"For where your treasure is, there your heart will be also." Matthew 6:21 (NIV)
God has a plan for your life and your finances as well. Let's review a few important considerations that you will need to take into account in order to implement God's financial plan for your life.
The Right Foundation
The first important aspect of financial planning to consider is your purpose. Your purpose in life and the purposes that God calls your family to will have a great impact on the way you manage the resources God has given you.
If you understand your life's purpose first, you will become more effective in your day-to-day living and clearer about the financial decisions you need to make. Great examples of individuals who understood their purpose are William Wilberforce, who sought to abolish slavery in England, and Martin Luther in the Reformation. Both men lived with purpose and were amazingly effective as a result of this knowledge.
Where else can we see the effects of understanding one's purpose? We see it most clearly in the intentionality with which God directs our lives. God intentionally declares His holiness and does so with relentlessness as He interacts with us. God knows the plans He has for us and He is driven by this holy purpose. Think about the implications that this has for your life. God is seeking to reveal His holiness through you and He will not quit that purpose. What a great example God has given us of the focus we need to have.
How does this relate to investing and financial planning? Well, just as He did with Wilberforce and Luther, God has a plan for your life. You can be confident in this fact, and know that He will give you the necessary resources to accomplish His purposes. All you need to do is ask Him.
The fact that God has a plan for you also means that you need to be clear in understanding the gifts and resources that God has given your family and how you can work together to serve Himi. This understanding should direct where you give, where you invest your time and money, and how you view the world. Spend time thinking, praying, and journaling about this aspect of your life before you dig into the practical aspects of developing a financial plan.
The Tools
Once you have spent time understanding your purpose, the next step is to put together a solid financial plan. A number of great resources exist to help you through this process:
Master Your Money - by Ron Blue, takes a look what the Bible has to say about stewardship and combines it with advice on budgeting and managing your finances.
A Life Well Spent - by Russ Crosson, challenges your thinking about how to invest in your family from an eternal perspective.
Sound Mind Investing - by Austin Pryor, a great step-by-step resource outlining the process for investing and managing your finances from a Biblical and practical perspective.
The Word on Finances - by Larry Burkett, explores what the Bible says in regards to almost any area of your finances.
In addition to these resources, consider taking a Crown Ministries (http://www.crown.org/) class through a local church or seeking out a good certified financial planner (CFP) who can help you. You can visit the CFP Board of Standards (www.cfp-board.org/cons_fndplr.html) or the Christian Financial Planning Institute (http://www.christianfpi.org/) to locate a good CFP in your area.
As you begin to explore how to invest and what it means to have a financial plan, you will find that the overarching process outlined in many of these resources is similar. However, each has different techniques and valuable insights that you should consider as you seek to develop a plan that is right for you.
As you work your way through these resources, you will begin to understand the following basic steps in the financial planning process:
1. Goal Setting - Define both short-term and long-term goals (driven by your purpose). These will differ depending on your stage of life, your finances and the size of your family. Make sure you have these in writing and keep them up-to-date.
2. Creating A Balance Sheet and Cash Flow Statement - This is just a fancy way of saying that you should list all of your assets (property, stocks, bonds, etc.) and liabilities (mortgage, credit card debt, etc.) to get a clear picture of where you stand financially. You should also list all of your regular income sources and expenses for a year.
3. Develop a Budget & Financial Plan - Based on your analysis in step 2, determine how much you should save, invest, and spend. Your goal should be to spend less than you earn over the long haul. Your financial plan defines how you move from where you are in step 2 toward the goals outlined in step 1.
4. Assess and Adjust - Once you have begun implementing your plan, schedule a time to review your progress. Plan to do this on a monthly basis. In addition to regular assessment, make an annual date with your spouse to pray, review your finances, and discuss your goals for the coming year.
The beginning of the year is a great time to start, but you can begin at any time. Focus on developing your budget for the next year and reviewing your progress in the previous year. Review the "numbers" for each category and then take a look at where your money went as it relates to saving and investing, giving, and living expenses.
Also take a look at whom or what your money was invested in. Was it time with family, saving for retirement, or a new car? Was your spending in line with the purposes God has given you?
Finally, review what you did well. Celebrate those positives and decide what you need to improve going forward. Plan to do this every year and you will be surprised at the positives effects this has on your ability to be a good steward.
Have No Anxiety...
Do not worry if this seems overwhelming at first. You can do it with the right kind of help. Thankfully, God tells us that He will provide the wisdom and guidance we need, whether it be directly through Him or through one of His servants. "For the LORD gives wisdom, and from his mouth come knowledge and understanding." (Proverbs 2:6)
Once you have been through this process, you will find it becomes much easier to repeat as an on-going discipline. The real challenge is establishing the right kind of habits to help you grow and become a better steward.
"To the man who pleases Him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases God. This too is meaningless, a chasing after the wind." (Ecclesiastes 2:26) This verse is an excellent reminder that God will bless and provide for us as we seek Him. However, if we are not seeking to please Him first, we will ultimately fail in doing anything that has real value.
Remember this verse and let God guide you as you seek to understand the purpose He has for your life. Approach your investing and financial plans with this purpose in mind and God will take care of the rest.
Achmade Zachary Ghazali,
http://dca2u.blogspot.com
Tuesday, May 6, 2008
Financial Planning - Islamic Shariah Perspective
Financial Planning in the conventional sense is an effort to render professional service to individuals, their families and their businesses, to provide impartial assistance in analyzing and organizing financial affairs in order to achieve financial and lifestyle goals. It would involve the process of determining life goals, gathering relevant financial information, examining current financial status and later proposing a strategy and plan to handle the current situation. The crux of a financial planning practice is the planning itself then the implementation of the plan and the monitoring of it. Being attributed by shari'ah, this process should be embedded with Islamic values and principles. Thus this paper attempts to delineate the sources of shari'ah financial planning, which include revelation and reality.
Shari'ah or Islamic way of life is based on the qur'an and sunnah. These bases are everlasting sources of guidance for Muslims life. The qur'an as word of Allah sent down upon the prophet Muhammad, through the Angle Gabriel, in its precise meaning and wording (the Arabic language), transmitted to us by numerous persons (tawatur) both verbally and in writing, is not only talking about Muslims' daily ritual worship, but it contains all aspects of human life. It consists of Allah's instructions for human being in order to maintain and achieve their life goal in this world and hereafter.
The qur'an is not word of the prophet, but it is Allah's word, as He says
"Your companion (Muhammad SAW) has neither gone astray nor has erred. Nor does he speak of (his own) desire. It is only a divine revelation revealed unto him." (53:2-4).
The qur'an was sent down to the prophet gradually during his life in two places namely Mecca and Madinah, which later on became the attributes of the verses: Meccan and Madinan verses. The Qur'anic verses sent down in Mecca during the first part of the Prophet-hood mainly center on Islamic creed such as Oneness of Allah and mission of the prophet which constitute primary element of the Islamic worldview. The later verses sent down during the Prophet-hood in Madinah contain rules and laws such as conduct of state, conduct of family life and relations among Muslims and between Muslims and non-Muslims which constitute the Islamic way of life.
Sunnah as what was transmitted on the authority of the prophet saw, his saying, deeds, tacit approval, or description on his feature (his physical appearance), has put the first source into the reality. In other words, the second source of shari'ah financial planning is in fact the implementation, and deliberation of the former source. It is through hadith or sunnah, the qur'an was being implemented and practiced. Otherwise it remains ideal, holistic principles. In addition, sunnah like the first source, legislates laws that were silent or not displayed in the qur'an. Sunnah has been recognized as the second source of shari'ah by the first source, in which Allah says,
"And whatsoever the Prophet (Muhammad SAW) gives you, take it, and whatsoever he forbids you, abstain (from it), and fear God. Verily, God is Severe in punishment." (59:7).
