled and she doesn't seem to see herself earning from the land in the near future. Now, let's ask ourselves: Having 30 acres of land and no money to feed your family or take a child to hospital, is that wealth or poverty? I think Lydia only looked at long-term needs and forgot that she has short-term needs that require money. What of those who find they are one paycheck away from salary? Are they thinking about the long-term needs?

Let’s take stock of our finances. How many mistakes are you guilty of? Do you now feel better-equipped to do better with these tips? Good luck, savers! Share this knowledge with your friends because it will not benefit you if you are selfish with it.

Steve Umeme, BBA, CPAK, CFIP, is a seasoned auditor, risk analyst and personal finance coach. He blogs at http://steveumeme.blogspot.co.ke/

Join the 52-week Savings Challenge Kenya and network with Steve Umeme and other people who are saving to reach their financial goals

Like and follow Super Savers Kenya on Facebook for more money management tips  

All about money market funds -- one of the best places to save your money

I run a savings group on Facebook and I have always recommended that people put their savings in a money market fund where they can earn better interest than in a bank's saving account. 

 In layman's terms, I would describe a money market fund as a chama (investment group) where members put their money together to get a huge lump sum which they then invest in something big and earn interest, dividends or profit, which is then distributed to members based on their contribution. 

In technical terms, a money market fund is a form of unit trust. A unit trust is a collective scheme where many people pool their money together and then it is invested by a professional investor in things like treasury bills, bonds, commercial paper, overnight lending, etc.

Many money market funds usually earn an interest of over 10 per cent per year (fluctuating depending on the performance of the markets. This year there are funds that have not gone below 10%, while others barely make it to 10%), which is better than a bank's two per cent. Interest is calculated every weekday, but compounded every month. The rates tend to fluctuate, though. You can check the change in interest rates on your fund manager's website or in the business pages of the newspapers.

How to join a money market fund:

Different money market funds have different requirements. They have a minimum initial deposit and amount of top-up. You can deposit a lump sum; you can top up the stipulated amount regularly or intermittently. 

Usually, you are allowed one free withdrawal every month, but subsequent withdrawals are charged a certain amount determined by your fund manager. They charge an annual fee, usually of 2 per cent (usually not per person, but on the whole fund, so members cost-share this cost) and a withholding tax of 15 per cent on interest, but even after subtracting these, the interest earned is usually still higher than what you would earn in the bank. 

To join, you fill in the forms and make your first deposit. In your form you can decide to make regular contributions and choose to do so by check-off system, which makes your savings automatic, so you are able to save even if you lack discipline. You will get monthly statements showing you how much interest your money has earned minus the withholding tax. 

To withdraw money, you fill in a form (or send instructions) and then wait for two to three working days for the money to be transferred to your bank account. What I like about this: I find it too much of a hustle. I can’t get my money instantly, and I have to fill in forms and then wait for days … when I think of all the drama involved, I just let my savings be and they continue to grow until I actually need them for the project I was saving for.

Some money market funds can be joined through a mobile phone USSD code e.g. *480# for Old Mutual. Most money market funds also have a pay bill number to help you make deposits conveniently, but remember Mpesa charges apply.

Kenyan money market funds:

Here are some money market funds you can research on and choose from. I prefer these ones (2016) because they rarely seem to go under 10 per cent. Zimele is here because it doesn't require very high contributions, especially for those who are saving Sh200 per day, and it has been performing relatively well this year:

Fund	Minimum initial fee	Top-up amounts	Fees
*Amana Capital	Sh10, 000	2, 500 and above	2% p.a.
*Apollo	Sh10, 000	Sh2, 000 and above	2% p.a.
*Madison Asset	Sh50, 000	Sh5, 000 and above	2% p.a.
*Pan Africa Pesa+	Sh2,500	Multiples of Sh1,000	2% p.a
*Zimele	Sh250	Any amount	2% p.a

*GenCap Hela by Genghis Capital (affiliated with Chase Bank), used to be one of the best, but it was suspended after the collapse of Chase Bank and was not revived even after Chase Bank reopened.

