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As Salaamu 'alaikum wa arhamtullahi
Recently there was a discuission with follow ups on Islamic investement;
they are valuable proposals, which I would like to share with you -
May our efforts be a useful source of information for our Umma- may Allah
give us
barakah in the efforts....
Acknowledgement for the redistribution:
Jaffer Manek
Euro Asia Pacific Professionals International Ltd
www.euroaspa.com/euroaspa/
Jaffer Manek- EuroAsPa Int'l <[log in to unmask]>
The mail is actually in response to an interesting discussion about the
stockmarket, in the frame of which, brother J. Manek brought forward his
comments/thoughts and proposals..
It seems a consensus has been reached that the system of stockmarkets is
not
as benign and benevolent a vehicle of investment for small-savers as it is
made out to be.
Secondly, it is undeniable that criticism per se is lame without an offer
of
possible solutions and alternatives. Thirdly, it appears we uphold the
maxim
that it is incumbent for every individual to improve his/her own position,
at all times, but in a positive way not only for himself/herself but also
for the community he/she lives in and the wider global community. I feel
this sentiment is not exclusive to Muslims but to people of other faiths
also.
So now we should move on to address the central question " ... where small
investors could place their money in their absence." I am going to attempt
a
suggestion subject to adjustment, further consideration and further
fine-tuning.
I have already put forward a provisional list of possible avenues of
investment for small savers. As a reminder, it is:
-----------------------
1 - pay-off all credit cards, personal loans, hire-purchase loans, mortgage
on housing.
2 - invest in boosting the education both temporal and spiritual of your
own
children
3 - pay-off debts of own business if applicable
4 - invest in own business expansion with paying for product innovation &
development, marketing, customer care, distribution/transport, staff
amenities, etc
5 - invest in personal development of self e.g. elocution to remove accent
in speaking, improve writing ability, improve personal appearance
6 - buy real estate to derive rental income, if necessary organise a team
where several people take an equal share and make clear provision to pay
the
one who puts in the effort, management etc in the democratic
decision-making
at the same time agree in writing a clear exit route at the outset for
anyone who needs to withdraw.
7 - inject funds to be a minority equity holder in a local small business
without dominating or threatening the entrepreneur. Agree in writing at the
outset a clear exit route for any investor in the team who needs to leave.
8 - invest in the environment and social amenities e.g. schools, hospitals,
water-wells, parks, gardens, plant trees, have the rubbish and weeds
cleared, deal with stray animals, hobbies for youngsters, etc as a healthy
and happy neighbourhood will rub-off on the small investor in the locality.
I feel the pension, well before 65 years' age, can be the combination of
the
value of your residence, the sale of your business or dividends from your
ownership in your business, a stream of rental income and the pleasure of
living in a friendly neighbourhood full of amenities. Depending on the
stockmarket to produce monthly payments from the age of 65 cannot be such
an
attractive or reliable proposition.
-----------------------------
Someone queried whether the order in which the list above should operate. I
suggest it is up to the individual to invest in the way most beneficial to
them in their particular circumstances. There could be a mixture of the
items in the list. Regarding the query about charity (zakat, khums, etc) it
is assumed that the surplus is after all charitable dues. Regarding the
query about investing in real-estate, it is possible for fifty or hundred
or
five hundred small investors to come together to buy outright real estate
for cash and participate proportionately in the rental income after costs
and overheads.
The small investor has got into the habit of assuming he/she must generate
a
% interest income or dividends on their small pot of money savings. This is
a passive position. I suggest if the amount of savings is small (I do not
offer a definition of "small"), the small investor should instead be
proactive and take the initiative to bunch up with other like-minded small
investors and in that way the overall amount would be significant.
That therefore means operating something akin to a bank or a co-operative
for holding a collection of small deposits. The exit route from the
grouping
for the small investor must be very clear and in writing from the outset to
provide maximum facility to exit whenever the need or desire to do so
arises for fairness (emergency, alternative investment opportunity, travel,
interruption of steady earnings, etc. ).
Secondly, the small investor must desist from the conditioning/greed in
demanding the "market" level of return on their small savings.
Such a grouping can then invest in ethical projects such as business
ventures, infra-structure, community projects, parks and amenities, etc.
Some noble examples in developing countries are before us:
- A bank from Bangladesh offers unsecured small loans (up to £500 sterling)
to women only for them to derive a living from arts, crafts, own
manufacture, small retail, etc. It has been successful in Bangladesh and
has
just opened a branch in East London where the Bangladesh community is
settled.
- A Turkish company in Turkey that is owned with one share each for its
small investors. It is very successful in its backing of ethical commercial
ventures although it is facing trying times from the vested interests who
are trying to find fault with it to close it down.
If such successes can take place in developing countries beset with all
kinds of impediments and loaded systems, why not replicate them in the
western democratic countries where there is great freedom to create and
operate such organisation?
So, whilst a small individual by himself/herself cannot be a significant
investor, a group of like-minded and harmonious small investors can be a
formidable force. However, a sincere and competent leadership is a
pre-requisite to keep the group together. Now, the crux of the matter is
how
many of such sincere and capable leaders exist? And, how many of such
sincere and capable leaders take the trouble to put themselves forward to
organise such groupings?
I feel that is where this matter is stuck and we need to wait for a
wonderful "can-opener" to set free this "ginny" to try to achieve the
potential that we aspire to, an aim that is possible and that is in
everyone's hands. Perhaps there is insufficient personal development,
perhaps there is insufficient "Takwa" (= nobility of purpose?)
Jaffer Manek, London, UK
Discussion was lead in the froum of the:
Islamic Banking and Finance Net Listserver
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Wa 'alaikum as Salaam
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