And Allah again authorizes the sunnah as the second source after the qur'an as mentioned in the various verses, as He says,
"He who obeys the Prophet (Muhammad SAW), has indeed obeyed Allah, but he who turns away, then we have not sent you (O Muhammad SAW) as a watcher over them." (4:80)
These constitute the primary and pivotal sources of Shari'ah financial planning. However the principles and values that are highlighted in the above sources, cannot be implemented at least, we understand and know the reality of the market. This is what the so-called "financial instruments" or available and existing means of achieving the life goal. Therefore the next thing as a shari'ah financial planner should know, is what ever related to all information of available instruments and means in the financial market. Afterwards, the shari'ah financial planners should look into them from the Islamic perspective.
In integrating the values that are prescribed in the qur'an and sunnah on one hand and financial instruments on the other, they have to put them into the implementation based on available market. In this case, they should make ijtihad (interpret and apply the Islamic laws) using prescribed methods or the so called "secondary sources" such qiyas, istihsan, istislah, and the like to evaluate the existing financial instruments from the Islamic perspective. These instruments may need to be adjusted or abandoned if they are not in line with the Islamic principles.
The secondary sources of shari'ah financial planning include those methods and procedures employed by Muslim scholars to comprehend and operationalize the principles and values as contained in the qur'an and sunnah. These include: Qiyas (analogical deduction) Istihsan (jurist preferences), Istislah (consideration of public good) Istishab (continuance or performance) and 'Urf (custom or usages that are not contradicting with shari'ah). A previous ijtihad of an individual or a group may arrive at the consensus of the learned Muslim scholars of the Muslim community and thus at the status of Ijma'. In this case Ijma (consensus of the Muslim scholars on Islamic laws) is also considered as one of the secondary sources of shari'ah.
In this regard, Public Mutual Berhad, one of outstanding financial institutions, appointed the shari'ah advisers to render the advice and ensure the islamicity of her Islamic funds. Presently the company has successfully and professionally established three competitive products known as Public Islamic Equity Fund, Public Islamic Bond Fund and Public Ittikal Fund.
In conclusion, shari'ah financial planning basically covers two interrelated things: end and means. The qur'an and sunnah perfectly guide human being to set and achieve the end as reflected in Allah saying,
"And when the prayer is finished, then you may disperse through the land, and seek of the bounty of Allah; and celebrate the praises of Allah often (and without stint); that you may prosper (Falah)" (62:10).
However, in translating this verse into the implementation as means to achieve end, the other secondary sources and the surrounding should be taken in to consideration in preparing the shari'ah financial planning.
Written by L. Yuryadi Arnakim ; Sources of Shari’ah Financial Planning
http://islamic-world.net/economics/shariah_financial_planning.htm
Achmade Zachary Ghazali,
http://dca2u.blogspot.com
Shari'ah or Islamic way of life is based on the qur'an and sunnah. These bases are everlasting sources of guidance for Muslims life. The qur'an as word of Allah sent down upon the prophet Muhammad, through the Angle Gabriel, in its precise meaning and wording (the Arabic language), transmitted to us by numerous persons (tawatur) both verbally and in writing, is not only talking about Muslims' daily ritual worship, but it contains all aspects of human life. It consists of Allah's instructions for human being in order to maintain and achieve their life goal in this world and hereafter.
The qur'an is not word of the prophet, but it is Allah's word, as He says
"Your companion (Muhammad SAW) has neither gone astray nor has erred. Nor does he speak of (his own) desire. It is only a divine revelation revealed unto him." (53:2-4).
The qur'an was sent down to the prophet gradually during his life in two places namely Mecca and Madinah, which later on became the attributes of the verses: Meccan and Madinan verses. The Qur'anic verses sent down in Mecca during the first part of the Prophet-hood mainly center on Islamic creed such as Oneness of Allah and mission of the prophet which constitute primary element of the Islamic worldview. The later verses sent down during the Prophet-hood in Madinah contain rules and laws such as conduct of state, conduct of family life and relations among Muslims and between Muslims and non-Muslims which constitute the Islamic way of life.
Sunnah as what was transmitted on the authority of the prophet saw, his saying, deeds, tacit approval, or description on his feature (his physical appearance), has put the first source into the reality. In other words, the second source of shari'ah financial planning is in fact the implementation, and deliberation of the former source. It is through hadith or sunnah, the qur'an was being implemented and practiced. Otherwise it remains ideal, holistic principles. In addition, sunnah like the first source, legislates laws that were silent or not displayed in the qur'an. Sunnah has been recognized as the second source of shari'ah by the first source, in which Allah says,
"And whatsoever the Prophet (Muhammad SAW) gives you, take it, and whatsoever he forbids you, abstain (from it), and fear God. Verily, God is Severe in punishment." (59:7).
And Allah again authorizes the sunnah as the second source after the qur'an as mentioned in the various verses, as He says,
"He who obeys the Prophet (Muhammad SAW), has indeed obeyed Allah, but he who turns away, then we have not sent you (O Muhammad SAW) as a watcher over them." (4:80)
These constitute the primary and pivotal sources of Shari'ah financial planning. However the principles and values that are highlighted in the above sources, cannot be implemented at least, we understand and know the reality of the market. This is what the so-called "financial instruments" or available and existing means of achieving the life goal. Therefore the next thing as a shari'ah financial planner should know, is what ever related to all information of available instruments and means in the financial market. Afterwards, the shari'ah financial planners should look into them from the Islamic perspective.
In integrating the values that are prescribed in the qur'an and sunnah on one hand and financial instruments on the other, they have to put them into the implementation based on available market. In this case, they should make ijtihad (interpret and apply the Islamic laws) using prescribed methods or the so called "secondary sources" such qiyas, istihsan, istislah, and the like to evaluate the existing financial instruments from the Islamic perspective. These instruments may need to be adjusted or abandoned if they are not in line with the Islamic principles.
The secondary sources of shari'ah financial planning include those methods and procedures employed by Muslim scholars to comprehend and operationalize the principles and values as contained in the qur'an and sunnah. These include: Qiyas (analogical deduction) Istihsan (jurist preferences), Istislah (consideration of public good) Istishab (continuance or performance) and 'Urf (custom or usages that are not contradicting with shari'ah). A previous ijtihad of an individual or a group may arrive at the consensus of the learned Muslim scholars of the Muslim community and thus at the status of Ijma'. In this case Ijma (consensus of the Muslim scholars on Islamic laws) is also considered as one of the secondary sources of shari'ah.
In this regard, Public Mutual Berhad, one of outstanding financial institutions, appointed the shari'ah advisers to render the advice and ensure the islamicity of her Islamic funds. Presently the company has successfully and professionally established three competitive products known as Public Islamic Equity Fund, Public Islamic Bond Fund and Public Ittikal Fund.
In conclusion, shari'ah financial planning basically covers two interrelated things: end and means. The qur'an and sunnah perfectly guide human being to set and achieve the end as reflected in Allah saying,
"And when the prayer is finished, then you may disperse through the land, and seek of the bounty of Allah; and celebrate the praises of Allah often (and without stint); that you may prosper (Falah)" (62:10).
However, in translating this verse into the implementation as means to achieve end, the other secondary sources and the surrounding should be taken in to consideration in preparing the shari'ah financial planning.
Written by L. Yuryadi Arnakim ; Sources of Shari’ah Financial Planning
http://islamic-world.net/economics/shariah_financial_planning.htm
Achmade Zachary Ghazali,
http://dca2u.blogspot.com
Investment : The Needs To Purify Returns
Introduction
Purification process usually involves the application of Shariah principles in determining the permissibility of share trading. It deals with the valuation of stocks along Shariah guidelines. In this way, it does not concern determining the market values of stocks. However it does not mean that the Shariah is negligence of performance parameters. The purification process is only the beginning of Shariah compliance. Equally important is the wealth creation aspects of stock investment.
In the earlier days, the names like filtration, cleansing and screening process were used to achieve similar objectives. The Securities Commission has played a noble role in setting up the Shariah criteria for listed stocks. In June 1997 the Commission published a list of stocks consistent with the Shariah criteria. Later, by 26th October 2001, 79% of the stocks (i.e. 642) listed in the KLSE were found to comply with Shariah values. Over time, the Commission oversees the purification process by actively pursuing a system of addition and deletion of stocks to ensure full compliance.
