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Myths & Facts About Halal Investments

Myths & Facts About Halal Investments

Introduction

The Muslim community is not much aware about business principles. Thus we are quick at making the wrong assumptions and decisions about business and investments. In this particular article, we will discuss in detail about the myths and facts about Islamic Investments or Halal Investments. This article will help you understand the process of conventional business and how it can be done Islamically.

Difference Between Conventional Investment & Halal Investment

Conventional Investment

The investments can be done into any business like Real Estate, Hospitals, Schools, Restaurants & Bars, Casino’s etc… There is no regulation on investing the money into any of the business.

Halal Investment

The investments can be done only into particular business like Real Estate, Hospitals, Schools, Restaurants etc… which does not involve an haram activity. Investments can’t be made into for example Bars which sell alcohol which is haram is Islam and Casino’s which involves gambling which is haram in Islam. There is regulation on investing the money only into business which are considered ethical (halal) as per Islam.

Where does the investments go ?

Conventional Investment

The investments go into business. Where the companies use the money to buy/sell assets, use for operation costs, promotions and marketing, development, salaries etc.. The investments are not saved in bank as there is a huge misconception among investors. However, some conventional companies can keep investment in banks and earn interest over it.

Halal Investment

The investments go into business. Where the companies use the money to buy/sell assets, use for operation costs, promotions and marketing, development, salaries etc.. The investments are not saved in bank as there is a huge misconception among investors. Halal Business companies never keep money in bank and take interest on it.

If the investments go into buying of product, services or expenditures. How does the company refund investments ?

Conventional Investment

The companies can refund investment, by arranging alternate source of investment or by reducing the investment on products and services or removing the assets. This is usually a time consuming process.

Conventional businesses can arrange funds on interest until they get alternate source to refund payments.

Halal Investment

The companies can refund investment, by arranging alternate source of investment or by reducing the investment on products and services or removing the assets. This is usually a time consuming process.

Halal Investments cannot arrange funds on interest as it is haram in Islam.

How are the profits made ?

Conventional Investment

The profits are made by selling of products or services or assets.

Halal Investment

The profits are made by selling of products or services or assets.

How long does it take to make profits ?

Conventional Investment

In case of products, the profits can be made on same day of selling of the products. While in services, the profits are earned on clearance of bills from the customers. The usual payment cycle from customers may range from 3 days to 60 days depending on the contract of the client.

Halal Investment

In case of products, the profits can be made on same day of selling of the products. While in services, the profits are earned on clearance of bills from the customers. The usual payment cycle from customers may range from 3 days to 60 days depending on the contract of the client.

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