A money market mutual fund is basically a pool where investors put their money together, and a fund manager invests it in relatively low-risk, short-term instruments like Treasury bills and fixed deposits. The compounding part is simply your returns earning more returns. For example, if ₦1m earns ₦1Read more
A money market mutual fund is basically a pool where investors put their money together, and a fund manager invests it in relatively low-risk, short-term instruments like Treasury bills and fixed deposits.
The compounding part is simply your returns earning more returns. For example, if ₦1m earns ₦100k and you leave that ₦100k invested, your next return is calculated on ₦1.1m rather than the original ₦1m.
So the longer you leave the money invested and keep reinvesting the returns, the more the money can grow.
Just keep in mind that the returns aren’t usually fixed or guaranteed; they can change over time.
I think the argument is valid, but the comparison is a bit misleading. The stock example gives us a projected return, while the business example assumes the business will consistently make ₦50k profit every week for 5 years. That’s a big assumption. For me, the real question is where that ₦1m makesRead more
I think the argument is valid, but the comparison is a bit misleading.
The stock example gives us a projected return, while the business example assumes the business will consistently make ₦50k profit every week for 5 years. That’s a big assumption.
For me, the real question is where that ₦1m makes the most sense at your current stage. If you already have a business you understand and know exactly what the money can do for it, that may be the better option. But if you don’t, putting everything into a business just because the potential return looks higher isn’t necessarily wise either.
How Are Returns Generated and Reinvested in a Money Market Fund?
A money market mutual fund is basically a pool where investors put their money together, and a fund manager invests it in relatively low-risk, short-term instruments like Treasury bills and fixed deposits. The compounding part is simply your returns earning more returns. For example, if ₦1m earns ₦1Read more
A money market mutual fund is basically a pool where investors put their money together, and a fund manager invests it in relatively low-risk, short-term instruments like Treasury bills and fixed deposits.
The compounding part is simply your returns earning more returns. For example, if ₦1m earns ₦100k and you leave that ₦100k invested, your next return is calculated on ₦1.1m rather than the original ₦1m.
So the longer you leave the money invested and keep reinvesting the returns, the more the money can grow.
Just keep in mind that the returns aren’t usually fixed or guaranteed; they can change over time.
See lessIs Investing ₦1 Million in Stocks Better Than Starting a Business in Nigeria?
I think the argument is valid, but the comparison is a bit misleading. The stock example gives us a projected return, while the business example assumes the business will consistently make ₦50k profit every week for 5 years. That’s a big assumption. For me, the real question is where that ₦1m makesRead more
I think the argument is valid, but the comparison is a bit misleading.
The stock example gives us a projected return, while the business example assumes the business will consistently make ₦50k profit every week for 5 years. That’s a big assumption.
For me, the real question is where that ₦1m makes the most sense at your current stage. If you already have a business you understand and know exactly what the money can do for it, that may be the better option. But if you don’t, putting everything into a business just because the potential return looks higher isn’t necessarily wise either.
See less