The question now is the purification factor market driven? Who needs purification? Assuming that the purification process is market-driven, the issue can be examined from two sides, namely:
1. Demand side : Retail and institutional investors
2. Supply side : Issuing companies (IPOs) and investors (secondary trading).
It is quite obvious that the people wanting to purchase and sell Shariah stocks constitutes the Muslim individuals as well as companies running business under an Islamic label, such as Islamic banks, takaful, Islamic unit trusts and asset management companies. They wanted to make sure that stocks bought and sold are permissible (halal) for fear when God's Law is violated; punishment in the Hereafter is inevitable.
This paper looks at the need for purification from two perspectives. First it deals with the legal factor, namely the Shariah value (hukm shari') attached to the act of buying and selling stocks. Secondly, it examines the ethical factor that ventures into the metaphysical dimension of the self and the factors affecting it. The self is the centerpiece of human motivation. Thus, what compels an investor to purchase Shariah stocks has a lot to do with the self and its objectives.
THE LEGAL FACTOR: The role of 'Aqd (contract)
The need for purification can be made more revealing when decisions of issuers and investors are further investigated. The issue can be more sensitive on the demand side, since investors are particular on what they buy. They are concern whether the profits earned from the investments are halal. The supply side factor however, is relatively silent unless issuers are keen to capture Islamic investors such as the recent PLUS initial public offers.
What is at stake here is a fundamental question, namely the nature of the contract ('Aqd) applied in trading Shariah stocks. Human actions in the Shariah can be categorized into five, namely:
1. Wajib (obligatory)
2. Sunnat (commendable)
3. Makruh (reprehensible)
4. Mubah (permissible)
5. Haram (prohibited)
In defining human actions, the contractual relationship between man and God (hablumninallah) as well as among man (hablumminnanas) is a crucial element to observe. As an example, the consumption of interest as riba, is prohibited (haram) as it both violated the rights of God and the rights of man. In a legal perspective, the contract of an interest-bearing loan is invalid (bathil).The act of lending and borrowing in this respect is not recognized by both God and society. When this happens the act of lending and borrowing with riba will not be rewarded but punishable in the hereafter.
The same applies in Shariah stock trading. If an investor desires to observe the Shariah, he or she must first ask whether the act of sale and purchase of stocks is valid (sah) in the eyes of God. It is here, the 'Aqd factor is most critical. If the 'Aqd is void (bathil), then the act of stock trading is punishable. Like wise if the 'Aqd is valid (sahih), then people who purchase or sell stocks will receive rewards (thawab) from God.
The 'Aqd (contract) for stock trading apparently has not received commendable attention compared with the Shariah criteria of the Securities Commission. In the latter, it seems that the subject matter is the stock (i.e. the financial asset) rather than the contract applied in the sale and purchase of that financial asset. It is thus important to explore what exactly is the nature of contract ('Aqd) applied in Shariah stock trading. The 'Aqd helps determine the Hukm Shari' of shariah stock trading. That is whether the actions of stock trading is accepted or rejected by God is defined by the validity of the 'Aqd. Therefore pinning on the Islamicity of the stocks alone may not suffice in determining the Shariah value (hukm) on the sale and purchase of stocks.
Contract of Al-Bay' (sale and purchase of asset/property)
There are four main principles of 'Aqd (contract),namely:
1. Agents of contract (tharafail aqdi)
2. Objective of contract (mauduul adqi)
3. Object of contract (mahalul aqdi)
4. Offer and acceptance (ijab & qabul)
To secure legitimacy, the contract must be free from the following elements
a. Interest (riba): contractual increase over capital loan
b. Gambling (maisir): speculative or aleatory contracts in which obligations and benefits accruing to participating parties are not fully defined at the time when the contract became effective leading to either wining or losing arising from mere chance instead of work and effort.
c. Ambiguities (Gharar): uncertainties that exists in contracts involving contracting parties and the subject matter, which leads to disputes and unjustified gain
d. Intoxicants (qamar): consumption of alcoholic beverages, which can impair the intellect ('aql) leading to irrational behavior.
e. Consumption of pork
f. Illicit sex (zina) : sexual relation outside marriage which annihilate the sanctity of the family system (nasl).
The two principles of risk-taking (al-bay') and profit-loss sharing (Shirkat) are a given in all contractual obligation. For that reason, the Shariah prohibits interest and gambling. In Islamic law, two popular the legal maxims (Qawaid Fiqiah) highlight the constructiive role of risk-taking in wealth creation :
1. No rewards without risks - "Al-Ghormi bil Ghonm"
2. Profits must be accompanied with liability "Al-Kharaj bil Daman"
A systematic understanding of stocks in Islam can best be acquired by looking at the nature of contract and transaction each party, namely the seller and buyer of stocks have both participated in. If focus is given on stock purification, the trading of stocks in Islam essentially involves the contract of sale (al-bay') since what is taking place is the exchange of financial assets (i.e. Shariah stocks) for money. A share certificate is an evidence of one's ownership of a company, namely ownership of assets. Although the ownership is only fractional but it gives the owners the right to participate in profit making, such as determining company policy by way of appointing company directors.
The contract of al-bay' seems fitting since a share certificate is seen to represent assets or property (al-mal mutaqawim) inputed into the production process. In the contract of al-bay' this is called the subject matter or mahallul 'aqdi.
But the ability to participate, say in the election of the board of directors seems to indicate that a person who purchases and owns common stocks, is not comparable to an ordinary consumer or merchant who respectively purchase tangible goods for consumption or trading purposes. So, using the contract of al-bay' may not be an accurate one, to say the least.
Contract of Partnership (Shirkatul 'Inan)
Investment in stocks can also be understood by way of applying profit-loss sharing principle. When a company issues a common share it does so to obtain risk or equity capital from the public. Investors who took up these shares are willing to assume the risk of losing his capital in a hope to obtain higher returns. Investment in stocks is therefore a profit-loss sharing activity, which Islam rightly enjoins. The contracts of profit-loss sharing ('Uqud al-Ishtirak) in Islam shall consists of two, namely:
1. Al-Qirad or Al-Mudarabah (Trustee Partership)
2. Al-Shirkah or Al-Musyarakah (General Partnership)
In Shariah stocks trading, the contract of Musyarakah seems more suitable since it (i.e. musyarakah) deals with a partnership of capital. This is because both issuer and investors injected capital input into the business. The contract of Shirkatul 'inan) unequal partnership of capital is thus relevant here. In short, the contract of Shariah stock trading can be summarized as follows:
Contract of Shirkatul 'Inan
1. Agents of contract : Issuer and investors (IPO)
2. Objective of contact: Profit and loss sharing
3. Object of contract:
a. Capital : Provision of cash or physical assets by both parties
b. Labor : Provision of work and effort by both parties
4. Offer and acceptance : as mutually agreed based on the above terms and conditions.
However, the nature of stock trading assumes that the investors are practically sleeping partners as they do not directly participate in the running of business. The contract cannot assume a Mudarabah relationship given that it (i.e. Mudarabah) only allows one party to contribute capital while the other providing the management role. All Muslim jurists require that partners put both work and effort into the business. Otherwise the contract becomes null and void (AAOIFI 1999).
Further research on the nature of Islamic stock trading and the applicable contracts is crucial. It looks like the contract (if any) assimilates both Musyarakah and Mudarabah features. A hybrid contract is a likely possibility but this needs a playing field at the fuqaha level. Meanwhile Muslim investors are rest assure by the Securities Commission that their act of buying and selling of shares are valid (sah) and thus, acceptable by God Almighty as good deeds ('amal saleh)
THE MORAL FACTOR
Muslim investors desire to know whether the act of buying and selling of Shariah stocks is valid or not valid. The purification process played an important role in putting Shariah legitimacy of Shariah stock trading. The question again, is why Muslims are concern with the haram and halal? If the contract of stock trading is invalid, the act of buying and selling of stocks is therefore a sin and brings along with it a sense of regret, helplessness and loss. In wealth creation, Muslims certainly do not desire these unwarranted stress and grief as opposed to happiness and tranquility.
