Beruflich Dokumente
Kultur Dokumente
1
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
2. IMPORTANCE OF INVESTMENT
People invest to get money in the future. Investment will help to provide capital
and income at some future time, either to meet a future obligation or need, or to transfer
to the next generation. Investment is necessary because it increased value of the product
purchased at present where there are some things that lose their charms and values as
and when the time passes. On the other hand, there are certain things that gain value
and increased rates along with the passing days. For an instance, gold, silver and other
such precious metals have increased values. Their rates fluctuate and an intelligent mind
knows when to sell them, if he ever invested in these metals. Whenever the rate is at its
highest and the investor thinks that this is the time to earn profits from the same, he
sells that precious metal and enjoys higher profit rates.
Next, investment can act as Security for the future where if we are totally bankrupt
yet still have a few assets and investments left, we can easily opt for those investments
and get money out of them to enjoy your life once again. we don’t have to beg in front
of others to give shelter during bad times. Investment not only lets we earn good amount
of profits, but also gives enough strength to feel secured for our future. Moreover, we
can make our family proud as it knows that no matter what happens, we still have
invested enough to feed them even if there are no sources of incomes left for you and
them. This is why the retired people enjoy the amounts they receive from the
investments they once make. To achieve financial goals, one need to start investing as
early as we can. The power of compounding will help the investment to grow at
snowballed rate. The earlier someone start to invest, the better potential for them to
achieve their financial goals.
2
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
3
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
net liquid assets and interest or other forms of non-permissible income. The fund
manager conducts a purification process on the impermissible income generated. The
impure income is distributed to charity.
4
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
Given this, any modern type of contract not mentioned in the Shariah is allowed if it
does not conflict with the Quran or the Sunnah and is based on ijma (consensus) and
qiyas (reasoning by analogy) and maslahah mursalah (considerations of the public
good), and also is free of any evil.
Islam acknowledges an increment in a commodity’s price in any sale contract to
be paid at a future date, as long as money’s time value is not claimed as a predetermined
value. In other words, any conditional increase in the loan’s principal in return for a
deferred repayment due to an expected depreciation in the value of the money, asset, or
other factors (e.g., inflation and commercial losses) is prohibited.
The key characteristics of Islamic economics is that economic and financial
activities are linked to real economic sector activities and there is encouragement to
equity based structures backed by tangible assets instead of debt based ones in
investment where in the conventional world the transactions may not necessarily have
to be backed by any real asset.
5
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
have to manage evolve quickly. We need to make sure we manage risks so that we
minimise their threats and maximise their potential.Risk management involves
understanding, analysing and addressing risk to make sure organisations achieve their
objectives. So it must be proportionate to the complexity and type of organisation
involved.Because risk is inherent in everything we do, the type of roles undertaken by
risk professionals are incredibly diverse.
They include roles in insurance, business continuity, health and safety, corporate
governance, engineering, planning and financial services. Islams always encourages
Muslims to do risk management. In Islamic history, there are various examples on risk
management practices applied by Prophet Muhammad SAW and the companions. In
the history of Prophet Muhammad SAW migration from Mecca to Madinah, Prophet
Muhammad SAW applied various types of risk management methods to avoid
enemies. For that process of migrating, Prophet Muhammad SAW asked the muslims
to move in small groups to avoid being detected and ambushed by the enemies. The
movement was also tricky, where Prophet Muhammad SAW asked the muslims to
move to the opposite direction before moving towards Madinah. Prophet Muhammad
SAW also hide in a cave for a few days before continuing the journey when he sensed
enemies were approaching his group.
This shows that risk management technique is permissible in Islam, contrary to
the old belief by certain quarters that muslims have to accept everything as qada’ and
qadar, without having to put effort to avoid misfortune. Indeed, risk management is
highly encouraged as it is in line with Maqasid al-Shariah.
6
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
7
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
process if combining many securities that do not move together in a portfolio to reduce
overall risk.
8
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
For a well-diversified portfolio, the risk – or average deviation from the mean – of
each stock contributes little to portfolio risk. Instead, it is the difference _
or covariance – between individual stock's levels of risk that determines overall
portfolio risk. As a result, investors benefit from holding diversified portfolios instead
of individual stocks.
Figure 1
Modern portfolio theory has had a marked impact on how investors perceive risk,
return and portfolio management. The theory demonstrates that portfolio diversification
can reduce investment risk. In fact, modern money managers routinely follow its
precepts. Passive investing also incorporates MPT as investors choose index funds that
are low cost and well-diversified. Losses in any individual stock are not material
enough to damage performance due to the diversification, and the success and
prevalence of passive investing is an indication of the ubiquity of modern portfolio
theory.
