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Where Should I Keep Money in 2023? The 10 Main Options
Money Management

Where Should I Keep Money in 2023? The 10 Main Options

Everyone knows they need to save money. Yes, even those who justify their overspending with "you only live once." There is a tonne of reasons to save, but primarily, it's to achieve financial independence. So, where should you put your money when you decide to save?

There are many saving vehicles to choose from depending on your needs and financial goals. These instruments help keep your money safe and protect you from inflation by generating income. They'll usually earn you interest or dividends. However, some instruments, like land, appreciate.

When choosing a savings vehicle, you must consider your goals, time horizon, and risk tolerance. This will ensure you put your money somewhere accessible, generate enough returns to help you achieve your objectives, and mitigate losses. 

With many saving methods to choose from, you must pick the ones that will help you accomplish your goals. This article will explore ten places you can keep your money and the pros and cons of each to help you make a better decision. Read on! 

Read Also: 10 Reasons to Start Saving Now

Fixed Deposits 

Fixed deposits (FD) are a saving instrument that banks and other financial institutions like Saccos offer their customers. FDs involves saving a certain sum of money, for a fixed period, at a predetermined interest rate. The rate is usually higher than the interest offered on normal savings accounts. 

Fixed deposits are also known as term deposits. They have different tenures that range from one month to ten years. The longer the maturity period and the amount, the higher the interest. 

There are two types of FDs depending on how you earn interest.

Cumulative FDs: Interest is paid at maturity. The interest will be reinvested in your fixed deposits depending on the compounding method the financial institutions offer. At maturity, you receive all interest and principal amounts.

Non-cumulative FDs: You will earn interest at fixed intervals depending on the terms of your fixed deposit. It can range from monthly to annually. This method is suitable for people who need a regular income stream. 

Fixed deposits are suitable for people with a low-risk tolerance, individuals saving for short-term goals, retirees looking for stable investments, and investors balancing the risk of their overall portfolio.

Pros of Fixed Deposits 

  1. Low risk as they are not affected by market movement and provide guaranteed returns
  2. Deposit insurance from Kenya Deposit Insurance Corporation (KDIC) if you invest in FD through your bank
  3. Flexible interest payout options depending on your needs
  4. Most financial institutions will allow you to borrow against your fixed deposits 
  5. Low minimum investment that can start from Ksh20,000, depending on your bank
  6. Deposits options are available in multiple currencies 

Cons of Fixed Deposits 

  1. Liquidity risks - you will be penalised for premature withdrawal and forfeit all earned interest. 
  2. Lower returns compared to other saving instruments and might fail to counter inflation. 
  3. Taxable - interest earned on FDs attracts a 15% tax calculated on a per-annum basis. 
  4. Fixed-rate interest means you'll miss out on higher returns if rates go up.

Read Also: Where Do I Keep My Savings? Fixed Deposit Account

High-Yield Savings Accounts

A high-yield savings account is a type of savings account that lets you earn higher interest on your savings. While they might not earn higher returns like fixed deposits, they are better than traditional savings and checking accounts. 

High-yield savings accounts are specifically important for people saving for specific medium to long-term goals and those who want to develop a savings culture. They work in a simple way. You open an account with a minimum deposit of less than Ksh1,000, then continue contributing to the account regularly to grow your savings. They are usually no minimum or maximum balance.

There are two main differences between high-yield savings accounts and fixed deposits. One, you have more access to your money if you save it in a high-yield savings account. Two, unlike fixed deposits, the interest rate of high-yield savings account are not fixed. That means the market determines them; they can go up or down.

Pros of High-Yield Savings Account

  1. Low minimum deposit to open an account 
  2. High-yield savings account come with incentives like lower transaction charges. 
  3. Suitable for saving your emergency funds 
  4. No penalty for early withdrawals 
  5. Most high-yield savings account compound interest daily 
  6. Minimum risk as KDIC insures your savings

Cons of High-Yield Savings Accounts 

  1. Some high-yield savings accounts have a limited number of withdrawals per month.
  2. The variable interest rate can hurt your returns if rates go down
  3. The interest rate might not keep up with the inflation rate 
  4. You can’t borrow against your savings 

Read Also: Digital Savings Accounts: Should You Open One in 2023?

