Option 10: T-bills, Treasury bonds, money market funds and other lower-risk options

This isn't trading; it's saving and investing. It belongs in this subject because many people chasing trading profits would be better off starting here, and because it's where your emergency fund and long-term money should usually live. Returns are lower than the "dream" returns advertised for trading, but they're far more predictable.

1. What they are

2. How they work: examples

T-bill: you buy a 364-day T-bill with face value KSh 100,000 at a discount price of about KSh 88,500 (the exact price depends on the rate at the auction). After a year you receive KSh 100,000. The difference is your interest (minus withholding tax).

Money market fund: you invest KSh 10,000. The fund's net annual yield is, say, 10% (yields change with interest rates). Interest accrues daily; after a year, about KSh 11,000 before tax. You can usually withdraw within a few working days.

Compare the outcomes:

amount = 50_000
years = 3
mmf_rate = 0.10            # example net yield; real yields change
tax = 0.15                 # example withholding tax on interest; check current rates

value = amount
for year in range(1, years + 1):
    interest = value * mmf_rate
    value += interest * (1 - tax)
    print(f"Year {year}: about KSh {value:,.0f}")

print()
print("A trader who loses 30% in a bad month:", f"KSh {amount * 0.7:,.0f}", "and needs +43% just to recover")

3. How to start

• T-bills and bonds: open a CDS account with the CBK through the DhowCSD platform (online and app), then bid in auctions; payments by bank transfer. Minimum amounts apply (T-bills have required larger minimums than bonds; check current figures on the CBK website). You can also invest through banks and stockbrokers, which may charge fees.
• MMFs and unit trusts: choose a CMA-licensed fund manager; open an account online (ID, KRA PIN); deposit by M-Pesa or bank. Compare net yields (after fees), fund size, the manager's reputation, and withdrawal times.
• SACCOs: choose a licensed SACCO (check SASRA's list for deposit-taking SACCOs); understand rules on share capital, deposits and withdrawals.

4. Costs

MMF management fees (usually already deducted from the quoted yield, so compare net yields), possible transfer fees, withholding tax on interest (some government infrastructure bonds have been tax-exempt), bank or broker fees if you don't buy directly.

5. Risk level: low to medium

• T-bills and bonds: backed by the government; low default risk in practice, but bond prices fall when interest rates rise if you sell before maturity, and inflation can reduce real returns.
• MMFs: low risk but not zero: fund management and credit risks exist; returns change with interest rates; they're not insured like bank deposits in all cases.
• Fixed deposits: bank deposits are protected up to a limit by the Kenya Deposit Insurance Corporation (check the current limit).
• SACCOs: governance varies; choose regulated, well-run SACCOs.
• Equity unit trusts: higher risk (share prices fall at times) with higher long-term growth potential.

6. Who it may suit

• Everyone, for emergency funds (MMFs are popular for this).
• Savers wanting predictable returns for goals 1–5 years away (T-bills, bonds, fixed deposits).
• Long-term investors combining these with shares or equity funds.

7. Red flags

• "Money market" or "investment" schemes promising returns far above T-bill rates, especially fixed weekly returns
• Unlicensed "chama investment" apps
• Anyone asking you to send money to a personal account to buy T-bills for you

8. Verdict

T-bills, bonds, MMFs, fixed deposits and good SACCOs are the foundation of personal finance in Kenya: lower risk, regulated, and predictable. They won't make you rich quickly, but they protect and grow money steadily, and they're where an emergency fund and much long-term money belongs before any trading.