It seems that an ethical explanation is in order to ascertain the desire for Shariah legitimacy (i.e. the legal factor) via the purification process. The above methods of Shariah screening constitute Islam's way of purifying the soul (tazkiyah an-nafs). These methods are means by which an individual can attain purification of the self. In Islam purification began from within. This is among the central theme of the Quran. That is, the individual strives to purify himself in a way ordained by the Creator. Purifying oneself is the final objective in life achievable by way of submitting one's desires to the Will of God, as embodied in the Shariah. In the end, man shall achieve happiness when the self returns to its true nature.
Submitting one's desire to Shariah values requires a driving catalyst that both motivates and excites the individual to do it with conviction. This is because submitting one's desire to a particular value system needs convincing. Temptations to realize gains through falsehood such as fraud and corruption are overwhelming when less effort is required to obtain them. Income derived from riba and gambling is immoral as both constitute unlawful gains since no equivalent countervalue ('iwad) is evident from the surplus made. Likewise, allowing ambiguities (gharar) in contractual obligations is against to mutual and cooperative values.
Islam as Al-Din means submission. In fact one of the meanings of Din or the Arabic root word DYN, is indebtedness. It is this notion of indebtedness that gives deeper meaning to the reason for human economic existence in Islam. Why is man indebted to God, and what is he supposed to do under such a situation of indebtedness? Logically, when a person is in debt he is supposed to settle it. In Islam man is indebted to God, his Creator and Provider, for bringing him into existence and maintaining him in his existence as man once did not exist, and now he does.
On this point, the Quran states, "Man, We did create from a quintessence of clay. Then We placed him as a drop of sperm in a place of rest, firmly fixed. Then We made the sperm into a clot of congealed blood; then out of that clot We made a lump; then We made out of that lump bones and clothed the bones with fresh; then We developed out of it another creature. So blessed be God, the Best to create". (Al-Mu'minun {23}:12-14).
How is man supposed to repay the debt? God is in no dire need of anything as He is the Creator and Sustainer, but the debt than man owes God must be paid. In Islam, paying or returning the debts means to give himself up in service, or khidmah, to his Lord and Master, to abase himself before Him - and so the rightly guided man sincerely and consciously enslaves himself for the sake of God in order to fulfill His Commands and Prohibitions and Ordinances, and thus to live out the dictates of His Law.
Now it is becomes clear that the meaning of man's existence is related to his indebtedness to God and his subsequent enslavement to His law. Man himself is the object of the debt. In fact the Covenant that man sealed with God in the Primordial stage of life i.e. when He says, 'Am I not your Lord", and man's true self testifying, answered: Yea!", requires man to manifest the Covenant (Al-Mithaq) through his submission in absolute true willingness.
The question now is, how can these meanings of indebtedness via the theory of Al-Mithaq be of significance in explaining the need for purification? The answer lies in the Islamic conception of the self. The Self in the Quran has been mentioned in different levels of man inner experience such as:
1. Human spirit (Ruh)
2. Soul (Nafs)
3. Intellect ('Aql)
4. Heart (Qalb)
Naquib Al-Attas provides a coherent exposition how these different modes of the self is seen as a unity:
"Thus when it (i.e. the human soul) is involved in intellection and apprehension it is called 'intelect'; when it governs the body it is called 'soul'; when it is engaged in receiving intuitive illumination it is called 'heart' and it reverts to its own world of abstract entities it is called 'spirit'. Indeed, it is a reality always engaged in manifesting itself in all these states".
The self was once pure and clean. Muslims believe in this fact (see Al-A'raf :175). The covenant that man i.e. the self sealed with God in the primordial life, implied that the self is indebted to the Creator. Man i.e. the self pays the debt by way of submitting his desires to God's Will as embodied in the Shariah when man is born into the physical world.
Man in Islam is the highest creation of God because he is bestowed by the Creator the power of intellect ('aql) with which he is able to differentiate right from wrong. At the same time,man is composed of forgetfulness (nisyan) and despite having testified to the truth of the covenant he sealed with God, he forgets (nasiya) to fulfill his duty and his purpose. Forgetfulness is the cause of man's disobedience and this blameworthy nature inclines him towards injustice (zulm) and ignorance (jahl).
Thus, in life (al-dunya) the self is inflicted with disturbances that do not allow it to fully submit to the law of Allah as promised. In this manner, the self is surrounded with impurities that further clouded his/her remembrance of the Al-Mithaq. This impurities caused the self to lose touch with God and lost the sense of the purpose of existence . Here the self will fall in grief (shawqawa). The Quran mentioned this very clearly:
"Verily by the declining day, man is in loss (khusrin), except those who believe and do good works, and exhort one another to truth, exhort one another to endurance" (Al-Asr 1-3)
However, when the self strives hard to free it self from the impurities (i.e. abstaining from God'prohibitions), by way of submitting itself to God's commandment, it will again experience the happiness (saada) it used to enjoy in the primordial stage of life. In this way, it cleansing of the self is achievable when the self struggle through life, enjoining the good and avoiding the bad ('amal ma'afuh nahi mungkar)
Likewise, investments in Shariah stocks is one aspect of man's submission to the Will of God. In wealth creation, a believer is expected to avoid the prohibitions and pursue the alternative means recommended by God. When man is able to pursue wealth creation in this way, he or she will see that justice is put in place. From the moral and ethical angle, man will be at ease with himself/herself. This is the level of nafs muthmainnah (the contented soul) (see figure below).
Conclusion
In explaining the need for purification of stocks listed in the KLSE bourse, this paper looks two factors affecting the investors, namely the legal and ethical factors. The legal factor explains why there is a need to spell out the real nature of 'aqd (contract) of stock trading. If the 'aqad is valid (sah), then the actions of buying and selling stocks will receive God's blessing and therefore rewarded both in this world and the hereafter. If the 'aqd is void (bathil), investors have committed a sin and therefore punishable. This desire to secure Shariah legitimacy (i.e. the legal factor) is driven by the ethical factor, namely the desire to purify one's self by way of obeying the law of God (Shariah). It is an act of submission or enslavement to God as He has given man life and sustenance. The concept of indebtness is fundamental to further understand why Muslims desire to purchase stocks that fully complied with Shariah principles.
Source : Dr. Saiful Azhar Rosly
Achmade Zachary Ghazali,
http://dca2u.blogspot.com
Purification process usually involves the application of Shariah principles in determining the permissibility of share trading. It deals with the valuation of stocks along Shariah guidelines. In this way, it does not concern determining the market values of stocks. However it does not mean that the Shariah is negligence of performance parameters. The purification process is only the beginning of Shariah compliance. Equally important is the wealth creation aspects of stock investment.
In the earlier days, the names like filtration, cleansing and screening process were used to achieve similar objectives. The Securities Commission has played a noble role in setting up the Shariah criteria for listed stocks. In June 1997 the Commission published a list of stocks consistent with the Shariah criteria. Later, by 26th October 2001, 79% of the stocks (i.e. 642) listed in the KLSE were found to comply with Shariah values. Over time, the Commission oversees the purification process by actively pursuing a system of addition and deletion of stocks to ensure full compliance.
The question now is the purification factor market driven? Who needs purification? Assuming that the purification process is market-driven, the issue can be examined from two sides, namely:
1. Demand side : Retail and institutional investors
2. Supply side : Issuing companies (IPOs) and investors (secondary trading).
It is quite obvious that the people wanting to purchase and sell Shariah stocks constitutes the Muslim individuals as well as companies running business under an Islamic label, such as Islamic banks, takaful, Islamic unit trusts and asset management companies. They wanted to make sure that stocks bought and sold are permissible (halal) for fear when God's Law is violated; punishment in the Hereafter is inevitable.
