What is Money Market Mutual Fund? And how do I get Started?

Money market mutual fund

This is an investment fund where many people put their money together inside one big basket. Then, Fund Manager (InvestNaija, Cowrywise, Stanbic IBTC etc) Pack all the people money and invest it in Treasury bills and commercial paper etc.

Then, everyday profits gathered/generated from the investment is divided and added to each and every one money depending on how much is invested.

And every 3months, your profits is paid back into your account or reinvested if that is what you want for more higher everyday additions.

And at anytime you need your money. You can withdraw it and within 24 hours. Your money will be in your account.

Let say a fund Manager offers it money market mutual fund at 17.17% per year.

Let do a little calculation on this now.

Let say I put #500,000 in the money market mutual fund now at 17.17% per year.

And I leave it for a whole year. I will having #85,850 on top the #500,000. And this is without the compounding power yet.

This #85,850 divided by 4 quarters of the year. Which means every 3 months. They pay #21,462.5 into your account. If you want/need it.

But if you don’t need it they will re-invest the #21,462.5 of the first quarter to the #500,000. And start giving daily interest of #521,462.5 of this amount, not for #500,000 only anymore and this is what is called compounding power.

Which means at the end of a whole year the total gain will not just be #85,850 only but it will be more than that.

And one beautiful thing about it is, it is not a fixed deposit. You can decide to add more or withdraw from it at anytime.

And I just use the #500,000 as example. You can start with as small as #5000. And keep adding #1000 or any amount to it depending on your capacity.