Financial planning is all about knowing where your money is going, and what does it do for you. First, you need to draw a budget. How to draw a simple budget? List down all the places/things/people on which you spend your money. Such as mortgage, rent, education (for yourself, spouse, children, or community welfare), food, … Continue reading Have you ever wondered where is my money gone? Part One
Insurance is all about minimizing the financial consequence of a risk that materializes. Insurance transfer the financial consequence of a loss one suffers to an Insurance company for a relatively small amount of money known as premiums which are paid to the Insurance company. The Insurance company maintains a fund from all the people who … Continue reading Why do we need Insurance?
Islam has not prohibited insurance contrary to commonly held beliefs. As far as the concept of insurance in Islam is concerned, it is to cover the risk of loss, or the "fortunate many helping the unfortunate few". This concept is not only allowed, but also encouraged in Islam. "Help one another in righteousness and piety, … Continue reading Insurance Series Blog Series No. 1 Introduction to Sharia Compliant Insurance – Takaful.
Dealing in equity shares can be acceptable in Shariah subject to the following conditions: The principal business activity of the company does not violate Shariah principles and Islamic Moral values. Therefore, it is not permissible to acquire the shares of the companies providing financial services on Riba (interest, usury), like conventional banks, insurance companies, or … Continue reading Islamic Sharia Compliant Investment Funds – Blog Series No. 2 Islamic Sharia Compliant Investment in Shares and Equity Funds
The term “Islamic Sharia Compliant Investment Fund” in this blogmeans a joint pool of collective investments funds, wherein the investors contributes money for the purpose of its investment to earn halal profits in strict conformity with the precepts of Islamic Shariah and Fiqh (Jurisprudence), and managed by a professional fund/money manager. The subscribers of the … Continue reading Islamic Sharia Compliant Investment Funds – Blog Series No. 1 Introduction to Islamic Sharia Compliant Investment Funds
Penned by Ali Ebrahim When disaster strikes, it’s best to be prepared. Nobody can predict the future but WISE people plan ahead for it. The unwise see buying insurance as an unnecessary expense but WISE people realize its true value. Having insurance OR Takaful is necessary because it allows people to have a contingency plan. … Continue reading Importance of Insurance
What is Salam? Bai‘Salam or deferred delivery sale is a forward contract wherein the price was paid in advance at the time of making the contract for the prescribed goods to be delivered at a later date. Unlike Murabaha (Cost plus Financing) and Ijarah (Lease), Salam was originally used as a financing mechanism for small … Continue reading Islamic Modes of Finance: Salam Alias Deferred Delivery Contracts
Definition and classification of Musharakah The literary meaning of Musharakah is "sharing". The root of the term "Musharakah" in Arabic comes from the word “Shirkah”, which means 'being a partner'. Under Islamic jurisprudence, Musharakah means; "a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio … Continue reading Musharaka
Mudarabah financing is a kind of partnership where one partner contributes money (i.e. the financier) to another (entrepreneur, who contributes his expertise, skill, knowledge, labour, idea), for investing in a commercial enterprise. The investment comes from the first partner who is called "Rab-ul-Maal" while the management and work is an exclusive responsibility of the other, … Continue reading MUDARABAH
A form of Musharakah, developed in the near past, is the 'Diminishing Musharakah.’ According to this concept, a financier and his client participate either in the joint ownership of property or equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that … Continue reading DIMINISHING MUSHARAKAH