The power of saving and the compounding effect should never be overlooked.

When it comes to stashing funds away for a given time, people tend to have deep questions about which option is best available to grow their money.

In most cases, they are torn between saving in SACCO’s or Money Market Funds (MMFs). There are many reasons why people invest, and the professional advice they often receive is ‘it depends on your goal’.

This in itself, holds a ton of vitality and cannot be emphasized enough. It does depend on your investment goal.

In the Facebook group “52 Weeks Savings Challenge Kenya,” a lady raised a question that became a subject of extensive discussion among members.

“Money market vs Sacco savings for someone who can save at least 25K per month. Which one would you go for members? Thinking of Hazina Sacco or any MMF with good returns,” she wrote.

Sacco option

In the context of a Sacco, one is required to commit to monthly contributions to the scheme. This would contribute to the overall growth of their shareholding.

Through these regular contributions, members can access loans at predetermined interest rates. SACCO’s use the interest generated from loan issuance and distributes the profits to members in the form of dividends proportionate to their shareholding.

Most SACCOs provide loans of up to 3X the value of a member’s shares. Additionally, these loans often come with comparatively lower interest rates when compared to loans offered by banks.

This option would be suitable for a person looking into a long-term investment option and access to cheap loans.

MMF option

With a Money Market Fund (MMF), investors entrust a specific MMF manager to handle their funds. This option is associated with relatively lower risk, as the likelihood of losing money is minimal.

MMFs pay out interest rates ranging from 5% to 11%, depending on your chosen fund manager. Interest is calculated daily from Monday to Friday, and the accrued amount is deposited into the account on end month.

For those considering investing in an MMF, it is an excellent avenue to save and earn relatively well on savings. If need arises to withdraw funds, one should communicate with the MMF manager, and in most cases, the money can be returned within 3 working days.

Angela Wambugu: Saving my money in MMF works better than fixed deposit

Bizna Advice

Both these saving tools are commensurately good. As explained prior, the decision between them depends on one’s specific financial goals and preferences.

If one seeks quick liquidity while aiming to generate profits, Money Market Funds are the best choice.

Conversely, for those seeking a long-term investment portfolio with growth potential and the ability to secure large loans, SACCOs are often the preferred choice.

Member’s take

Damaris K. Mwaniki: Both are good and the final decision depends on your goal. If you want something stable and for the long term go for the sacco. If you want liquidity go for MMF. Do your own due dilligence.

Philip Njoroge: Sacco has more benefits than MMF. As for liquidity sacco is better since you can borrow at will up to 5 times your savings. Only make sure the 25k is deducted at source by filling out check forms.

Festus Nyong’a: You can have both by going with the phrase don’t put all your eggs in one basket. Sacco is to enjoy dividends and access loans that can make you get an asset while the money market is for short-term goals like say buying a car, going for a vacation, and emergency fund…I would advise both depending on your financial goals.

Peter Mwaurah: The two aren’t the same in functionality. One is an investment while the other is a savings and loan scheme. It would be best to take up both but if you are constrained to pick one, then let it be the MMF.