Introduction
Spend no more than 50% of your money on needs, 30% on your wants, and save 20%
How can we set a budget for overselves?
Prepare for financial emergencies
Pay off all debts before investing
It is suggested by financial planners to keep at least six months of living expenses in cash
How can we plan before we begin investing?
Low debt requirement
Can’t earn income from interest
Limitations
What are the pros and cons of hallal investing?
Reinvesting earned money back into the principle of an investment
What is compounding?
Avoid investment funds that have high fees.
Own index funds
How should you invest?
Companies whose primary business activities go against the teachings of islam: alcohol, gambling, interest, and pork products
What kind of companies are haram to invest in?
A key factor when compounding
What is the effect of time on compounding?
Picking stocks can be a tricky task
Why should we avoid investing in single stocks?
Avoid bonds and interest based investments
Don’t receive interest
What are the halal investment guidelines?
1. Start investing early
2. Reinvesting earnings (capital gains and dividends)
3. Avoid taking excessive risks that will cause large losses
What are the 3 ways to harness the power of compounding?
An easy way to invest in every stock in an index (list) in proportion to the size of the company.
What are index funds?
In these investments, you cannot collect interest
What is hallal investing?
A periodic payment that some companies pay their shareholders, a way for a company to give part of its earnings back to shareholders
What is a dividend?
- They’re broadly diversified, which eliminates individual stock risk
- They are low cost and tax efficient
Why does investing in index funds work?
Collecting interest is not permissible in this religion?
What is Islam?