If you invest Sh1 million in a money market fund (MMF), how much returns should you expect to receive every end of the month? This became the topic of discussion when one Kenyan stated that they have invested Sh1 million in a money market fund and are receiving about Sh8,000 per month.

They then went on to estimate that they will double up their initial investment of Sh1 million within four years through compounded interests if they don’t make any withdrawals.

However, this assertion drew a wide range of counter arguments, with the majority of Kenyans noting that it will take more than four years to double their capital. We sampled this discussion as follows:

You cannot double Sh1 million in four years at that rate. If the monthly payout is Sh8,000 and you compound the interest for 4 years, that will total to about Sh465,000 in four years, assuming the rate is 9.6 percent per year. – Mathenge.

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That Sh8,000 that you get from Sh1 million is 8 percent. For you to double your Sh1 million, it will take you 9 years. This is simple math based on the 72 rule of compounding (72/8=9). – Sisimba.

MMF is paying me Sh2,800 per month after investing Sh500,000

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As an emergency fund – the return is not bad. As an investment – those returns are dismal. The question is – when we ‘park’ our money – what other opportunities are we foregoing? Does it hamper our abilities to risk or even think of entrepreneurial ventures that may be far more profitable? With Kenya’s inflation rate, Sh96,000 on Sh1 million is just beating inflation. I wouldn’t really call that in ‘investment’. – Ian.

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Sh8,000 per month is equivalent to Sh96,000 per year and a total of Sh384,000 in four years. To compound and double a million in 4 years you need a rate of 18 percent and above based on the rule of 72. – Ticha