How to make passive income through investing in money markets-Kenya

Wondering how to generate extra coin without being actively engaged in managing and monitoring your investment, investing in money market could be your solution. Money Market refers to a short term loans traded between banks and other financial institutions,  money markets provides a platform for those with funds to  invest in a safe short-term investment option, while providing borrowers  a platform for accessing low cost loans.

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Money markets instruments.

In Kenya an individual may invest in the below money market instruments.

• Treasury bills

Treasury bills are a short-term investment providing a secure investment opportunity that is available to both individuals and corporate entities. Treasury bills are issued by the national government and mature within 3 months, 6 months or 1 year.

• Treasury bonds

Treasury bonds are a secure medium to long term investment, interest payments are paid every 6 months throughout the bond’s maturity. Treasury bills are auctioned by the central bank of Kenya monthly.

• Fixed Bank deposits

Commercial banks offers financial instruments such as fixed deposits to account holders who wish to lock a certain amount of money for a period of time. Fixed deposit interest rates are higher compared to treasury bills and treasury bonds.

• Money market funds

A money market fund is an investment scheme where many investors pool funds and the funds are managed by a professional fund manager at a fee. The fund managers invests in other money market instruments such as commercial paper, certificates of deposit, Treasury bill and Government Bonds on behalf of the investors. As an individual you can invest in the Money market funds by opening a money market account with a Unit Trust that is regulated by the Capital markets authority (CMA). Money market accounts offer higher interest rates than normal savings accounts. MMF calculate interest daily and compound it monthly. Account holders has rights to occasionally withdraw money or write checks against the account.