Requires two types of screening: 1. business activity screening to ensure the business is halal 2. financial screening to ensure that interest borrowing and savings are minimal (<30%) and that any impure income is less than 5%.
2. BONDS
Not Shariah compliant
These are interest-bearing loans.
3. LAND
Potentially Shariah-compliant.
The T&Cs, financing and structure must be shariah-compliant.
4. PRIVATE EQUITY
Potentially Shariah-compliant
Requires two types of screening: 1. business activity screening to ensure the business is halal 2. financial screening to ensure that interest borrowing and savings are minimal (<30%) and that any impure income is less than 5%.
5. RETAIL FOREX
Not Shariah compliant.
Real currencies are never traded. Involves interest &
non-compliant leverage.
6. OPTIONS & BINARY OPTIONS
Not Shariah compliant.
Options involve Riba, Gharar and Maysir.
They are Zero-sum games.
7. FORWARDS AND FUTURES
Not Shariah compliant.
They have Gharar and irregular contractual forms.
8. CONVENTIONAL SAVINGS ACCOUNTS
Not compliant.
These savings accounts have interest. One should have a Shariah compliant savings account instead.
9. CRYPTO-ASSETS
Potentially Shariah compliant.
Type of crypto & underlying asset/
utility needs to be reviewed. Security token needs
screening.
10. CONVENTIONAL INDICES
Not Shariah compliant.
Shariah compliant tracker fund required.
11. DEFINED CONTRIBUTION PENSIONS
Potentially Shariah Compliant
Must be invested in a Shariah compliant fund.
12. COMMODITIES
Not compliant.
Most commodities are traded using CFDs, futures and swaps. No real ownership.
Where a precious metal is traded with ownership and possession, it will be permissible like @TheMintedApp
13. CFDs
Not compliant.
Subject matter not recognised in Shariah.
Involves Riba.
14. MUTUAL FUNDS
Potentially compliant.
The fund must be reviewed for Shariah compliance and the underlying assets need to be screened.
15. ETFs (Exchange-traded Funds)
Potentially compliant
Must be certified. Not synthetic, or with
non-compliant equities.
16. ETCs (Exchange Traded Commodities)
Potentially compliant
Must be physically backed, ownership of
commodity & not futures-based.
17. ETNs (Exchange Traded Notes)
Not compliant
Generally structured using Swaps.
18. SWAPS
Not compliant
No ownership of the underlying asset.
19. COLLECTIBLES
Potentially compliant
Ownership & possession of collectIble
required.
20. SUKUK
Potentially complaint.
Needs Shariah certification.
21. CROWDFUNDING
Potentially compliant
Subject to T&Cs & structure. Interest-based not compliant.
22. PROPERTY
Potentially compliant
Subject to T&Cs & structure.
23. RRSP/TFSA/RESP/LIRA/RRIF (For Canadians)
Potentially compliant
Must be Shariah-compliant Fund. Mixed
portfolios have high Shariah non-compliance risk.
24. 401k/IRA (For US)
Potentially compliant
Must be Shariah-compliant Fund. Mixed
portfolios have high Shariah non-compliance risk.
25. REIT Funds
Potentially compliant
Subject to T&Cs. Tenants' businesses must be compliant [AAOIFI].
• • •
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This thread simplifies the rules of Zakat and is a quick reference for anyone needing a refresher.
WHO MUST PAY ZAKAT?
1. Muslim 2. Adolescence - only in the Hanafi school. 3. Mental Capacity - only in the Hanafi School
Other Madhabs apply on the wealth of child and those who lack mental capacity too.
WHAT ARE THE CONDITIONS FOR WEALTH?
1. You own it. 2. You have it with you, in safekeeping, or invested somewhere. Basically, it is not lost completely nor something kept as collateral. 3. Must equal the threshold (Nisab) again after one lunar year.
This book discusses the creative financial strategies that the world’s poorest people use to get by.
Extreme poverty does not turn people into charity cases, unable to help themselves. In fact, those who live in poverty are incredibly smart financially, have many complex networks for raising capital and making investments.
We assume that people with little money spend any & all cash as soon as they get it. But that’s not true. People living on an average of less than $2 a day usually set aside a small amount of savings.
INVESTING VS GAMBLING: What is the difference from an Islamic perspective?
THREAD
In the context of risks, trading and gambling are both regarded as speculative risks. In both trading and gambling, one can profit or lose. However, there are key differences between them.
1) Gambling is staking of wealth by two or more parties where the winner wins all & the loser loses all. In other words, gambling is winning at the expense of another’s loss. Whereas in investing, counter-parties & shareholders (ordinary shares) collectively gain or lose.
2) Gambling does not involve ownership of underlying assets. It is merely staking your wealth. Whereas trading and investing demands ownership of underlying assets.
Charity in Islam is not a donation; it is an investment! When giving in charity, you are sacrificing immediate consumption for returns from God in this life and the next! But what are the different asset classes and their rewards?
1. Mosque in world = house in paradise [Bukhari]
2. Feeding the poor = reward of fasting day & praying the nights [Bukhari]
3. Orphan care = companionship of the Prophet in Paradise [Bukhari]
4. Supporting widows = reward of striving in path of God [Muslim]
5. Supporting the bereaved = special dress in the next life [Bayhaqi]
6. Clothing others = God will shield you from hardships [Musnad Ahmad]
7. Debt relief = Relief on the Day of Judgement [Muslim]
8. Feeding others = shield from hellfire [Bukhari]