That being said, MPT has some shortcomings in the real world. For starters, it often
requires investors to rethink notions of risk. Sometimes it demands that the investor
take on a perceived risky investment (futures, for example) in order to reduce overall
risk. That can be a tough sell to an investor not familiar with the benefits of
sophisticated portfolio management techniques.
9
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
Likewise, it is logical to borrow to hold a risk-free asset and increase your portfolio
returns, but finding a truly risk-free asset is another matter. Government-backed bonds
are presumed to be risk free, but, in reality, they are not. Securities such as Malaysia
Treasury bonds are free of default risk, but expectations of higher inflation and interest
rate changes can both affect their value.
5.1 SHARES
Investment shares is the basic unit of ownership in a company. Shareholders have the
right to vote at general meetings. Shareholders can expect to benefits from the profits
earned by the company in the form of dividends if any and also form the growth in the
value of the company.
10
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
11
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
Companies whose core activities are not the Sharia principles are classified as approved
securities. The securities that are from the list approved securities are based on the following
criteria:
ETF is an exchange-traded funds, is a unit trust funds that is listed and traded on a stock
exchange. ETF are open-ended with unique kind creation and redemption mechanism
supported by a system of participating dealers and liquidity providers. The difference
between ETF and unit trust is in the manner in which their units are bought and sold.
An ETF is an index tracking fund. Most ETF are passively managed index although
there is ongoing work to create enhanced and actively managed ETF. In managing
index funds passively, mangers do not pick stocks based on fundamental analysis.
Instead managers track the performance of a benchmark index.
12
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
PERMISSIBLE ACTIVITIES :
Financial services based on interest
Gambling manufacture/sale on non halal products
Conventional insurance
Entertainment activities not in line with sharia
Stock broking and trading in conventional securities
Hotels and resort
13
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
All Islamic Financial instruments in general must meet a number of criteria in order to
be considered halal (permissible)
Riba
Gharah
Maysir
14
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
a) SUKUK AL-IJARAH
The popularity of this structure can be attributed to a number of different factors; some
commentators have described it as the classical sukuk structure from which all other
sukuk structures have developed, whilst others highlight its simplicity and its favour
with Shari’a scholars as the key contributing factors. In the Islamic finance industry,
the term ijara is broadly understood to mean the ‘transfer of the usufruct of an asset to
another person in exchange for a rent claimed from him or, more literally, a lease. In
order to generate returns for investors, all sukuk structures rely upon either the
performance of an underlying asset or a contractual arrangement with respect to that
15
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
asset. The ijara is particularly useful in this respect as it can be used in a manner that
provides for regular payments throughout the life of a financing arrangement, together
with the flexibility to tailor the payment profile and method of calculation in order to
generate a profit.
b) SUKUK AL-MURABAHAH
contractual arrangement between a financier (the seller) and a customer (the
purchaser) whereby the financier would sell specified assets or commodities to the
customer for spot delivery in the expectation that the customer would be able to meet
its deferred payment obligations under the murabaha agreement.
The deferred price would typically include the cost price at which the financier
had purchased the assets/commodities, plus a pre-agreed mark- up representing the
profit generated from its involvement in the transaction. The payments of the deferred
price from the customer may be structured as periodical payments on dates specified at
the outset, thus creating an income stream for the financier for the term of the
transaction.
The same characteristics of the murabaha structure can also be adapted for use as
the underlying structure in a sukuk issuance. Sukuk proceeds from Investors may be
applied by Issuer to acquire commodities and on sell such commodities to the
Originator to generate revenue from the murabaha deferred price which would be
distributed to the Investors throughout the term of the sukuk al- murabaha.
c) SUKUK AL-SALAM
A salam contract involves the purchase of assets by one party from another party
on immediate payment and deferred delivery terms. The purchase price of the assets is
typically referred to as the salam capital and is paid at the time of entering into the
salam contract. The assets sold under the salam contract are referred to as al-muslam
fhi, delivery of which is deferred until a future date.
A salam contract may be construed as being synonymous with the objective of a
forward sale contract. Forward sale contracts are generally forbidden under Sharia
unless the element of uncertainty (gharar) inherent in such contracts is effectively
eradicated. For this reason, certain criteria must be met in order for a salam contract to
be Shari’a compliant.
16
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
d) SUKUK AL-MUSHARAKAH
Its simplest form, a musharakah arrangement is a partnership arrangement between
two (or more) parties, where each partner makes a capital contribution to the partnership
(musharakah), in the form of either cash contributions or contributions in kind.
