Basic Islamic Investment Policy

Rinas Lareef, Jamiah Naleemiah 

 

Islam is a comprehensive religion. Its ethics and morals are not only concerned about the relationship between man and God or the relationship between Muslims, but also with regard to the relationship between all living beings in this global village.

Among the top reasons why people invest their money is to grow their income, earn higher returns, reach financial goals, support others etc. but all this needs to adhere to Sharia guidelines.

 

Principal Rules Of Investment

Islamic investment policies are unique in that they differ from other investment policies practised in many parts of the world today. There are two vital rules which need to be fulfilled from the standpoint of Islamic law when making investments.

 

Absence Of Interest 

Not only Islamic investments but also all financial transactions in Islam should be free of interest. Islamic Shariah strictly prohibits interest (riba) which works two ways where the lender cannot receive or borrower cannot borrow. Almighty Allah states in the Holy Quran. “Those who take interest cannot stand except like the one who has been confounded by the touch of Satan-this so because they say that trade is like interest. But Allah has allowed trade and forbidden interest”. God also says very clearly that “Allah does not bless interest. and he causes the charitable deeds to grow. and Allah does not love any ungrateful sinner.” (2:275-276).

 

Unethical Investments 

Alcohol or any firm involved in the production of alcohol, international or national banks and institutions which are involved in interest, casinos and other unethical activities are prohibited by Allah or his messenger directly or indirectly.

 

Benefits Of Islamic Investment

There many social and economic benefits real Islamic investment policies achieve, which we can summarize as below:

1- Reducing economic disparity.

2- Providing an opportunity for more people to invest without fear.

3- Controlling monopoly situations brought about by those influencing economic markets by using economic power.

4- Considering the ultimate goal of Islamic Sharia, which is protecting wealth, preventing its accumulation and circulating it to benefit all members of society.

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