MMFs Are Not an Investment – Yes or No?

By Set Free Capital CBO - your partners in financial wisdom and real-life freedom

There has been a hot discussion lately in Kenya: “Money Market Funds are not an investment.” Many argue that because MMFs give lower returns compared to shares, bonds, or business ventures, they don’t qualify as investments. And to be honest, they are right.

But here’s the truth. Just because MMFs are not investments in the traditional sense does not mean they are useless. In fact, for many Kenyans earning between 20,000 and 100,000 shillings a month, MMFs are one of the smartest tools you can use to take control of your money.

Let’s break this down in a way that feels close to home.

Why MMFs Are Not an “Investment”

When people talk about investment, they usually mean something that multiplies wealth significantly. Think of buying shares in a company, starting a business, buying land, or investing in government infrastructure bonds. These have the potential to double or even triple your money over time.

MMFs don’t do that. They don’t make you rich. They are not designed for aggressive growth. Their returns, which average between 9 and 13 percent per year, mainly protect your money from inflation while keeping it liquid and safe.

In short, an MMF is not the matatu that will take you to wealth. It is the stage where you wait safely until the right bus arrives.

So What’s the Role of an MMF?

An MMF is not where you go to build wealth but where you park your money while planning the next move. It beats leaving money idle in your current account or earning peanuts in a regular savings account.

Here’s why this matters:

1. Protection against inflation

Let’s say you are saving 10,000 shillings every month. If you keep it in a current account, it earns nothing. Inflation silently eats into it. By the end of the year, that money has lost value. But if you park it in an MMF, earning about 10 percent, you at least maintain or slightly grow its buying power.

2. Liquidity when you need it

Emergencies happen. School fees deadlines come. Your mum calls asking for support. MMFs let you withdraw within one or two working days, sometimes instantly. Compare that to tying all your cash in an asset you cannot sell quickly.

3. Discipline to build capital

For many Kenyans, the biggest challenge is not lack of opportunity but lack of lump sum capital to seize it. You may want to buy a bond that requires a minimum of 50,000 shillings, or shares worth 100,000 shillings, or join a high-return investment club. The problem is you only manage to save 5,000 or 10,000 per month. An MMF gives you a safe place to build this money until it is enough.

Think of it like a jerrycan where you keep collecting water drop by drop until you have enough to cook, clean, or water your shamba.

Relating It to Everyday Life

Let’s paint a few scenarios many Kenyans can relate to:

• John earns 30,000 shillings per month. He saves 5,000 each month in an MMF. After ten months, he has about 52,000 including interest. Now he can buy a treasury bond that requires 50,000 minimum. Without the MMF, that money may have been scattered on impulse spending.
• Mary earns 50,000 shillings per month. She puts 10,000 in an MMF every month while she researches where to buy a plot. After one year, she has 124,000 shillings, thanks to interest. Now she can pay a deposit for land without having borrowed.
• Kevin earns 20,000 shillings per month. He saves only 2,000 monthly. After two years in an MMF, he has over 52,000. This gives him a stepping stone to join an investment group or start a small business.

💡 Pro tip: In each case, the MMF itself is not the wealth creator. But it is the bridge that made the wealth creation possible.

Why the Conversation Matters

When you hear “MMFs are not an investment,” don’t take it as discouragement. Take it as clarity. It helps you know what role MMFs play in your financial journey. If you expect them to double your money overnight, you will be disappointed. If you use them as a parking space, a holding tank, or a stepping stone, they work beautifully.

It is like using M-Pesa. Nobody thinks of M-Pesa as an investment. It is simply a convenient tool. Yet, how many of us cannot imagine life without it? MMFs are the M-Pesa of saving and short-term money management.

The Smart Strategy for Small Income Earners

If you earn between 20,000 and 100,000 shillings, here’s how to use MMFs wisely:

• Save consistently - Set a standing order or reminder to drop a fixed amount into your MMF every month. Even 2,000 makes a difference.
• Use it as a buffer - Instead of keeping all your emergency fund in M-Pesa where it tempts you, store it in your MMF. Withdraw only when truly necessary.
• Build towards bigger opportunities – Identify what you want in the future. Is it a bond, shares, land, or starting a side hustle? Let the MMF be your waiting room.
• Avoid the temptation of “get rich quick” promises - If a deal promises to double your money in weeks, that is not investing, that is gambling. Let your MMF teach you patience as you prepare for safer, higher-yield investments.

Encouragement for the Hustler

It can feel discouraging to see big headlines about people making millions in real estate or the stock market while you are saving only a few thousand. But remember this: every oak tree starts as an acorn. MMFs are not glamorous. They will not make you rich instantly. But they give you a safe start, a habit of saving, and the patience to grow.

For many Kenyans, that is the missing link. Not a miracle investment, but a safe bridge between where you are now and the wealth you want to build.

Final Word

So yes, MMFs are not an investment. But they are not meant to be. They are a tool. A tool that protects your money, keeps it liquid, and helps you gather enough to step into bigger opportunities.

If you earn 20,000, 50,000, or even 100,000 shillings per month, don’t dismiss them. Use them. Let them be your disciplined partner as you work toward bonds, land, shares, or your dream business.

In the Kenyan hustle, sometimes the smartest move is not the flashiest one. Sometimes it is simply parking your money wisely until your next big chance arrives.

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