This paper looks at the need for purification from two perspectives. First it deals with the legal factor, namely the Shariah value (hukm shari') attached to the act of buying and selling stocks. Secondly, it examines the ethical factor that ventures into the metaphysical dimension of the self and the factors affecting it. The self is the centerpiece of human motivation. Thus, what compels an investor to purchase Shariah stocks has a lot to do with the self and its objectives.
THE LEGAL FACTOR: The role of 'Aqd (contract)
The need for purification can be made more revealing when decisions of issuers and investors are further investigated. The issue can be more sensitive on the demand side, since investors are particular on what they buy. They are concern whether the profits earned from the investments are halal. The supply side factor however, is relatively silent unless issuers are keen to capture Islamic investors such as the recent PLUS initial public offers.
What is at stake here is a fundamental question, namely the nature of the contract ('Aqd) applied in trading Shariah stocks. Human actions in the Shariah can be categorized into five, namely:
1. Wajib (obligatory)
2. Sunnat (commendable)
3. Makruh (reprehensible)
4. Mubah (permissible)
5. Haram (prohibited)
In defining human actions, the contractual relationship between man and God (hablumninallah) as well as among man (hablumminnanas) is a crucial element to observe. As an example, the consumption of interest as riba, is prohibited (haram) as it both violated the rights of God and the rights of man. In a legal perspective, the contract of an interest-bearing loan is invalid (bathil).The act of lending and borrowing in this respect is not recognized by both God and society. When this happens the act of lending and borrowing with riba will not be rewarded but punishable in the hereafter.
The same applies in Shariah stock trading. If an investor desires to observe the Shariah, he or she must first ask whether the act of sale and purchase of stocks is valid (sah) in the eyes of God. It is here, the 'Aqd factor is most critical. If the 'Aqd is void (bathil), then the act of stock trading is punishable. Like wise if the 'Aqd is valid (sahih), then people who purchase or sell stocks will receive rewards (thawab) from God.
The 'Aqd (contract) for stock trading apparently has not received commendable attention compared with the Shariah criteria of the Securities Commission. In the latter, it seems that the subject matter is the stock (i.e. the financial asset) rather than the contract applied in the sale and purchase of that financial asset. It is thus important to explore what exactly is the nature of contract ('Aqd) applied in Shariah stock trading. The 'Aqd helps determine the Hukm Shari' of shariah stock trading. That is whether the actions of stock trading is accepted or rejected by God is defined by the validity of the 'Aqd. Therefore pinning on the Islamicity of the stocks alone may not suffice in determining the Shariah value (hukm) on the sale and purchase of stocks.
Contract of Al-Bay' (sale and purchase of asset/property)
There are four main principles of 'Aqd (contract),namely:
1. Agents of contract (tharafail aqdi)
2. Objective of contract (mauduul adqi)
3. Object of contract (mahalul aqdi)
4. Offer and acceptance (ijab & qabul)
To secure legitimacy, the contract must be free from the following elements
a. Interest (riba): contractual increase over capital loan
b. Gambling (maisir): speculative or aleatory contracts in which obligations and benefits accruing to participating parties are not fully defined at the time when the contract became effective leading to either wining or losing arising from mere chance instead of work and effort.
c. Ambiguities (Gharar): uncertainties that exists in contracts involving contracting parties and the subject matter, which leads to disputes and unjustified gain
d. Intoxicants (qamar): consumption of alcoholic beverages, which can impair the intellect ('aql) leading to irrational behavior.
e. Consumption of pork
f. Illicit sex (zina) : sexual relation outside marriage which annihilate the sanctity of the family system (nasl).
The two principles of risk-taking (al-bay') and profit-loss sharing (Shirkat) are a given in all contractual obligation. For that reason, the Shariah prohibits interest and gambling. In Islamic law, two popular the legal maxims (Qawaid Fiqiah) highlight the constructiive role of risk-taking in wealth creation :
1. No rewards without risks - "Al-Ghormi bil Ghonm"
2. Profits must be accompanied with liability "Al-Kharaj bil Daman"
A systematic understanding of stocks in Islam can best be acquired by looking at the nature of contract and transaction each party, namely the seller and buyer of stocks have both participated in. If focus is given on stock purification, the trading of stocks in Islam essentially involves the contract of sale (al-bay') since what is taking place is the exchange of financial assets (i.e. Shariah stocks) for money. A share certificate is an evidence of one's ownership of a company, namely ownership of assets. Although the ownership is only fractional but it gives the owners the right to participate in profit making, such as determining company policy by way of appointing company directors.
The contract of al-bay' seems fitting since a share certificate is seen to represent assets or property (al-mal mutaqawim) inputed into the production process. In the contract of al-bay' this is called the subject matter or mahallul 'aqdi.
But the ability to participate, say in the election of the board of directors seems to indicate that a person who purchases and owns common stocks, is not comparable to an ordinary consumer or merchant who respectively purchase tangible goods for consumption or trading purposes. So, using the contract of al-bay' may not be an accurate one, to say the least.
Contract of Partnership (Shirkatul 'Inan)
Investment in stocks can also be understood by way of applying profit-loss sharing principle. When a company issues a common share it does so to obtain risk or equity capital from the public. Investors who took up these shares are willing to assume the risk of losing his capital in a hope to obtain higher returns. Investment in stocks is therefore a profit-loss sharing activity, which Islam rightly enjoins. The contracts of profit-loss sharing ('Uqud al-Ishtirak) in Islam shall consists of two, namely:
1. Al-Qirad or Al-Mudarabah (Trustee Partership)
2. Al-Shirkah or Al-Musyarakah (General Partnership)
In Shariah stocks trading, the contract of Musyarakah seems more suitable since it (i.e. musyarakah) deals with a partnership of capital. This is because both issuer and investors injected capital input into the business. The contract of Shirkatul 'inan) unequal partnership of capital is thus relevant here. In short, the contract of Shariah stock trading can be summarized as follows:
Contract of Shirkatul 'Inan
1. Agents of contract : Issuer and investors (IPO)
2. Objective of contact: Profit and loss sharing
3. Object of contract:
a. Capital : Provision of cash or physical assets by both parties
b. Labor : Provision of work and effort by both parties
4. Offer and acceptance : as mutually agreed based on the above terms and conditions.
However, the nature of stock trading assumes that the investors are practically sleeping partners as they do not directly participate in the running of business. The contract cannot assume a Mudarabah relationship given that it (i.e. Mudarabah) only allows one party to contribute capital while the other providing the management role. All Muslim jurists require that partners put both work and effort into the business. Otherwise the contract becomes null and void (AAOIFI 1999).
Further research on the nature of Islamic stock trading and the applicable contracts is crucial. It looks like the contract (if any) assimilates both Musyarakah and Mudarabah features. A hybrid contract is a likely possibility but this needs a playing field at the fuqaha level. Meanwhile Muslim investors are rest assure by the Securities Commission that their act of buying and selling of shares are valid (sah) and thus, acceptable by God Almighty as good deeds ('amal saleh)
THE MORAL FACTOR
Muslim investors desire to know whether the act of buying and selling of Shariah stocks is valid or not valid. The purification process played an important role in putting Shariah legitimacy of Shariah stock trading. The question again, is why Muslims are concern with the haram and halal? If the contract of stock trading is invalid, the act of buying and selling of stocks is therefore a sin and brings along with it a sense of regret, helplessness and loss. In wealth creation, Muslims certainly do not desire these unwarranted stress and grief as opposed to happiness and tranquility.
It seems that an ethical explanation is in order to ascertain the desire for Shariah legitimacy (i.e. the legal factor) via the purification process. The above methods of Shariah screening constitute Islam's way of purifying the soul (tazkiyah an-nafs). These methods are means by which an individual can attain purification of the self. In Islam purification began from within. This is among the central theme of the Quran. That is, the individual strives to purify himself in a way ordained by the Creator. Purifying oneself is the final objective in life achievable by way of submitting one's desires to the Will of God, as embodied in the Shariah. In the end, man shall achieve happiness when the self returns to its true nature.