Essentially, a musharakah is akin to an unincorporated joint venture but may, if
required, take the form of a legal entity. The musharakah partners share the profits of
the musharakah in pre-agreed proportions and share the losses of the musharakah in
proportion to their initial capital investment.
e) SUKUK AL-MUDHARABAH
The term mudarabah is broadly understood to refer to a form of equity-based
partnership arrangement whereby one partner provides capital (the Rab al-Mal) and the
other provides managerial skills (the Mudarib).The same characteristics of the
mudarabah structure can also be adapted for use as the underlying structure in a sukuk
issuance as each Investor’s purchase of sukuk would represent units of equal value in
the mudarabah capital, and are registered in the names of the sukuk certificate holders
on the basis of undivided ownership of shares in the mudarabah capital. The returns to
the Investors would represent accrued profit from the mudarabah capital at a pre-agreed
ratio between the Rab al-Mal and the Mudarib, which would then pass to the Investors
according to each Investor’s percentage of investments in sukuk mudarabah.
f) SUKUK AL-ISTISNA
In the modern day context of Islamic finance, the istisna has developed into a
particularly useful tool in the Islamic funding of the construction phase of a project, it
is often regarded as being similar to a fixed-price turnkey contract. In order to enable
investors to receive a return during the period where assets are being constructed under
an istisna arrangement, some Shari’a scholars have permitted the use of a forward lease
arrangement (known as ijara mawsufah fi al-dimmah) alongside such istisna
arrangement. Accordingly, sukuk al-istisna often combines an istisna arrangement with
a forward lease arrangement – whilst the istisna is the method through which the
investors can advance funds to an originator, the ijara provides the most compatible
payment method to those investors.
17
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
Part of your contribution will be allocated to a takaful fund in the form of participative
contribution (tabarruq), and the balance of the contributions will be used to purchase
the investment-linked units. You will undertake a contract (aqad) to become one of the
participants by agreeing to mutually help each other, should any of the participants
18
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
suffer a misfortune arising from death or disability. If you did not make any claim
during the period of takaful, you are entitled to a share of the surplus in the takaful fund.
The surplus will be shared between you and the takaful operator based on the concept
of surplus sharing according to a pre agreed ratio. Your share of the surplus will be used
to purchase additional investment-linked units. The takaful operator acts as a manager
to oversee the management of the investment fund. In return, the takaful operator
receives a fee (ujrah) for its service.
6. ALTERNATIVE INVESTMENTS
6.1 Property
Investment property is real estate property that has been purchased with the
intention of earning a return on the investment, either through rental income, the future
resale of the property or both. An investment property can be a long-term endeavor or
an intended short-term investment such as in the case of flipping, where real estate is
bought, remodel or renovated, and sold at a profit. Investment in property is permissible
in islam as long as the financing is done according to shariah and the property is rented
out to those carrying permissible activities.
Protection of the property must also be obtained from takaful operators. Property
has traditionally been regarded as a hedge against inflation. In a diversified portfolio,
property works to balance the portfolio as it has the potential to reduce the risks without
significantly reducing returns. An investor must know the market in which he is
searching for property or hire an expert to help. For investors seeking an income stream
from rental properties, the most important aspects to consider are property location and
market rental rates. As for location, many successful rentals are located in close
proximity to major schools. For example, if you buy a property near a state university,
students are likely to want to rent it year after year. There are also many other features
of a profitable rental property, and some take time to learn. the biggest difference
between a rental property and other investments is the amount of time and work you
have to devote to caring for it. If you don't want to, you can hire a professional property
manager. But his or her salary then becomes an expenses that impacts your investment
profitability.
19
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
6.2 Gold
In order to fully understand the purpose of gold, one must look back at the start
of the gold market. While gold's history began in 3000 B.C, when the ancient Egyptians
started forming jewelry, it wasn't until 560 B.C. that gold started to act as a currency.
At that time, merchants wanted to create a standardized and easily transferable form of
money that would simplify trade. Because gold jewelry was already widely accepted
and recognized throughout various corners of the earth, the creation of a gold coin
stamped with a seal seemed to be the answer. Following the advent of gold as money,
gold's importance continued to grow.
History has examples of gold's influence in various empires, like the Greek and
Roman empires. Great Britain developed its own metals-based currency in 1066. The
British pound (symbolizing a pound of sterling silver), shillings and pence were all
based on the amount of gold (or silver) that it represented. Eventually, gold symbolized
wealth throughout Europe, Asia, Africa and the Americas. Gold is a type of precious
metal. Gold and other precious metals are assets that are both tangible but not liquid
unlike real estate which is tangible but not liquid or company shares and bonds which
are liquid but not tangible.
The most important reason for investing in gold is diversifying risk. Gold is an
excellent portfolio diversifier, since it has very low correlation with other assets. This
is why the yellow metal is one of the most effective hedges or safe havens. Gold can be
seen as an insurance against tail risks, financial black swans, high and accelerating
inflation or systemic crises. There are many ways to invest in gold. The most traditional
way of investing in gold is by buying bullion bars or coins. However, investors can also
purchase gold exchange-traded products or gold certificates, to avoid the risks and costs
associated with the transfer and storage of physical bullion. Investors can also invest in
gold via derivatives, such as forwards, futures and options. The indirect way to have
exposure to the price of gold is buying the shares of gold mining companies.
