As a rule, people prefer to manage their own finances. Everyone does it that way regardless of the compelling reasons behind each investment. All said and done, creating a good “investment basket” that suits your personal needs is important, so it is important to get investment advice from a professional, which will help you choose the right product for the duration you plan.
Money market funds (MMFs) are collective investment schemes that invest in short-term, high-quality debt securities such as government and corporate debt securities, usually outpacing inflation, providing a better chance of maintaining real investment value.
Unlike traditional savings options, MMFs invest in instruments denominated in foreign currencies, providing a hedge against currency depreciation.
They are often valuable because of their low risk, stability, and easy access to funds for short-term needs. For example, CIC Asset Management’s MMF product starts from Sh5,000 with an average interest of 13 per cent compounded monthly while also offering flexibility and access to funds when needed.
MMFs allow you to build a basket of wealth while also taking proactive steps toward financial security in volatile economic times.
With Money Market Funds, investments are spread across multiple assets, including bank deposits, Treasury Bills and cash holdings; minimize exposure to a single asset class or market risk thus maintaining fund stability and providing a balanced return on a single investment.
Compounding the interest makes it a suitable investment apart from the monthly contribution. This interest is invested back into your principal, making sure your money keeps growing.
An important concern when it comes to investing is liquidity. In most money market funds, this is made easy because you can recall funds quickly so that your money is accessible whenever you need it. In addition, the fund also protects you from inflation as it allocates your investments across various asset classes including bank deposits, treasury bills, and near-cash holdings.
To get the most out of it, check the performance of the fund and choose one with a good investment mix and a short investment term to reduce risk. Prioritize safety by choosing funds that invest in safe debt, such as government bonds and consider companies that have a good reputation in the market.
Income withdrawal is a way to get your pension as a regular income (monthly, quarterly, semi-annually or annually) after retirement when your pension balance is reinvested, say in an annuity fund. It acts as an arrangement where members choose to access their pension benefits as ordinary income through an investment fund from which pension benefit payments are drawn.
Income withdrawals, especially CICs, offer individual members flexibility in terms of investment choices, frequency, timing and amount of withdrawals.
The minimum withdrawal period is 10 years from the date of withdrawal, which is set by the Pension Benefits Authority. In addition, members can withdraw a maximum of 12 percent of their outstanding account balance per year leaving the balance invested guaranteeing returns achieved based on prevailing market trends.
After a minimum period of 10 years, one is given the option to continue the income withdrawal arrangement.
buy an annuity with the fund or convert the fund into a cash amount for withdrawal.
An annuity is a financial product designed to provide income “as is” over a guaranteed period or lifetime. It is usually purchased with a sum of money converted into a series of payments, which can be made monthly, quarterly, semi-annually, annually, or as agreed in the contract.
It is commonly used as a retirement income strategy to ensure a steady cash flow after leaving a regular job. One can create a payment structure that will be fixed or make it variable as desired.
The main benefit of an annuity is the ability to provide a reliable source of income during retirement or other phases of life where a consistent cash flow is important so it plays an important role in financial security.
In conclusion, a balanced range of mutual funds can help achieve a balanced portfolio that aims for growth while managing risk.
Regularly monitoring macro-economic trends and making adjustments will ensure that your investments continue to align with your financial goals and market conditions.