Submitting one's desire to Shariah values requires a driving catalyst that both motivates and excites the individual to do it with conviction. This is because submitting one's desire to a particular value system needs convincing. Temptations to realize gains through falsehood such as fraud and corruption are overwhelming when less effort is required to obtain them. Income derived from riba and gambling is immoral as both constitute unlawful gains since no equivalent countervalue ('iwad) is evident from the surplus made. Likewise, allowing ambiguities (gharar) in contractual obligations is against to mutual and cooperative values.
Islam as Al-Din means submission. In fact one of the meanings of Din or the Arabic root word DYN, is indebtedness. It is this notion of indebtedness that gives deeper meaning to the reason for human economic existence in Islam. Why is man indebted to God, and what is he supposed to do under such a situation of indebtedness? Logically, when a person is in debt he is supposed to settle it. In Islam man is indebted to God, his Creator and Provider, for bringing him into existence and maintaining him in his existence as man once did not exist, and now he does.
On this point, the Quran states, "Man, We did create from a quintessence of clay. Then We placed him as a drop of sperm in a place of rest, firmly fixed. Then We made the sperm into a clot of congealed blood; then out of that clot We made a lump; then We made out of that lump bones and clothed the bones with fresh; then We developed out of it another creature. So blessed be God, the Best to create". (Al-Mu'minun {23}:12-14).
How is man supposed to repay the debt? God is in no dire need of anything as He is the Creator and Sustainer, but the debt than man owes God must be paid. In Islam, paying or returning the debts means to give himself up in service, or khidmah, to his Lord and Master, to abase himself before Him - and so the rightly guided man sincerely and consciously enslaves himself for the sake of God in order to fulfill His Commands and Prohibitions and Ordinances, and thus to live out the dictates of His Law.
Now it is becomes clear that the meaning of man's existence is related to his indebtedness to God and his subsequent enslavement to His law. Man himself is the object of the debt. In fact the Covenant that man sealed with God in the Primordial stage of life i.e. when He says, 'Am I not your Lord", and man's true self testifying, answered: Yea!", requires man to manifest the Covenant (Al-Mithaq) through his submission in absolute true willingness.
The question now is, how can these meanings of indebtedness via the theory of Al-Mithaq be of significance in explaining the need for purification? The answer lies in the Islamic conception of the self. The Self in the Quran has been mentioned in different levels of man inner experience such as:
1. Human spirit (Ruh)
2. Soul (Nafs)
3. Intellect ('Aql)
4. Heart (Qalb)
Naquib Al-Attas provides a coherent exposition how these different modes of the self is seen as a unity:
"Thus when it (i.e. the human soul) is involved in intellection and apprehension it is called 'intelect'; when it governs the body it is called 'soul'; when it is engaged in receiving intuitive illumination it is called 'heart' and it reverts to its own world of abstract entities it is called 'spirit'. Indeed, it is a reality always engaged in manifesting itself in all these states".
The self was once pure and clean. Muslims believe in this fact (see Al-A'raf :175). The covenant that man i.e. the self sealed with God in the primordial life, implied that the self is indebted to the Creator. Man i.e. the self pays the debt by way of submitting his desires to God's Will as embodied in the Shariah when man is born into the physical world.
Man in Islam is the highest creation of God because he is bestowed by the Creator the power of intellect ('aql) with which he is able to differentiate right from wrong. At the same time,man is composed of forgetfulness (nisyan) and despite having testified to the truth of the covenant he sealed with God, he forgets (nasiya) to fulfill his duty and his purpose. Forgetfulness is the cause of man's disobedience and this blameworthy nature inclines him towards injustice (zulm) and ignorance (jahl).
Thus, in life (al-dunya) the self is inflicted with disturbances that do not allow it to fully submit to the law of Allah as promised. In this manner, the self is surrounded with impurities that further clouded his/her remembrance of the Al-Mithaq. This impurities caused the self to lose touch with God and lost the sense of the purpose of existence . Here the self will fall in grief (shawqawa). The Quran mentioned this very clearly:
"Verily by the declining day, man is in loss (khusrin), except those who believe and do good works, and exhort one another to truth, exhort one another to endurance" (Al-Asr 1-3)
However, when the self strives hard to free it self from the impurities (i.e. abstaining from God'prohibitions), by way of submitting itself to God's commandment, it will again experience the happiness (saada) it used to enjoy in the primordial stage of life. In this way, it cleansing of the self is achievable when the self struggle through life, enjoining the good and avoiding the bad ('amal ma'afuh nahi mungkar)
Likewise, investments in Shariah stocks is one aspect of man's submission to the Will of God. In wealth creation, a believer is expected to avoid the prohibitions and pursue the alternative means recommended by God. When man is able to pursue wealth creation in this way, he or she will see that justice is put in place. From the moral and ethical angle, man will be at ease with himself/herself. This is the level of nafs muthmainnah (the contented soul) (see figure below).
Conclusion
In explaining the need for purification of stocks listed in the KLSE bourse, this paper looks two factors affecting the investors, namely the legal and ethical factors. The legal factor explains why there is a need to spell out the real nature of 'aqd (contract) of stock trading. If the 'aqad is valid (sah), then the actions of buying and selling stocks will receive God's blessing and therefore rewarded both in this world and the hereafter. If the 'aqd is void (bathil), investors have committed a sin and therefore punishable. This desire to secure Shariah legitimacy (i.e. the legal factor) is driven by the ethical factor, namely the desire to purify one's self by way of obeying the law of God (Shariah). It is an act of submission or enslavement to God as He has given man life and sustenance. The concept of indebtness is fundamental to further understand why Muslims desire to purchase stocks that fully complied with Shariah principles.
Source : Dr. Saiful Azhar Rosly
Achmade Zachary Ghazali,
http://dca2u.blogspot.com
Monday, May 5, 2008
Be A Unit Trust Consultant - Dinar Consultants
As a unit trust consultant in Dinar Consultants, you’ll be in an excellent position to explore the largely untapped multi billion ringgit unit trust industry.
• Unlimited Income ( up to 7-figure annual income )
• Working in The No.1 Unit Trust Company in Malaysia
• Year-End Bonus
• Breakaway Bonus
• Equalization Bonus
• Career Benefits
• Profit Sharing for MFGAMs
• Free insurance coverage
• Loan subsidies (car & computer)
• On-going commission for beneficiaries
• Certificate in Financial Planning (CFP) subsidy scheme
• An opportunity to be your own BOSS !!
Dinar Consultants offers high quality educational training in the following areas
i) Personal Development Success,
ii) Financial Success and
iii) Sales Success.
We at Dinar Consultants also utilizes a large network of highly trained educators and certified sales industry professionals such as Stars Academy to transform our consultants to their ultimate success.
Our Business Opportunity Preview (BOP) will be held every Wednesday at
Jalan Bangsar Utama 3,Bangsar. Please call Zachary at 012.692.8877 for your attendance.
We highly welcome you to attend our BOP and see what we could help you for your Ultimate Success.
Achmade Zakry Ghazali,
http://dca2u.blogspot.com
Contact Us - Dinar Consultants
Contact Information
Taking care of business means taking care of you. That is why I work hard to assist you in selecting the appropriate investments :
Achmade Zakry Ghazali,
Dinar Consultants,
11, Jalan Bangsar Utama 3,
Bangsar Utama, 59000,
Kuala Lumpur,
Malaysia.
Office Hours :
Monday – Friday : 9:00 a.m - 6:00 p.m
* Evenings and weekends by appointment.