Comparison of performance in 2016:

Fund	1st January 2016		26th June 2016		9th July 2016		12th Aug. 2016
	Daily yield	Annual rate	Daily yield	Annual rate	Daily yield	Annual rate	Daily yield	Annual rate
Amana	17.90	19.44	13.24	14.08	12.06	12.75	11.68	12.32
Apollo			13.30	14.14	10.81	13.32	10.74	13.23
Britam	12.44	13.18	Below 10%	Below 10%	9.54	9.97	Below 10%	Below 10%
CIC	15.79	16.79	Below 10%	Below 10%	10.89	11.37	11.22	11.73
Madison	17.43	18.90	12.28	13.43	11.35	11.96	11.40	12.01
Pan Africa (Sanlam)	16.60	18.09	11.45	12.13	11.04	11.67	11.40	12.01
Zimele	11.00	11.46	10.34	10.75	10.34	10.75	10.34	10.75

·         Daily yield means the amount of interest per year you would earn if you put money in a money market fund for a day.

·         Annual rateis the average yearly interest earned by members who have put their money in the fund.

Here are the contact details, but please note that money market funds are not just for people in Nairobi. Most of these companies have a branch network countrywide and with mobile money (money transfer) and email, you can make your contributions and communicate via email from any part of Kenya and even the diaspora.

Fund	Contact details
Amana Shilling Fund	Amana Capital Limited, 2nd floor, block C, Saachi Plaza, Argwings Kodhek Road, Kilimani, Nairobi www.amanacapital.co.ke Tel: 0721700076 or (020)2351735 or (020)2351741/42 Email: info@amanacapital.co.ke
Apollo Money Market Fund	APA Insurance, Apollo Centre, Westlands, Nairobi www.apainsurance.org Tel: (020)2862000 or (020)3641000 Email: info@apainsurance.org
CIC Money Market Fund	CIC Asset Management www.cic.co.ke Tel: 0703099120 or 0703099347 or (020)28223313 or (020)2823347 Email: cic.asset@cic.co.ke
Madison Asset Money Market Fund	Madison Asset Management Services, Madison Insurance House, Upper Hill Close, Nairobi www.madisonasset.co.ke Tel: (020)2721340 or (020)2864500 Email: info@mams.co.ke
Pan Africa Pesa+ Fund (Sanlam)	Sanlam (formerly Pan Africa Asset Management), 3rd floor, Pan Africa Life House, Kenyatta Avenue, Nairobi CBD www.pan-africaassets.com Tel: (020)2220559 Email: clientservice@paam.pan-africa.com
Zimele Money Market Fund	Zimele Asset Management Company, 7th floor, Ecobank Towers, Muindi Mbingu Street, Nairobi CBD  www.zimele.co.ke Tel: 0734207662 or 0722207662 or 0733111108/9 Email: info@zimele.net

OTHER MONEY MARKET FUNDS

Fund	1st January 2016		11th August 2016		Minimum initial amount	Top-ups	Annual fee
	Daily yield	Annual rate	Daily yield	Annual rate
African Alliance Shilling Fund	11.26%	11.88%	7.49%	7.76%	Sh100, 000	Sh1, 000, though they say any amount	1%
Britam	12.44%	13.18%	9.44%	9.86%	Sh100, 000	Sh10, 000	2%
CBA	12.81%	13.53%	7.96%	8.24%	Sh100, 000	Sh20, 000	2%
EIB Equity	12.71%	13.48%	6.64%	6.85%	Sh1, 000	Sh1, 000
*GenCap Hela	17.26%	18.41%	Suspended	Suspended	Sh500	Sh500	2%
ICEA LION	16.48%	16.74%	8.98%	9.39%	Sh10, 000	Sh2, 000
Nabo Africa (US dollars)	$94.15	$94.15	$101.1	$101.1	$50,000 (USD)	Call them for more information	2.5% Redemption fee 1%
Old Mutual (merged with UAP)	8.42%	8.75%	7.40%	7.66%	Sh1, 000	Sh1,000	3%
STANLIB	14.78%	15.82%	6.91%	7.13%	Sh10, 000	Sh5, 000	2%

Contact details:

