Sharia Investment for Families

2019 is coming to an end, so how is the progress of your family financial planning so far?

Based on the results of seminar discussions, it was found that there are still many families who have not started investing for several reasons. One of the reasons is the uncertainty regarding the blessing of the investment they would make, possibly because they worry it would not follow the principles and rules of Islamic Sharia. Then, does it mean you must stop investing and prefer not to do it instead? Of course not. In any case, economy inflation is inevitable. If it is not dealt with an investment strategy, then the opportunities for achieving various financial goals in the future will not arise. Let us be familiar with the types of investments that are in line with the Sharia principles.

Investments based on Sharia principles basically have to meet several criteria, namely: Halal products, Halal in its acquisition, and also Halal to use. Apart from that, it must also meet a number of other criteria, that is not containing elements of Riba, Gharar, and Maysir.

The concept of having to be free of the Riba element means that the choice of financial products must avoid gaining profit from the exchange of ribawi goods and also obtaining interest from loan repayments. Next is free from the Gharar element. This means that the issuer of financial products must not provide incomplete information to mislead potential investors. For example, when you buy an ornamental fish in an aquarium, the actual size of the fish can be different from the size seen through the aquarium glass because there is a water and glass effect. The last is to be free from the Maysir element, which means excessive risk-taking. The example for this is buying a cat in a sack, a potential buyer has to pay for something that is not clear.

Currently, there are already many investments available that follow Sharia principles and rules. No need to worry about whether it’s Halal or not because all of the financial products mentioned later on have been approved by the Indonesian Ulema Council and overseen by the National Sharia Board. Prospective investors should still pay attention to their investment needs and objectives when choosing the right product.

First, Sharia deposit. In general, the concept of Sharia deposits is similar to conventional deposits where customers deposit funds in a bank for the purpose of obtaining yields. Sharia deposits offer profit sharing so that the nominal amount of yields received monthly is not fixed. This is the main difference between Sharia deposits and conventional deposits that promise a fixed rate of interest in each period. This product is suitable for the need to place an emergency fund and for investors with a conservative risk profile.

Second, Sharia-based mutual fund. The mutual fund market in Indonesia also offers Sharia mutual funds. The types of Sharia mutual funds available are as diverse as the conventional ones. So, adjust your choice of mutual funds according to the investment period and family investment risk profile.

Third, Sharia-based retail savings bond. At present, the Indonesian government has two products namely Retail Sukuk and Savings Sukuk. Both of these products are Sharia-based investment instruments in the form of securities issued by the Indonesian government to retail consumers. In return for your investment, the government will share yields in the form of coupons given every month. Coupons are given until the end of the investment period marked by the return of your investment principal value.

Fourth, Sharia shares. The National Sharia Board of the Indonesian Ulema Council and the Financial Services Authority (OJK) has issued a regulation regarding which shares can be categorized as Sharia shares. In addition, OJK also publishes a list of Sharia shares on a regular basis. This facilitates investors who want to invest based on the Sharia principles because investors only need to match the shares to be selected with the list of Sharia shares.

Although it is known as Sharia-based investments, anyone can make an investment regardless of being Muslim or non-Muslim. In fact, today, the United Kingdom is an advanced country in terms of using Sharia-based financial products. So, if it is suitable for your family financial goals, then there is no harm in choosing Sharia-based financial products.

Live a Beautiful Life!

By: Prita Ghozie from ZAP Finance