Office : (603) 2283 5735
Fax : (603) 2283 5739
Mobile : (6012) 692 8877
Email : achmade.zakry@yahoo.com
Website : dca2u.blogspot.com
Product & Services
• Individual & Corporate Investment
• EPF ( KWSP ) Investment Scheme
• Islamic & Conventional Investment
• Retirement Planning or Children Education
AZG,
Achmade Zakry Ghazali
Achmade Zakry Ghazali,
http://dca2u.blogspot.com
Three Major Ways To Invest in Unit Trust Investment
There are three major ways to start investing in unit trusts :
Lump Sum Purchases
This is where an investor has a lump sum to invest into a unit trust. This may be the only investment the investor wishes to make. Over a period of time (3-20 years), the initial investment will increase as distribution and other income is earned by the fund. When redemption or sale of the units take place, the unit-selling price will reflect the accumulation and compounding of capital over the relevant periods. It is this compounding effect over time which makes accumulation type investments, such as unit trusts, so attractive to the investor.
For example, someone who has recently inherited a sum of money may wish to invest the funds into a unit trust and hold it for an extended period to save for some specific purpose. e.g. children's education. At the end of the holding period, the proceeds of the sale of the units will be the initial investment plus the returns on that amount, accumulated over the period.
Regular Savings
Some people invest in unit trusts by making regular (e.g. monthly) contributions to their fund. This is an ideal, disciplined and useful way to accumulate capital for a future need. By making regular contributions over a period of time, the sum accumulated at the end of the period will increase. This is commonly known as dollar cost averaging.
At the end of the period, the redemption (or sale) price of the units held will represent the accumulation of all contributions, plus returns generated from the total contributions since the first purchase was made. The effect is more noticeable the longer the holding and contribution period. This form of savings is the basis of most pension fund accumulation e.g. the Employees Provident Fund.
EPF Transfers
Investors may also invest in unit trust funds through transfers of eligible amounts from his EPF account 1. EPF members who have savings of at least (see the table below) in account 1, are eligible to withdraw from their EPF savings to invest in unit trusts.
Achmade Zachary Ghazali,
http://dca2u.blogspot.com.
Benefits in Unit Trust Investment
Professional Investment Management
A unit trust combines the capital of many investors to employ experienced management in purchasing securities of many companies. The management of a unit trust provides diversification of investments and supervision which few investors could individually afford. Investment management is a full time job requiring specialised knowledge and training. It involves the study of a variety of factors. Some of the factors which have to be examined are,
Comparisons of all industries in the economy
i) Relative studies of companies within a promising industry
ii) Personal contact with management of promising corporations
iii) Evaluating the effect of international events, both monetary and political
iv) Determining the results of government policies on each industry
Professional management is also interested in studying less obvious factors such as wage rates, which might affect the economy or the profitability of certain companies or corporations. It requires careful study of individual companies within the industry to determine which of the many companies offer the best prospects for the investors. It requires comparing this company with the best companies in other promising industries. Since all this factors are constantly changing, re-evaluation and study have to be continuous.
Diversification
Diversification means spreading one's investments among many securities. It is an important method of reducing risk. It decreases the danger of damaging losses, which can occur through having all of one's eggs in one basket.
Diversification is difficult and expensive for a small investor because the cost of purchasing numbers of shares in many companies at the same time is disproportionately high.
Unit trusts with their resources are able to make widely diversified investments available to even the smallest investor. Diversification involves the ownership of many different securities. All the securities owned by an individual investor or unit trust fund are referred to as an investment portfolio.
LiquidityAn investor can sell his units, wholly or partially, at the following trading day's unit buying price. Units have a high liquidity, that is, they can be readily converted into cash.
It has to be remembered, however, that unit trust’s units will be redeemed at the prevailing buying price on the following day after receipt of the repurchase form. The unit price may be higher or lower than the price at which the investor started the plan. Unit trusts should be regarded as a long term, rather than short term investment.
Advantages of CompoundingMany unit trust funds provide facilities for investors to reinvest their distributions. For those who opted for distribution reinvestment, the fund will automatically credit the distributions into the account, rather than sending distribution warrants.
This process of reinvesting the income from the original investment and also of reinvesting the return on the total accumulating investments is called compounding.
As an illustration, if at 25, you invested RM100 at the beginning of every month at an interest growth of 10% per annum until age 65, your investment would have grown to RM638,000 ! The key element to compounding is time. The longer the period of time, the greater the growth.
Regularity of Investing
Many people do not have substantial sums of cash available to invest, but they can develop an investment account, investing smaller sums regularly in a unit trust.
Most unit trust funds have plans available to make it possible for smaller investors to invest relatively small amounts monthly. It is easy and inexpensive for an individual to acquire units through deposits of RM100 or more a month in a unit trust fund.
Fund Administration - The Convenient Factor
Few people have the experience, time or facility to properly set up an investment programme, much less to supervise it constantly. Unit trust managers have emerged as professional organisation devoted to solving the investment problems of people from all walks of life.
Unit trusts relieve their investors of the need to handle their own securities transactions. Investors in unit trust funds are not obliged to concern themselves with matters such as,
Obtaining quotations on securities being bought and sold
Delivery and payment for the securities involved in each transaction
Safekeeping of cash and securities
Accounting and bookkeeping procedures, etc
Investors of unit trust funds will receive semi annual and annual reports which describe
a. The portfolio of the funds
b. Investment changes made in the period
c. Distributions paid, if any
d. Fund manager's opinion on the economic and market outlook
Achmade Zakry Ghazali,
http://dca2u.blogspot.com
Why You Should Choose Dinar Consultants
Why Should You Choose Dinar Consultants ?
Consultant
Dinar Consultants Agency's team of consultant possess tremendous of experience managing individual and corporate investments for the Malaysia’s Number 1 Unit Trust Company. Individually, and as a group, they have distinguished themselves as sought-after experts and advisors in the unit trust investments and client management industries. With the Dinar Consultants team, you can be confident of receiving faithful service backed by unsurpassed expertise every step of the way.
Security
Dinar Consultants Agency is trustworthy. We manage millions of Ringgit Malaysia in escrow funds. We represent some of the most financially investors in the country, including:
§ VIPs and VVIPs
§ Politicians
§ High net worth people
§ Government servants and private workers
As investors, they trust Dinar Consultants Agency to manage and monitor their investment portfolio(s) with the highest integrity available.
Responsiveness
Exceptionally knowledgeable specialists from our team of responsive, customer-focused professionals will attend to your every need and question confidentially with integrity and accuracy. Our top-quality services are thorough, and your need for privacy respected.
Expertise
Resourceful managers backed by a skillful team of agent guide the process, bringing to each transaction decades of expertise in unit trust investments. With confidence in our depth of experience, intellectual capital, and technical expertise, clients turn to us again and again to manage their investments and to solve their financial problems.
Resourcefulness
We are an entrepreneurial-driven group that can mobilize quickly. We are always accessible to respond to your needs. And thanks to our smart technology, we can handle transactions of any size or complexity at any one of our offices. We have about 25 offices in the country including Sabah and Sarawak.
Faithful Service
Our consultants are trained to provide a personal approach to courteous service and to follow strict controls and procedures, start to finish. We have exceptionally knowledgeable personnel and the best technology available today to provide top-quality service.
Achmade Zachary Ghazali,
http://dca2u.blogspot.com.
Consultant
Dinar Consultants Agency's team of consultant possess tremendous of experience managing individual and corporate investments for the Malaysia’s Number 1 Unit Trust Company. Individually, and as a group, they have distinguished themselves as sought-after experts and advisors in the unit trust investments and client management industries. With the Dinar Consultants team, you can be confident of receiving faithful service backed by unsurpassed expertise every step of the way.
Security
Dinar Consultants Agency is trustworthy. We manage millions of Ringgit Malaysia in escrow funds. We represent some of the most financially investors in the country, including:
§ VIPs and VVIPs
§ Politicians
§ High net worth people
§ Government servants and private workers
As investors, they trust Dinar Consultants Agency to manage and monitor their investment portfolio(s) with the highest integrity available.
Responsiveness
Exceptionally knowledgeable specialists from our team of responsive, customer-focused professionals will attend to your every need and question confidentially with integrity and accuracy. Our top-quality services are thorough, and your need for privacy respected.
Expertise
Resourceful managers backed by a skillful team of agent guide the process, bringing to each transaction decades of expertise in unit trust investments. With confidence in our depth of experience, intellectual capital, and technical expertise, clients turn to us again and again to manage their investments and to solve their financial problems.