Money Market Funds

Money market funds (MMFs) are a type of savings instrument that pools money from different investors and invests it in low-risk instruments. Typically, they invest in secure debt securities like treasury bills, fixed deposits, and commercial papers. The type of vehicles MMFs invest in makes them safe for people with low-risk tolerance. 

In Kenya, you can invest in MMFs through your bank, SACCO, and other financial institutions like insurance companies and pension schemes. MMFs are usually very liquid, and you can access your money anytime. They suit people who want an alternative to bank accounts and looking for slightly higher investment returns. 

MMF investors earn interest determined by the performance of the investment instruments their unitholder (MMF issuer) invested in. The interest is compounded daily or monthly, depending on your chosen MMF. 

Although MMFs are not insured like bank accounts, they're safer than other unit trusts funds like equity funds and balanced funds. They are regulated by the Capital Market Authority (CMA) and are required to invest in low-risk and short-term vehicles to minimise losses for investors.

Pros of MMFs

  1. Liquidity - you can easily access your money without being penalised. 
  2. Low risk and can offer a higher return than bank accounts and other saving instruments. 
  3. Low minimum investment - you can invest in MMF with as low as Ksh1,000 
  4. Reduces risk in your risk exposure by making it easy to diversify your portfolio 
  5. Low minimum requirement compared to fixed deposits 

Cons of MMFs

  1. Low returns that might not keep up with inflation 
  2. Not insured by KDIC
  3. You can't borrow against your savings 
  4. Some MMFs might restrict the number of withdrawals you can make
  5. Returns are unpredictable as investments held by MMFs can fluctuate 

Read Also: Where Do I Keep My Savings? Money Market Fund

Equity Funds

Equity funds, like MMFs, are pooled funds professionally managed and regulated by CMA. The main distinction between these two saving instruments is the type of investment they pick. As you have read above, MMFs invest in low-risk instruments that generate interest. Equity funds take a different route and invest in growth assets with higher risk aptitude, like stocks and shares. 

Equity funds suit investors with higher risk appetites and can withstand market volatility. These types of funds are actively managed to outperform the markets. Financial institutions like banks and insurance companies offer equity funds. It is also important to remember that equity funds attract higher management charges than MMFs.

Pros of Equity Funds

  1. Funds are professionally managed to ensure higher returns for investors 
  2. They allow you to invest in high-risk instruments by spreading your risk across various stocks and shares 
  3. Low minimum investment 
  4. Flexibility - You can invest a lump sum of money or start small by investing monthly 
  5. Variety of options - Many equity funds invest in different asset classes, e.g., shares, stocks, REITs, corporate bonds, etc. you have to choose one that works for you. 

Cons of Equity Funds

  1. Liquidity risk - you have time for your withdrawals as the value of your investments fluctuates. You will lose money if you withdraw when the markets are down. 
  2. Poor fund management can lead to you losing more than your initial investment. 
  3. Some equity funds have lock-in periods that prevent you from withdrawing your money. 
  4. Equity funds can be volatile, making them unsuitable for short-term investments. 
  5. Funds are not insured. 

Read Also: 5 Investment Strategies that Will Keep you Financially Stable

Treasury Bonds and Bills

In times of economic uncertainties, investors usually flock to instruments with the lowest risk exposure. In Kenya, that investment is are government-backed debt instrument. They include:

Treasury Bonds: These are a secure, medium- to long-term investment that will typically earn you interest payments bi-annually throughout the bond's maturity. The central bank auctions treasury bonds monthly and usually offer attractive fixed interest rate. 

Treasury Bills: These are short-term investments offered weekly by the central bank, with different maturity periods of 91, 182, and 364 days. They’re issued at a discounted cost and mature at face value.

You can invest in treasury bonds and bills individually or through a middleman, usually a financial institution like your bank. You will get the highest returns when you invest individually, but you need a CDS account and will be required to follow the whole lengthy process of investing.