20
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
6.3 Commodity
Commodities are raw materials that are sold in bulk, such as oil, wheat, silver, gold,
pork bellies, oranges and cocoa. They are generally raw materials that are eventually
used to produce other goods such as oil for gasoline, cocoa for chocolate, wheat for
bread, etc. As such, they give an investor the opportunity to invest in the materials that
a country (or corporation) produces as well as those that it consumes. Most larger
manufacturers buy the commodities they need on the "spot market," where the full cash
price is usually paid on the spot. Speculators typically buy and sell commodities with
option and futures contracts. There are several types of commodity investment which
is direct and indirect.
Direct refers to cash purchase of physical commodities such as agricultural
products, metals, crude oil. Indirect refers to the acquisition of indirect claims on
commodities such as equity in plantation companies or future contracts. Commodities
offer investors a number of benefits. First, Hedge Against Inflation: Commodity cash
prices may benefit from periods of unexpected inflation, whereas stocks and bonds may
suffer. Commodities are "real assets", unlike stocks and bonds, which are "financial
assets". Commodities, therefore, tend to react to changing economic fundamentals in
ways that are different from traditional financial assets, particularly with respect to
inflation.
Commodity prices usually rise when inflation is accelerating, so investing in
commodities can give portfolios a hedge against inflation. Conversely, stocks and
bonds tend to perform better when the rate of inflation is stable or slowing. Faster
inflation lowers the value of future cash flows paid by stocks and bonds because those
future dollars will be able to buy fewer goods and services than they would today.
However, this inflation advantage is captured more efficiently by direct investment in
commodities than, for example, investment in commodity-related equities whose prices
also reflect the financial prospects of the issuer or actively managed commodity futures
accounts, which tend to reflect the manager's skills at selecting the right commodities.
21
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
The methodology had recently been revised as an effort to harmonize the standard
to global expectation with the introduction of the two-tier quantitative approach which
applies the business activity benchmarks and the newly- introduced financial ratio
benchmarks, while existing qualitative assessment continues to be applicable. The main
references for the screening methodologies are the Quran and Sunnah.
However, the Holy Quran and the Sunnah do not explicitly state the guidelines for
the quantitative criteria. For instance, the thresholds for financial ratios are based on
interpretation in the form of ijtihad (reasoning from the source of Shariah by qualified
Shariah scholars) and Shariah statements that are not directly related to capital markets.
There is some degree of freedom for scholars to specify their quantitative criteria.
These different opinions and judgements of the scholars can be due to complexity of
transforming the historical and verbal Shariah sources into quantifiable and formal
22
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
23
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
24
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
a) The company must have a good image i.e. public perception towards the company must
be good; and
b) The core activities of the company are important and considered maslahah to the
Muslim ummah (nation) and the country, and the non-permissible element is very small
and involves matters such as `umum balwa, `uruf (custom) and the rights of the non-
Muslim community which are accepted by Islam.
Hence, it can be summarized that for securities issued by mixture activities companies
to be classified as Shariah-compliant securities, it must pass both assessments i.e.
quantitative assessments as well as qualitative assessments (Securities Commission
Malaysia, 2013a).
25
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
The main differences between the revised methodology and previous methodology are
as in Table 1 below:
Table 1: The Main Differences between the Revised Methodology and Previous
Methodology
Unchanged
26
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
conventional banking;
conventional insurance
gambling
liquor.
Pork and non-halal food and
beverages;
interest income from conventional accounts and instruments, including
dividends from investment in Shariah non-compliant instruments and interest
income awarded arising from a judgement by a court or arbitrator;
tobacco and tobacco-related activities
other activities deemed non-compliant according to Shariah.
27
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
To fulfil the requirement for this assessment, each ratio must be less than 33% and only
securities issued by company that meet the requirement in all assessments will be
classified as Shariah compliant securities (Securities Commission Malaysia, 2013c).
28
MBFB 3083 (ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGEMENT)
8. REFERENCE
Internet :
https://i-epistemology.net/v1/economics-a-business/899-the-time-value-of-money-
concept-in-islamic-finance.html
http://www.business-guard.com/en/definitions/liquidity-planning
https://www.theirm.org/the-risk-profession/risk-management.aspx
https://economictimes.indiatimes.com/definition/risk-return-trade-off
https://www.accountingtools.com/articles/2017/5/13/risk-return-trade-off
Modern Portfolio Theory: Why It's Still Hip |
Investopedia https://www.investopedia.com/managing-wealth/modern-portfolio-
theory-why-its-still-hip/#ixzz54BOi09za
Book :
ISLAMIC FINANCIAL PLANNING AND WEALTH MANAGMENT
29