Introduction
Money Market Funds (MMFs) are among the most popular investments in Kenya today. They’re safe, liquid, and offer better returns than a savings account. But despite their popularity, many investors fall into the same traps — and these mistakes can cost you money.
Here are the top mistakes Kenyans make with MMFs and how you can avoid them.
1. Thinking Multiple MMFs = Diversification
Many investors open two or three different MMFs, believing they’re diversifying. But since MMFs invest in the same instruments (T-bills, bonds, bank deposits), this isn’t diversification, it just dilutes your returns.
What to do instead: Pick the best-performing MMF and diversify across other asset classes (stocks, special funds, bonds, etc.).
2. Withdrawing Too Frequently
Some investors use MMFs like an M-Pesa wallet, withdrawing every few days. This breaks compounding and reduces effective returns.
What to do instead: Treat MMFs as a short-term investment, not a daily expense account.
3. Ignoring Fees and Taxes
Even if the gross rate looks good, management fees and 15% withholding tax apply. Some investors overlook this, expecting the full advertised rate.
What to do instead: Always check the net return after fees and taxes.
4. Not Checking the Fund Manager’s Track Record
Not all MMFs perform the same. Some consistently lead, others lag behind. Many Kenyans just pick the fund their bank recommends.
What to do instead: Compare returns across different fund managers before investing.
5. Using MMFs as a Long-Term Growth Strategy
MMFs are designed for safety and liquidity, not aggressive growth. Relying only on MMFs for wealth building means your money won’t beat inflation in the long run.
What to do instead: Use MMFs for emergency funds and short-term goals, but invest in special funds, stocks, bonds, or property for long-term growth.
MMFs are an excellent tool, but only if you use them wisely. Avoiding these mistakes will help you maximize returns, reduce risks, and build real wealth.
Not sure if you’re making the most of your MMF? At Vasili Africa, we help you compare funds, optimize your returns, and build a truly diversified portfolio. Reach out today!
Read our latest Money Market Fund Performance Report https://vasiliafrica.com/money-market-funds-kenya-september-2025/