Pros of Treasury Bonds and Bills

  1. Low risk as the government backs them. 
  2. Some bonds, like infrastructure bonds, are tax-exempt. 
  3. Competitive rates compared to other saving instruments.
  4. They‘ve different investment time horizons ranging from one month for treasury bills to 30 years for treasury bonds.
  5. Treasury bonds can provide a source of stable and predictable bi-annual income.
  6. Bonds have an easy exit alternative as they can be resold on the NSE. 
  7. Accessible through MMFs and other unit trust funds for low-scale investors 

Cons of Treasury Bonds and Bills

  1. High minimum investment of Ksh50,000
  2. Inflation-risk - Bonds have fixed interest rates, which means your returns might be low if an increase in inflation leads to higher interest rates 
  3. Liquidity risk - you might lose some of your initial investment if you resell your bonds before maturity.

Read Also: Is Investing in Government Bonds a Good Idea? (Pros & Cons) 

Corporate bonds

Corporate bonds are debt securities offered by corporations. In simpler terms, you can think of corporate bonds as lending your money to a company; in return, the company pays you fixed interest. The interest (also known as a coupon) is paid at agreed intervals until maturity when you will receive your initial capital.

A corporation usually offers bonds when they need to raise money to fund operating expenses, expand, or acquire other companies but don’t want to sell shares. Corporate bonds usually have higher returns compared to government-issued bonds. But with higher returns comes higher risks. Investors have to think about default risk when investing in corporate bonds.

This makes corporate bonds attractive to people with a high-risk tolerance. You can invest in Corporate Bonds individually or through equity funds. 

Pros of Corporate Bonds

  1. Higher returns than fixed deposits and treasury bonds
  2. Provide regular income 
  3. Hire rates that can keep up or exceed inflation 
  4. Liquidity - some bonds can be resold in secondary markets 
  5. Widespread options, as many equity and balanced funds, will let you invest in corporate bonds indirectly 

Cons Corporate Bonds

  1. Default and credit risk - the bond issue might be unable to pay you interest or your initial capital if their corporation goes bankrupt. 
  2. Corporate Bonds have fixed interest rates which might affect your earnings if rates go up.
  3. You might lose some of your principal if you resell the bonds before maturity. 

Read Also: Scariest Ways to Invest When You Have High-risk Tolerance

Pension Schemes

Pension schemes are benefits that allow individuals to save money during their working years and access funds when they retire. They provide one of the easiest ways to save for your sunset years. Individuals can invest in pension schemes by making monthly deposits of as low as Ksh200.

The most predominant pension scheme is NSSF. However, there are other RBA-registered schemes you can choose from. 

Pension schemes work in a simple way, and anyone with a regular income to meet the minimum monthly contribution can invest in them. You make your monthly contribution, the scheme invests the money, and after you hit retirement age, you redeem your pension. You can withdraw it as a lump sum or in monthly installments.

Pros of Pension Schemes

  1. They offer investors an opportunity to save and invest for retirement in diversified asset classes.
  2. They offer multiple payment options. 
  3. Most pension schemes will allow you to borrow against a portion of your savings. 
  4. Some pension schemes will provide the benefit of life insurance cover
  5. Funds are professionally managed 

Cons of Pension Schemes 

  1. Limited tax deductions - you only receive a tax break if you withdraw Ksh25,000 per month or Ksh300,000 per year. Any extra amount will attract taxes.
  2. No control over your money - You can’t access your savings until you retire, and you have no say on how they are invested.
  3. It benefits early investors the most.

Read Also: The Risk and Rewards of Investing in Pension Funds 

Real Estate

Traditionally, real estate has been an excellent tool for building physical wealth. It adds diversity to your portfolio and lowers your overall investment risks. Real estate can help you avoid inflation risks and help you generate income in different ways. 

There are multiple real estate investing strategies you can choose from; the common ones are:

Real Estate Investment Trusts (REITs): These are dividend-paying investments that are traded on the Nairobi Security Exchange (NSE). They pool funds from different investors and invest the money in real estate holdings like commercial buildings. After all deductions, returns generated by the investment are shared with investors.

Buying and Holding Properties: This strategy involves buying a piece of land or house and holding it for capital appreciation. The property is usually for personal use and generates no income. 

Renting out Properties: This strategy involves buying and using a property for commercial reasons. You can rent the property and generate income. It is the best strategy when investing in real estate.

Pros of Real Estate 

  1. Well-chosen real estate appreciates over time. The appreciation rates usually outpace inflation. 
  2. It can provide a regular and predictable source of income that gradually increases.
  3. You can borrow against your real estate 
  4. It gives you more control over your asset
  5. It helps you build equity if you purchase a property with mortgage financing. 

