Halal Investment: 3 Things You Should Know Before Starting!

Halal Money Investment is a good opportunity to grow financially without compromising values. In addition, there are several benefits of halal money investment that will be discussed in this article.

Why Halal Investment?

Halal investing can provide numerous benefits to both Muslims and non-Muslims. It promotes a disciplined investment process that includes extensive security research and monitoring. In general, Islamic screens’ low debt requirements enable a conservative approach that appeals to risk-averse investors.

Halal investing discourages short-term speculation. Some Islamic scholars consider high portfolio turnover rates (frequent trading) to be a form of gambling. Low turnover reduces portfolio trading expenses, such as broker commissions, while increasing tax efficiency by avoiding the rapid buying and selling of securities, which can result in taxable capital gains.

Factors You Should Consider

  • Understand why you’re investing.

This is critical because it serves as the foundation for everything else. It’s natural to have certain desires and goals. Halal investing in a systematic manner is one strategy to achieve these goals. Giving your halal investments a goal to attain, on the other hand, helps you comprehend the worth of your investment. Goal-based halal investing is a method of making investments after determining what you want to accomplish in the future. After you’ve planned out all of your requirements, you’ll have a better idea of how much time you’ll need to devote to each goal. If you have 20 years to invest and no real need to access the money in the meantime, your strategy will be vastly different than if you only have one year to invest and a potential need to access the cash.

Your risk tolerance is determined by the reason you are investing. This is significant because the amount of risk you take usually correlates to the market returns. So be very clear in your mind about why you’re investing.

  • Time

Your best tool is time. This is why you should know why you’re investing and how long you’ll be able to stay invested. Money should be a tool that makes your life better. It is better to have a lower savings rate and enjoy the journey rather than sacrifice everything of value in your life and end up dying. Make sure you are wisely balancing your long-term desires and your short-term wants in a way that maximizes joy. There is no formula for that, as only you can determine which trade-offs you are willing to make.

For example, if you had just purchased a home and the market plummeted six months later, your reaction would most likely be determined by how quickly you needed to sell it. It would be a disaster if you acquired it as a flip and planned to sell it right away. However, if you had intended to retain it for a long time, you would not be disturbed.

Halal Investment Ideas

  • Property

It provides you with a steady source of income as well as a physical asset. The concept is to purchase a home and rent it out to renters. Property returns are typically approximately 6% per year, but they can be as high as 10% or higher.

Having to deal with tenant issues is one of the drawbacks of owning a buy-to-let property. You’re legally accountable for certain repairs. However, the property investment is a fantastic option for someone who doesn’t want to take on too much risk but yet wants to put their money to work in something other than a savings account.

  • Cash

Halal cash investment may appear to be too similar to traditional banking. When you invest in Islamic banking, however, this is not the case. Islamic banking ensures that all terms and conditions of real Islamic apply. In contrast to traditional banking, Islamic banking is a practice of banks and financial institutions that follow the Islamic Shariah. However, you must be familiar with HALAL banking techniques in order to avoid misunderstanding or having doubts about the process and return on your investment.

  • Gold

Considered as a traditional and physical store of safety when it comes to the overall economy, Muslims are highly fascinated by their investments made in gold.

Sukuks are a type of fixed-income security and are similar to Islamic bonds. As a result, you’re opting for consistent profits rather than rapid increases.

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