As I go around the country delivering talks and workshops on money management, I am shocked at the number of people I meet who still keep large sums of money with a bank and they earn very little interest. Often times, they don’t even know what interest rate they are earning. Also, I come across many people who use fixed deposit accounts for emergencies. When you have a fixed deposit account with a bank, you must serve the notice period before you can withdraw the funds and if you can’t serve the notice period, as is often the case when you have an emergency, then you would be charged an early withdrawal penalty. A money market investment account is a better way to go for short term investments and for emergencies

Below are the key attributes of a Money Market Investment Account

  • The money market investment account aims to preserve capital so the chances of a capital loss are very low
  • The account also aims to maintain liquidity & generate a sound level of income
  • It is a low risk Profile fund and is recommended for investments with a 0 – 2 year investment term
  • Minimum monthly debit order is R500
  • Minimum lump sum is R20 000

• The fund I normally use had returns in the last 1 year of 7.8%.

The fund is suitable for investors who;

• Want to receive a monthly income from their investments e.g. if you are retrenched or you took an early retirement package and want to invest your funds and pay yourself a monthly income from your investment, then the money market investment account would be a good place to invest your money

• Highly risk adverse and do not want to lose any money when they invest

• Require returns higher than bank deposits

• Need a short – term investment account

• Want an emergency investment account. If you don’t have an emergency fund, you might end up getting into debt when you encounter a crisis hence I encourage all of us to have an emergency fund account

Stokvels would also do much better if they used such money market accounts to invest their funds rather than keep the funds with a bank. Before you can invest in tax-free investments, I normally encourage my customers to first have a Money market investment account so that they do not interrupt their tax-free investment accounts which are really suitable for medium to long – term investment objectives. If you want us to help you set up a money market investment account, drop us an email on info@thuthuka-sa.co.za or services@thuthuka-sa.co.za