Know 3 Halal Investment Products Based on Their Return Levels

3 Halal Investment Products Based on Their Return Levels

It is important to know the type of halal investment products based on their return levels to hedge our wealth against inflation. With different risk appetites, we can classify the halal investment products according to their return level into three main categories. They are banking products, money market products, and capital market products. The risk profile of each product can be considered as low risk, intermediate-risk, and high risk respectively. Individual investors may enter into those products depending on the affordability of each.

As the following, we present to you three halal investment products based on their return levels you may consider to start investing in 2022.

1) Islamic Fixed or Term Deposit

This halal financial product offers a fair enough return to your investment if you are a conservative investor. With this product, you will only protect your money in the range of inflation. The rate of return in Islamic fixed deposits varies following the interest rate movement stipulated by the national central bank.

Let us take an example. In 2020, Islamic banks in Malaysia offered up to 2.4% fixed deposit with 12-month tenure with a minimum deposit of RM 1,000. Meanwhile, in the same year, Sharia banks in Indonesia provide up to an equivalent of 4% p.a.

As it is a banking product, your investment principal is subject to protection from the deposit insurance institution. Indonesia’s jurisdiction protects the depositors’ fund up to Rp 2,000,000,000, and Malaysia, on the other hand, guarantees the deposit fund up to RM 250,000.

2) Sharia Negotiable Certificate of Deposit (NCD) or Islamic Negotiable Instrument (INI)

After Islamic fixed deposit, Sharia NCD provides a relatively higher return from halal investment in fixed income products. It is a money market instrument that is accessible for confident individual investors. This product, on average, serves a 3% p.a. return with the adjustment of the central bank interest rate.

However, this kind of product is not available widely. Malaysia is the prominent Islamic finance jurisdiction that promotes this product and makes it accessible for individual investors. If you are interested in this investment, you will prepare at least RM60,001 to invest in this financial product initially. Some issuers will ensure the principal, while others may not do so. It depends on the contract structure of Sharia NCD or INI.

3) Sukuk

Sukuk is Islamic debt securities issued by either government or corporates, and it serves a higher return level of halal investment compared to both previous instruments. In general, Sukuk provides 3.5% up to 11% p.a. profit rates depending on its grade or rating and its maturity. The longer the tenure is, the higher the profit rate is.

For instance, in 2021, the Indonesian government provided the competitive rate of Retail Sukuk 015 at 5.10% p.a for individual investors. Ijarah is the underlying contract for this Sukuk. Interestingly, the minimum investment is also as minimum as Rp1,000,000 or equivalent to USD 65. As it is a government-issued Sukuk, this instrument can be considered a safe-haven investment because the principal on investment is guaranteed.

On the other hand, if you consider gaining more returns from Sukuk, you may look forward to corporate Sukuk. Generally, corporations use Mudharabah as the underlying contract of their Sukuk issuance. In November 2021, for example, one private chemical company in Indonesia offered three series of Mudharabah Sukuk. Those are series A for 370 days maturity at 6.2% p.a. profit, series B for 3-year tenure at 8.75% p.a gain, and series C for 5-year tenor at 9.25% p.a rate.

However, minimum subscription for this product is relatively more costly than government Sukuk at Rp50,000,000 (equals to USD 3,450) with additional multiplies of Rp5,000,000. Moreover, as this Sukuk is corporate origination, investors are subject to potential default by the issuer in case of any adverse impact from the industry and macroeconomy conditions.


To sum up, you may choose your expected gain from investing in a halal financial product by following your risk appetite. As noticed for the general principle of investment, the higher the risk, the higher the return, and vice versa.

Banking products offer safe-haven halal investment by principal guaranteed but with fair enough return. Islamic NCD provides a slightly higher return level but is less affordable for individual investors. While Sukuk offers the highest return for fixed income financial products as per this article. However, corporate Sukuk also exposes potential default by the issuer in case of disastrous conditions. That is why it offers you a higher return.

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