When a Money Market Fund Is Better Than Land Banking

Land ownership holds emotional and cultural value in Kenya — “ardhi haipotei” (land never loses value) — but from a financial standpoint, there are times when money market funds outperform land speculation in both logic and returns.

Here’s how to know when to choose one over the other.

🏦 1. When You Need Liquidity and Flexibility

Money Market Fund advantage:

• You can withdraw your cash within 2–4 days with no penalties.

• You earn daily compounded interest (averaging 10–15% p.a. in 2025, depending on the fund).

• Ideal for short- and medium-term goals (e.g., emergency fund, business float, saving for a deposit).

Land banking downside:

• Land is illiquid — you can’t sell it quickly without discounting the price.

• It can take months (even years) to find a buyer.

• Transaction costs (legal fees, stamp duty, commissions) eat into gains.

✅ Choose a money market fund when you’ll need access to your money in the next 1–5 years.

💰 2. When You Want Predictable, Passive Returns

Money Market Fund:

• Returns are predictable and relatively safe, backed by treasury bills, fixed deposits, and commercial paper.

• You can calculate your expected growth monthly — great for disciplined savers.

Land Banking:

• Returns depend on location, infrastructure development, or speculation.

• A bad location can trap capital for decades.

• No fixed “interest” — only potential appreciation, which might not materialize.

✅ MMFs win when you value consistency and low risk over potential big payoffs.

⚠️ 3. When the Land Market Is Saturated or Stagnant

In recent years, speculative land around areas like Kitengela, Joska, Nanyuki, and Konza has seen slowed growth.

• The boom of 2010–2018 (when land could double in 2 years) has cooled.

• Infrastructure-led appreciation takes longer, and many parcels remain idle or over-subdivided.

Meanwhile, money market funds benefit from rising interest rates, making them more rewarding in the short term.

✅ When the property market is cooling, park your money in a fund while waiting for better opportunities.

🧾 4. When You Want Clean, Transparent Records

Money Market Fund:

• Monthly statements, easily traceable, regulated by the Capital Markets Authority (CMA).

• No title disputes, no land fraud, no caveats.

Land Banking:

• High risk of fake titles, double allocations, and fraudulent sellers, especially with unregulated “chamas” and “investment groups.”

• You might also face zoning or ownership disputes that tie up your capital indefinitely.

✅ Use MMFs when transparency, safety, and documentation matter.

🏗️ 5. When You Don’t Have Enough Capital for a Strategic Plot

Land appreciation depends heavily on location and timing.
If your budget can only afford cheap, remote land with poor access or no utilities, your capital may lie idle for years.

Instead, investing the same amount in a money market fund:

• Preserves value

• Grows steadily

• Keeps you liquid enough to pounce on prime opportunities later (e.g., serviced plots, joint ventures, or shares in REITs).

✅ MMFs make sense as a “capital parking lot” while saving for more meaningful investments.

📈 6. When Inflation or Interest Rates Are High

When interest rates rise (like in 2024–2025), MMF returns climb because they’re tied to government T-bill yields.
At the same time, land transactions tend to slow down, since buyers face higher borrowing costs and less liquidity.

✅ High interest rate environments favor MMFs; low-rate, high-growth periods favor land.

When Land Banking Wins

Let’s be fair — there are times when land beats MMFs, especially:

• When it’s strategic (near new roads, towns, or projects).

• When bought below market price or directly from owners.

• When you plan to develop (build rental units, farm, or flip).

But pure speculation — buying idle land and waiting “for it to go up” — is no longer the guaranteed win it once was.

🧮 Quick Comparison Table

Final Thought

A money market fund is better when you value liquidity, predictability, and low risk — or when the land market looks uncertain.
Land banking, on the other hand, only works when it’s informed, strategic, and patient.

In modern Kenya, smart investors do both:

• MMF for short-term parking and stable growth.

• Land for long-term wealth and development potential.

💡 Think of the money market fund as your “seed nursery” — it grows your capital quietly until the right land opportunity comes along.