Business investments are very risky, but despite this, the rewards you will reap from them are limitless. You just need the proper intuition and decision-making strategies to get the best possible outcome. However, even the most seasoned business veteran will tell you that, even with careful strategies, gaining revenue is simply out of your hands. But there are better investment practices out there than the ones we were used to, and if you ever heard of shariah-compliant investing, then you know exactly what we’re talking about.
Having a values-based investment plan is essential in today’s world. Shady practices often lead to scams and exploitation in the pursuit of generating maximum profit. And it is these types of situations that often scare people away from investing. But shariah-based investments are different; they are ethically bound by principles laid by the Qur’an. Maybe try your luck and practice shariah compliant investment in Australia. However, is it really a worthy practice compared to traditional investment?
Conventional Investing
- Driven by Revenue Returns: the main goal of traditional investing is to maximise as much revenue as possible from stocks. This means debts are typically given interests to extract profit from loans. However, this type of setup is usually susceptible to often shady business practices that can lead to exploitative sales. Mostly, it benefits the investor more than the shareholders.
- Limitless Horizons: there’s no limit to how many bonds or stocks investors can get their hands on. They can explore different industries to put their money in, so long as they adhere to local laws and regulations. The good part about this is that they can be as creative and free as they want when it comes to choosing their investment projects.
- Data-Driven: when analysing which businesses or projects to invest in, the traditional method mostly relies on numerical data. They check for market trends, revenue reports, and financial indicators to know the best probability of gaining more profit.
Shariah-Compliant investing
- Ethically Driven: values play a huge role in this type of investing. Since Islam has stringent rules when it comes to the everyday lives of Muslims, it’s only obvious that even in business these beliefs play a big part. Business investments in halal typically avoid certain industries that are considered “haram” or sinful to the faith, and these include alcohol, gambling, interest-based debts, and pork products.
- Zero Interests: a central principle in Islam is the avoidance of “riba” (interest), since it’s their belief that gaining revenue from money that has no inherent use is forbidden. Therefore, these types of investments typically avoid investing in ventures that would require the stakeholder to pay for them.
- Social Responsibility: the best part about shariah-compliant investing is its openness to give chances to small businesses, NGO projects, and startups. Halal investments believe that being able to uplift others is the greatest charity in Islam. It’s this practice in faith and business that is their simple way to give back to the community.