"High risk, high return." Let's talk about this.

Added: 2026-04-28

[00:00:00]There is no investment [music] without risk. And the day that risk becomes zero, investment also becomes [music] impossible. So, if you want to assess the risk of a fixed income fund, then you need to look at what does a fixed income fund [music] invest in. And a fixed income fund will invest in the big thing is the government bonds. Long-term government bonds, as I said, 5 years, 10 years, 25 years. Now, I want to say this, the more the years but a a fixed income fund invests in a government bond, the higher the risk. Remember the phrase that says, "Higher risk, higher return." If I lend you money for 1 day compared to lending somebody else's money for 10 years, the one I'm lending for 10 years is higher risk than the one I'm lending for 1 day. [music] So, number one is because of the long-term nature of the bond. Number two, a fixed income fund will also invest in corporate bonds, meaning it will lend the money to companies other than government. And the risk of lending money to a company is higher. So, corporate bonds have higher risk than government bonds. So, what if the company goes belly up? It struggles like we have seen KQ struggling, we have seen Uchumi struggling, we have seen Nakumatt struggling. What if they're not able to pay back? That's [music] the risk that the fixed income fund would be taking.

[00:01:16]So, we can safely say that a fixed income fund takes more risk than a money market fund and therefore, that's why a fixed income fund will give customers a higher return compared to a money market fund.