Reasons in Investing Correctly


Muslims all over the world follow the Islamic principles of the sharia law. These Islamic laws are derived from the Holy Scriptures of the Quran, the Prophet sayings or Sunnah and other important Islamic recorded scriptures. The laws of sharia govern all aspects of a Muslims life. Likewise on the subject of finance and investments in the Muslim society there are certain restrictions that are placed according to the Islamic law. The two most important aspects of the Islamic law on Islamic investment and finance are the restriction of usury/interest or riba and forbidden or not permitted (haram) investment.

In the Muslim world, the companies such as banks and other lending institutes, increase capital according to the Islamic law or sharia is known as Islamic finance. The Islamic law also refers to the types of investment that are permitted under this law. Islam makes no separation between the secular and spiritual, it is a unique form of socially responsible investment. Also, it helps with the financial matters.

One of the main benefits of Muslim investments in Australia is that it encourages and allows people to invest in a responsible and social manner. One of the centuries old practices that are now gaining high popularity and recognition through the whole world is Islamic finance and investment. The ethical nature used in the process of Islamic investment in now even attracting the interest of many non-Muslims too.

Since it is sometimes difficult to avoid haram or forbidden business activities, Muslim investment usually requires a purification of investment. Purification of investments can be done through many forms and one such way is through Zakat or a form of acceptable charitable cause. Many Muslims today, especially who are living in the western world know that it is difficult to find a bank that is permissible because nearly all the banks deal with interest. Hejaz Financial Services is a good example of an Islamic financial institution. 

The two concepts that are Musharakah and Mudarabah that are ownership monitor assets and the sharing of risk are different from western finance. Not only interest or riba is haram but in all western finance banks interest is a must. Investors will agree to share the profit among themselves without taking interests from their investment.

Muslims cannot invest in anything that is not permitted especially if this is considered an unlawful business in the Islamic law such as tobacco, pork, alcohol, prostitution, gambling, weaponry and pornography. Also Muslim investors cannot invest in businesses that transfer risk such as insurance. Sharia is a divine law that governs all the practical part of a Muslim’s daily life. It indicates fiscal conservatism, ethical business practice and social responsibility.