A guideline to how do the Islamic investment halal method works in modern day finance? A financial gadget that can earn you interest-free profit backed by asset-based investment.
How it sounds when you got to know, your profit is free of interest. This may surprise you when you are in habit of taking fixed profit, every month through your invested funds.
How does the Islamic Investment Halal profit Work?
You can make “Halal” profit. Below is a complete guide to earn an interest-free profit, the same rate as conventional bank offers but in a total Islamic way:
– Sharing of profit and loss
Once you will open your account in any Islamic fund, the profit amount will vary every month.
If you are familiar with business profit and loss, you may know the profit is not fixed every month, the amount keeps on changing. So, as the case in the Islamic way of investment, the banks will fix the rate of profit but the return may be different.
In caparison, conventional banks will not expose your investment to any risk in productive enterprise and a fixed amount will be credited to your account every month.
– Asset-based investment
Islamic banks will invest your money in a physical commodity like a vehicle, real estate, or Islamic bonds.
Islam doesn’t recognize money as a commodity, rather than used as a medium for investment. For instance; commercial banks deal in money and monetary paper where no real estate or inventories are created, only money is created through money.
Asset-based investment has several benefits to the community and economy. An asset is a build that generates paybacks to the people who are connecting in building this asset.
– Prohibited business
Alcohol, gambling and buying stock: other than Islamic bonds or stocks. Islamic financial institutions are not allowed to participate or do trade deeds in these kinds of businesses. Why?
Here, you may mark a religious point. But if you know the nature of the above-mentioned business activities, the answer is pretty much clear. In all these trade activities, there is a high level of uncertainty or not fit for society, for example, selling Alcohol.
You have to admit, Islamic finance is not only about making money but also add great value to society.
– Interest-free return
Interest is not allowed in Islam. Here, the question is why it’s not allowed when most of the investment based companies and banks are working on this approach?
To understand this, you need to study below example:
In interest-based transactions, the money is not invested rather than lent out to another person to increase the value of money. From the loan installment: that is lent out to another person, a fixed amount is distributed among the deposit holders every month.
This is how an interest-based financial system works where wealth will remain in a few hands and not circulated among society.
– Sharia Committee
Because Islamic banks strictly adhere to and observe Islamic laws, there is a group of Sharia committees in every financial institution that offers Islamic investment products.
This group is a combination of highly qualified religious scholars and financial analysts. These people have immense knowledge of the Islamic way of doing business, besides; they maintain a high level of transparency at every level to ensure “Halal Earnings”.
Moreover, many companies that are offering Islamic investment Halal instruments and operating outside Islamic countries, these enterprises also hire Sharia advisors to stay in line with Islamic laws.
What are your Islamic investment opportunities?
The above explanations give a clear understanding of how does Islamic investment halal solution works?
Islamic funds are strengthening their routes not only in Muslim countries but also in western countries. No matter in which part of the world you are, there are global Islamic investment opportunities.
Below is the list of top 7 options to pick:
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Azzad Asset Management
Amana Funds Trust