When your savings earn interest, and that interest stays in the account, next month you earn interest on the interest too. That is compound interest, and over years it does a lot of the work.
KES 1,000 a month for five years
EXAMPLE DATA: you put away KES 1,000 every month for 60 months, KES 60,000 in total. The rate is held steady and interest is added monthly.
| Rate earned, after tax | What you have after 5 years | Of which interest |
|---|---|---|
| 3.01% (bank savings average after tax, Aug 2026) | about KES 64,660 | about KES 4,660 |
| 9.15% (a money market fund paying 10.76%, after tax) | about KES 75,710 | about KES 15,710 |
| 10.00% | about KES 77,440 | about KES 17,440 |
Same discipline, same KES 60,000 saved, more than three times the interest, only because of where the money sits.
What to take from it
- Start, even small. KES 100 a week is a start; compounding needs time more than size.
- Check the rate you earn. A savings account averages far less than a money market fund or a Treasury bill: compare them on where your shilling earns most.
- Mind withdrawals and fees. Taking interest out, or paying fees, slows the compounding.
Try your own numbers in the savings calculator.
The 3.01% is the Central Bank of Kenya’s August 2026 average savings rate (3.54%) after 15% withholding tax; the other rates are examples. Information, not advice.