You have a Money Market Fund Account…Is it working for you?
The answer lies to the reason of why you opened it in the first place, if you even had one.
➡️Is it a fund for your emergencies?
➡️Is it a fund to protect your capital?
➡️Is it a fund just as another savings account?
➡️Is it a fund for capital gains?
➡️Is it a fund for gaining better returns?
➡️Is it a fund you opened just because it’s like the “in thing” Fomo predicted, you know.
Most people who opened it for the last 3 reasons are most likely disappointed or not feeling the service of the fund.
A money market fund is a low risk type of asset that it’s aim is mainly to protect your capital and give slight returns above inflation. Pesa isikose it’s original value overtime. Unfortunately some offer below the inflation rate once you factor in the withholding tax of 15 per cent.
Rhina Namsia: 5 things you need to understand before investing in anything
Money market fund works on a compounding basis and if you understand compounding, it’s an interest that works best when utilized early and over a longer period of time. Also, people with huge amounts of initial principle are more likely to feel the positive impacts of a money market.
Learning points:-
💉 Have a defined smart goal before assigning your money to any investment account. This way you can keep track and know if the account is working towards that goal or not
💉 Start early and think long term especially with money markets. It’s not a fund to make your rich overnight
💉Keep your emotions at bay. Emotions will always make you either withdraw your money so early or invest in things you do not understand but just because they are somehow trending
💉 Understand the structure of what you’re investing in. In simple terms this means know the underlying assets of a fund, years of experience in the game, managerial structure, fees and costs involved. This way you make an informed decision before allocating your money in a fund and somehow know what to expect. You also get informed on what right questions to ask your fund manager.
We now have MMFs cropping up left, right and center and they are giving banks a run for their funds. Don’t be caught up in FOMO. Be A smart Investor.
Rhina Namsia is the founder of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.
