Sharia Investment: Smart Money for All
The great thing about Sharia investments is that they are for both Muslims and non-Muslims. There’s more to like about them, writes Elsa Febiola Aryanti.
Amidst the financial crisis in 2008 that resulted in the meltdown across the world’s financial institutions, there was widespread devastation amongst investors who lost their life savings. However, Sharia financial institutions were relatively unaffected, with growth that surpassed that of conventional banks.
How did Sharia investments manage to do that? The answer is simple. They protect investors in many ways. Let’s start with surah Al Qasas 28:77 as follows:
But seek, with that (wealth) which Allah has bestowed on you, the home of the Hereafter, and forget not your portion of lawful enjoyment in this world do good as Allah has been good to you, and seek not mischief in the land. Verily, Allah likes not the Mufsiduun (those who commit great crimes and sins, oppressors, tyrants, mischief-maker, corrupter)
The main pillar of Sharia investment is translated into a basic principle that appeals to those who want to invest their money and valuable assets: fairness and transparency. How many times have we seen investors treated unfairly, tied to unclear contracts or given misleading information regarding their investments? For those who long for their investments to balance moral responsibility with the best returns, Sharia investment is also the answer.
The abovementioned principle of fairness and transparency are further enhanced by regulations, practices and strategies governing Sharia-compliant investments. In choosing areas to invest in, Sharia requires that they operate only within halal industries, specifically those that do not involve gambling, riba (interest), alcohol, pork or pork products, and pornography. In short, Sharia requires that we don’t feed the development of those that have a negative effect on society—plain and simple.
Now, who doesn’t like to make lots of money? Everybody does. Can Sharia investments bring high returns? Obviously, yes. Otherwise, we wouldn’t be witnessing the strong developments of Sharia investments as we are today. There’s more. The returns of Sharia investments are not only measured by their values, but also whether they are achieved in a morally and environmentally responsible way.
On the other hand, do Sharia investments involve risks? No doubt about it. The balance between risks and returns are recognised in Sharia investments. After all, risks cannot be avoided—they can only be managed. The management of their risks is in line with the requirement that every transaction be clear and supported by well-defined underlying assets. The strict requirement for the clarity of contract, or akad, in a Sharia investment reflects the fairness and transparency for all parties involved. Isn’t that a welcome relief?
The author is a member of the Board of Directors at Paramadina Islamic Management Institute and an Islamic financial planner at the Hijrah Institute, both in Jakarta. She also volunteers at a number of charitable organisations.
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