She noted that she owns a decent home, drives a good car, and all her children were adults who no longer depend on her In an exclusive interview with TUKO.co.ke, financial expert Eric Muchoki advised the woman to ring-fence her sources of passive income before investing in a money market fund.

A Kenyan woman wrote: “I earn KSh 1 million passive income per month. I have a home, I drive a decent car, and all my children are settled adults. I need help on how to spend the money. Please help.”

In an exclusive interview with TUKO.co.ke, financial expert Eric Muchoki said the initial step was safeguarding passive income sources.

For instance, if it's rental income, this is done by insuring the property that generates rental income. His second recommendation is to have comprehensive medical insurance to cushion her against unforeseeable health risks. "With the advancement in age comes an increase in health risks. Therefore, it's important to have comprehensive medical insurance to cushion you against unforeseeable health risks in the future, whose treatment may cost you an arm and a leg. Our comprehensive medical insurance can take care of that sufficiently. After protecting your passive income through asset and medical insurance, you can now focus on making your money work for you," Muchoki explained.

Muchoki assured that a money market fund was one of the best avenues for growing wealth. A money market fund, or MMF, is a collective investment vehicle where investors pool funds to invest collectively. "MMF fund managers primarily invest in short-term debt instruments such as call deposits, short-dated treasury bills, and commercial papers, which are characterised by low risk and high liquidity. This makes money market funds well-suited for risk-averse investors seeking stability and high returns in their portfolios," the financial expert expounded. 

How MMF works According to the Customized Solutions Insurance Agency director, MMF earns money daily, and proceeds are distributed proportionately to members according to their share of contribution. The fund value grows daily since the interest earned will be re-invested the following day, therefore growing the entire fund. "Due to the power of compound interest, investors are able to build and accumulate a lot of wealth within a very short period of time. 

An investor can withdraw their fund partially or in full when the need arises. Unlike money invested in a bank fixed deposit account, money invested in a money market fund is not penalised for early withdrawal." Customized Solutions Insurance Agency has an MMF generating a 14% interest rate. However, Muchoki cautioned the performance of the fund was determined by prevailing market conditions. "MMF is regulated by Capital Market Authority therefore, client money is safe and secure," he added.

Disclaimer: Advice given in this article is general and is not intended to influence readers' decisions about solving financial challenges. They should always seek their professional advice that takes into account their circumstances before making a financial decision.