I learnt about MMMF from ikings Facebook posts and i invested some money into it but i don’t entirely understand it.
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Imagine you are Mama Ngozi. You heard about this thing called Money Market Mutual Fund (MMMF) from Iking Ferry's Facebook posts, and you decided to put some of your money into it. Now, you want to know if you need to study the market to figure out if you are gaining or losing money. Let me break thiRead more
Imagine you are Mama Ngozi. You heard about this thing called Money Market Mutual Fund (MMMF) from Iking Ferry’s Facebook posts, and you decided to put some of your money into it. Now, you want to know if you need to study the market to figure out if you are gaining or losing money. Let me break this down for you, my dear:
So, you see, investing in a Money Market Mutual Fund is like planting seeds in your farm. You give your money to professional farmers (in this case, fund managers) to grow it for you. They use your money to buy short-term government securities, treasury bills, or commercial papers, which are like different types of crops.
Now, just like you wouldn’t really need to go to the big market (like Onitsha Main Market) every day to check on your farm, you don’t have to study the market every day to know if you’re making money. The fund managers handle all that for you. They watch the market trends, buy and sell securities, and try to make profits for you.
However, it’s essential to keep an eye on your investment occasionally, like checking your farm to make sure your crops are growing well. You can look at your investment statement regularly to see how your money is doing. If you see consistent growth, then you’re gaining; if the value is dropping, then you might be losing.
In summary, while you don’t need to study the market daily like a professional trader, it’s good to stay informed about how your investments are performing. Just like Mama Ngozi tends to her farm, keep an eye on your money to ensure it’s growing like a well-tended crop. And remember, patience and smart decision-making are key in investing, just like in farming.
See lessFirst, What is a Mutual Fund? because i also invest in it Think of a Mutual Fund as a big basket where thousands of people bring their money together. The fund manager (licensed professionals) now takes all that money and invests in things like Treasury Bills, Commercial Papers, Bonds, etc. So, instRead more
First, What is a Mutual Fund? because i also invest in it
Think of a Mutual Fund as a big basket where thousands of people bring their money together. The fund manager (licensed professionals) now takes all that money and invests in things like Treasury Bills, Commercial Papers, Bonds, etc.
So, instead of you struggling alone with ₦50k or ₦200k, your money joins others to play in the big leagues.
Back to your Daily Interest question (Money Market Mutual Funds)
Let’s use a real-life example: Money Market Mutual Fund on InvestNaija by Chapel Hill Denham.
If you put ₦1,000,000 today, the fund begins to accrue interest daily.
Let’s say your share of daily interest is ₦2,000.
Every single day, ₦2,000 is quietly recorded for you.
You won’t get an alert every morning like salary o. Instead, it shows as “Accrued Interest” on your dashboard.
After 3 months, your accrued interest might be around ₦180,000. At that point, the fund manager “pays” it into your wallet as units of the fund.
You can now:
Reinvest it (compound your money).
Or Redeem it (withdraw to your bank).
See lessThat’s how “daily interest” works, not cash-out daily, but your money grows silently every day.
Quarterly or Yearly Dividends (Other Types of Funds)
Not all mutual funds show daily growth. Some are designed to collect profits for 3 or 6 months, then share dividends at once.
This one is like farming: you don’t harvest tomatoes daily, you wait until harvest season.
But here’s where many people get it wrong.
In your bank savings account, if you need your money, you walk in and collect it immediately.
Why?
Because by CBN policy, banks don’t invest 100% of your deposits. They keep about 50% in reserve so that when customers rush in, they can always pay out.
But in a Mutual Fund, the fund manager invests the full money. They don’t keep “reserve” like banks.
That’s why if you request withdrawal today, it may take 24 hours or 48 hours before you get it, because they need to unwind or rebalance investments to release your cash.
So please don’t shout at your fund manager as if it’s a bank cashier. That’s how the system works.
in short: Daily Interest = Money Market Funds grow silently every day, you can redeem when you like.
Quarterly/Yearly Dividends = Other types of funds share profits in bulk, not daily.
Banks is not Mutual Funds. Banks keep reserves, funds don’t. That’s why withdrawals take longer.
Your capital in Money Market Funds is very safe, but the interest you earn depends on market conditions. sometimes it can pay 17%, 18% depending on the market