1. What is a Money Market Fund?

A Money Market Fund (MMF) is a type of mutual fund that invests in short-term, high-quality debt instruments. In Kenya, MMFs offer investors a relatively safe place to park their money while earning better returns than traditional savings accounts.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

• \( Principal \) — Initial investment amount in KES
• \( Rate \) — Annual interest rate in decimal form (e.g., 0.08 for 8%)
• \( Time \) — Investment period in years
• 365 — Days in a year for daily compounding

Explanation: The formula calculates how your investment grows with daily compounding interest, which is how most Kenyan MMFs operate.

3. Importance of Money Market Funds in Kenya

Details: MMFs have become popular in Kenya as they offer higher liquidity than fixed deposits, better returns than savings accounts, and are relatively low risk compared to other investment options.

4. Using the Calculator

Tips: Enter principal amount in KES, annual interest rate as a decimal (e.g., 0.1 for 10%), and investment period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are typical MMF rates in Kenya?
A: Rates vary but typically range between 7-12% annually, depending on the fund and market conditions.

Q2: How often are interest payments made?
A: Most Kenyan MMFs credit interest daily, which is then compounded.

Q3: Are MMFs taxable in Kenya?
A: Yes, interest earned is subject to 15% withholding tax in Kenya.

Q4: What's the minimum investment amount?
A: Varies by provider but typically starts from as low as KES 1,000.

Q5: How liquid are MMF investments?
A: Very liquid - most funds allow withdrawals within 1-3 business days.