Fund	Contact details
African Alliance Shilling Fund	African Alliance Kenya Investment Bank, 4th floor, Kenya Re Towers, off Ragati Road, Upperhill, Nairobi www.africanalliance.com Tel: (020) 2777000 Email: info@africanalliance.co.ke
Britam Money Market Fund	Britam Asset Managers (Kenya) Limited, 5th floor, Britam Centre, at the junction of Mara Road and Ragati Road, Upperhill, Nairobi www.britam.com Tel: 0703094091 or (020) 2833000 Email: clientservicesbaam@britam.com
CBA Money Market Fund	Commercial Bank of Africa, Mara/Ragati Road, Upperhill, Nairobi www.cbagroup.com Tel: (020) 2884000 Email: contact@cbagroup.com
EIB Equity Money Market Fund	Equity Investment Bank, Equity Centre, Hospital Road, Upperhill, Nairobi www.equitybankgroup.com
GenCap Hela	Genghis Capital, 6th floor, Prudential Insurance Building, Wabera Street, Nairobi CBD www.genghis-capital.com Tel: (020)2774750/1/2 Email: hela@gencapunittrust.com
ICEA LION Money Market Fund	ICEA LION Centre, Riverside Park, Chiromo Road, Westlands, Nairobi  www.icealion.com Tel: 0719071999 or (020)2750000 or 0730151000 Email: wecare@icealion.com
Nabo Africa Money Market Fund	Nabo Capital (affiliated with Centum), 7th floor, International House, Mama Ngina Street, Nairobi CBD www.nabocapital.com Tel: 0709902700 or (020)2286700 Email: info@nabocapital.com
Old Mutual Money Market Fund *UAP merged with Old Mutual	Old Mutual Investment Group, corner of Mara Road and Hospital Road, Upperhill, Nairobi www.oldmutual.co.ke Tel: (020)2829800
STANLIB Money Market Fund	Stanlib Kenya, 1st floor, Liberty House, Mamlaka Road, Nairobi www.stanlib.com/Kenya Tel: 0711076111 or (020)3268508 Email: customercare.kenya@stanlib.com

Advantages of money market funds:

• They are a low-risk, high liquidity method to grow your money. Low risk means you can’t lose the principal amount you put in and your money grows every month. The only risk I see is if the fund collapsed with your money. High liquidity means you can get your money back quickly when you need it (within three working days).

• You earn compound interest not simple interest. So the interest you earn is added to your principal each month and then that new principal earns more interest. Simple interest is calculated on the principal alone, but compound interest is calculated on the principal and interest earned. So for example, for simple interest of 1% for Sh10, 000, the first month you’ll earn Sh100 (1% of the principal 10, 000), the second month you will earn another Sh100 (1% of 10,000), so in total you’ll have Sh10, 200. But in compound interest, the first time you’ll earn Sh100 (1% of 10, 000) but the next month interest will be calculated as 1% of 10, 000 + 100 (principal plus interest to make new principal). So 1% of 10, 100 = 101. So the second month on compound interest, you’ll have a total of 10, 201. The third month on simple interest you’ll have 10, 300; on compound interest 10, 303. So basically your money grows at a faster rate.

• Your money is invested by professionals to ensure maximum return and low risk.

• You can top up at any time, unlike with a fixed deposit account at a bank where you can’t top up any time.

• Attractive interest. Although the interest rate fluctuates, you get way better interest than you would in an ordinary bank savings account.

Questions to ask a potential fund manager:

1. How much is the initial amount needed to join this fund? 
2.    Is the principal secure? Can I lose my money?
3.  Can I top up any amount and at any time? 
4. Is there any initial joining fee? Annual management fee? How much? How is it calculated? Are there other (hidden) charges or fees? 
5. Do you charge for withdrawals? How much? 
6. Can I get my money on short notice? How fast can I get my money when I need it? 
7. Can I do automatic top-ups via check-off system? 
8. Can I top up using mobile money?
9. What do I need to join this money market fund (requirements)? 
10. Do you send client statements? How often? Via email? 
11. Are there any tax obligations due on my earnings? Principal? Which ones? 
12. How long has this (money market) fund been around? What’s the average performance of this fund historically? How long have you been around? Can I see the annual report for the fund for last year/ the last few years? 
13. Who is your custodian/trustee?
14.  Look out for stability. You don’t want a fund to collapse with your money.
    
15. Is there anything else I need to know that I may not have asked?

Requirements for joining a money market fund:

1. Fill the joining/application forms 
2. Copy of ID card 
3. Photographs 
4.  KRA PIN certificate 
5. Bank deposit or Mpesa confirmation of first deposit 
6. Utility bill for proof of residence (may or may not be required)

Comparison of how much you’ll earn in a savings account versus a money market fund:

We’ll use the figure of Sh6000 per month

Savings in:	Interest	Amount after 12 months	Savings in	Interest	Amount after 12 months
Money market fund	10%	Sh75843.21 of which Sh72, 000 is principal and Sh3843.21 is interest. Take away 15% withholding tax. Interest earned Sh3266.728	Savings account	2%	Sh72, 777.63 of which Sh72, 000 is principal and Sh777.63 is interest

Would you rather earn Sh3266.72 on your Sh72, 000 or Sh777.63 on your Sh72, 000?

*This is just a guide. Please get current information from the money market fund(s) of your choice.