Cons of Real Estate 

  1. Usually requires high starting capital unless you are investing in REITs
  2. Illiquid - It can take time to sell your property. You might have to sell below market value if you need money urgently 
  3. It requires a lot of time and money to maintain, or it will lose its value. You will also need to buy premium homeowners insurance 
  4. High taxes - income from real estate is taxed, and you must pay annual land rates. You will also pay capital appreciation tax when you resell 
  5. It's a long-term investment

Read Also: Should I Buy A House? 5 Signs That You Are Ready


Saccos are member-based organisations that pool members' resources together and invest them in a way that benefits everyone. The returns from the investment are paid out to each member as dividends depending on their number of shares. Saccos are the most popular investment and saving vehicle for working-class Kenyans. 

Since its formation in 1908, Saccos have grown and currently offers many front-office services that were previously restricted to banks. These services include current accounts, finance automation, Internet banking, banker's cheque, and financial advice. 

Since its formation, Sacco's main objective was to allow members to access cheap credit. Today, they can borrow as much as 3x their savings. They can keep their rates lower than banks and credit unions because members vote and agree on the interest rate during their annual general meeting. 

Pros of SACCOs

  1. Saccos offer ownership and higher returns. When you buy a share, you become part owner of the cooperative, and you will earn a dividend on your shares. Additionally, you will earn interest on your savings.
  2. Saccos encourage saving disciple as members are usually required to make minimum monthly deposits. 
  3. Investment opportunities - Saccos help members find a better investment. For example, they can allow members to get mortgage loans at a better rate by partnering with housing cooperatives. 
  4. Saccos are well-regulated by the Sacco Society Regulatory Authority (SARSA)
  5. The value of Sacco shares can appreciate. 

Cons of SACCOs

  1. You will need guarantors when you want to borrow more than your savings.
  2. Saccos have no deposit insurance like bank savings.
  3. Liquid risk - the process of liquidating your Sacco shares can be lengthy. You will need to write to the Saccos' board and find someone to buy your shares. 
  4. You have no control over how your money will be invested 
  5. Dividends can be low as they are subject to the performance of Saccos investments 

Read Also: Top 5 Reasons to Join a Sacco 

Life Insurance 

Life insurance is a type of investment that helps protect your dependents from financial instability after your demise. While anyone can buy this cover, it is specifically important for individuals who are breadwinners in their families. It is also an investment vehicle you can include in your retirement and estate planning.

There are two types of life insurance: 

Term life insurance: This type of policy lasts for a fixed period ranging from 3 to 20 years. You will pay a premium during that period to the insurance company during that period to maintain coverage. After the period lapses, you can claim it.

Whole life insurance: This policy is taken for your lifetime and can only be claimed after your demise. It is designed to provide you with life-long protection. With this policy, you pay a set of fixed monthly premiums. 

Pros of Life Insurance 

  1. It allows you to protect your family financially. 
  2. Affordable - most insurance companies in Kenya offer life covers with affordable premiums of less than Ksh1,000
  3. Tax deductible 
  4. Premiums usually stay the same
  5. You can withdraw from your cover while you are still alive 
  6. You can borrow against your life insurance 

Cons of Life Insurance 

  1. It's expensive for older people. 
  2. It's hard to redeem, and your dependents will usually undergo a lengthy process. 
  3. It favours early investors. 

Read Also: Alive & Not So Well: Who Will Manage Your Finances When You Can't? 


Saving money is one of the simplest ways to start your wealth-building journey. While it might seem like an easy investment, you need to approach it carefully, especially when choosing your preferred saving vehicle. 

First, consider your risk tolerance. If you are a conservative investor with a low-risk tolerance, you should consider KDIC-insured savings products. This will lower your risk exposure. 

The second is flexibility. How accessible are your savings, and can you meet any minimum monthly contributions? Answering these questions will help you avoid liquidity risks and penalties in the future.

Finally, think about your goals. How you save for retirement will differ from how you save to educate your kids or buy a house. It is advisable to open different savings accounts for different savings goals to make tracking your progress and spreading out risks easier. 

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Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.

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