Resourcefulness
We are an entrepreneurial-driven group that can mobilize quickly. We are always accessible to respond to your needs. And thanks to our smart technology, we can handle transactions of any size or complexity at any one of our offices. We have about 25 offices in the country including Sabah and Sarawak.
Faithful Service
Our consultants are trained to provide a personal approach to courteous service and to follow strict controls and procedures, start to finish. We have exceptionally knowledgeable personnel and the best technology available today to provide top-quality service.
Achmade Zachary Ghazali,
http://dca2u.blogspot.com.
About Us - Dinar Consultants
Achmade Zachary Ghazali ,
Founder of Dinar Consultants .
“We are more than a service. We are a resource for our clients. They rely upon us to address their investments because of our depth of expertise as well as our national network of contacts in the corporate, entrepreneurial, and public sectors”.
Dinar Consultants
In December 2005, Dinar Consultants was founded by a young potential entrepreneur, Achmade Zachary Ghazali ( AZG ), to provide high quality cutting edge Unit Trust Investment superb service for its valued clients and continuous training for its unit trust consultants. Dinar Consultants is a direct agency under the management of an award-winning agency, Sterling Consultants Agency.
In both the Islamic funds and Conventional funds marketplaces, Dinar Consultants Agency is a respected resource for personal investors, corporate companies or even other financial consultants who seek our expertise. With Dinar Consultants as your unit trust consultant, you can conduct your unit trust transactions with confidence knowing your investment will be monitored regularly. We founded Dinar Consultants Agency to transform our knowledge into value for our clients. It is very satisfying to earn their trust, transaction after transaction.
Literal Meaning of Dinar
Dinar means gold or money, a unit of money widely used in Muslim countries.
Technical Meaning of Dinar
Dinar is a combination of two words, Deen ( Religion ) and Nar ( Hell ). It can be interpreted as money is good only if we use it for the good deeds. On the contrary, if we use money for the evil purpose, we’ll be burnt in the Hell. ( Nauzubillahi min zhaliq )
“...And there are those who bury gold and silver and
spend it not in the way of Allah: announce unto them a most
grievous penalty. On the Day, when it will (all) be heated in
the fire of Hell, and with it will be branded their foreheads,
their flanks, and their backs. (and it will be said unto them) :
This is the (treasure) which you buried for yourselves: taste
you, then, the treasures you buried”
( Surat at-Tawba : 34-35 )
Our Services
Individual & Corporate Unit Trust Investment
EPF ( KWSP ) Investment Scheme
Islamic & Conventional Investment
Retirement Planning or Children Education
Our Roles
· To create awareness among people about the importance of financial planning, encourage them to save their hard-earned money and invest wisely.
· To help clients analyse their financial situation, establish their investment goals and propose an investment plan.
· To continuously monitor and rebalance clients’ portfolio(s) to check on their investments' potential returns.
· To build a trusted relationship with clients by providing ethical and professional advisory services.
· To continuously upgrade skills and knowledge with the aspiration of being a ‘value-creating’ consultant.
Our Vision
We are a service-oriented team of diverse unit trust well-trained consultants, backed by the No.1 Unit Trust Company in Malaysia. It is our vision to meet and exceed our clients' expectations. We achieve this vision by combining our industry insight and unsurpassed technical expertise with faithful service - confident that, by doing so, we are enhancing the value of unit trust investments in a free economy.
Our Mission
As an agency of the No.1 Unit Trust Company in Malaysia, Dinar Consultants Agency adheres to and promotes "the standards of excellence" espoused by the Company.
Sterling Consultants
Meanwhile, Sterling Consultants was founded in 2004 by well trained leader, MFGAM Adi Sasteria Nurputra. Under their great leadership and strong supports from other team members, Sterling Consultants is one of the top agencies in The No.1 Unit Trust Company in Malaysia. It has been awarded for its strong performance by the Company since 2005.
Sterling Consultants is backed by its excellent networking agencies, such as NetWorth Consultants led by MFGAM Mohd Amin Yahya, GrowRich Consultants led by MFAM Iskandar Zulkarnain, Titan Consultants led by MFAM Md Shah Muhaimin, MaxWealth Consultants led by MFAM Amri, Atrium Consultants led by MFAM Hismazatul, Prodigy Consultants led by Sherry Arizal etc.
Sterling Consultants’ Credentials
Nationwide Achievements
2007 Awards
Champion Agency Manager 2007
Champion Mutual Fund Agent 2007
1st Runner-up Mutual Fund Supervisor 2007
2nd Runner-up Mutual Fund Supervisor 2007
Top 4 & 10 Personal Sales Producer 2007
Million-Dollar Producer 2007
2006 Awards
Champion Mutual Fund Supervisor 2006
2nd Runner-up Agency Manager 2006
No 6 Personal Sales Producer 2006
Top New EPF Sales Award 2006
Million-Dollar Producer 2006
2005 Awards
Top Mutual Fund Agent 2005
Million Dollar Producer 2005
Achmade Zachary Ghazali,
http://dca2u.blogspot.com.
Saturday, May 3, 2008
History of Unit Trust Industry in Malaysia
History of Unit Trusts in Malaysia
Malaysia introduced the unit trust concept relatively early compared to its any Asian countries. In 1959, a unit trust was first established by a company named Malayan Unit Trust Ltd.
The Development of Unit Trusts Industry
The Formative Years: 1959 -1979
The first two decades in the history of the unit trust industry were characterised by slow growth in the sales of units and a lack of public interest in the new investment product. Only five unit trust management companies were established, with a total of 18 funds introduced over that period. The industry was regulated by several parties including the Registrar of Companies, The Public Trustee of Malaysia, Bank Negara Malaysia and the Ministry of Domestic Trade and Consumer Affairs.
The 1970s also witnessed the emergence of state government sponsored unit trusts, in response to the Federal Government's call to mobilise domestic household savings.
The Period from 1980 to 1990
This period marks the entry of government participation in the Unit Trust Industry and the formation of a Committee to regulate the unit trust industry, called the Informal Committee for Unit Trust Funds, comprising representatives from the Registrar of Companies (ROC), the Public Trustee of Malaysia, Bank Negara Malaysia (BNM) and the Capital Issues Committee (CIC).
The 1980s marked a significant development in the history of the industry when the Skim Amanah Saham Nasional (ASN) was launched by Permodalan Nasional Berhad (PNB) in 1981. Despite only 11 funds being launched during this period, the total units subscribed by the public swelled to an unprecedented level because of the overwhelming response to ASN.
The 1980s also witnessed the emergence of more unit trust management companies, which were subsidiaries of financial institutions. Their participation facilitated the marketing and distribution of unit trusts through bank's branch network which widened investor reach.
The Period from 1991 to 1999
This period witnessed the fastest growth of the unit trust industry in terms of the number of new management companies established, and funds under management. The centralisation of industry regulation, with the establishment of the Securities Commission on 1 March 1993, coupled with the implementation of the Securities Commission (Unit Trust Scheme) Regulations in 1996 and extensive marketing strategies adopted by the ASN and ASB (Amanah Saham Bumiputera), played key roles in making unit trusts household products in Malaysia. Consequently, the total asset value of funds under management grew more than threefold from RM15.72 billion at the end of 1992 to RM59.95 billion at the end of 1996. The period also saw greater product innovation and deregulation of the industry.
Although the pace of growth of local unit trust funds has moderated since the financial crisis of 1997-1998, it has nevertheless maintained its upward trend.
The Period from 2000 to current
In 2005 the unit trust industry experienced another year of strong growth which saw the net asset value of managed funds capitalising 14.2% of Bursa Malaysia¡¦s market at RM98.5 billion at the end of 2005. Further, the liberalisation of overseas investment rules (such as the increase in overseas investment limit from 10% to 30%) by Bank Negara Malaysia has seen unit trust management companies launching numerous offshore funds or realigning investment strategies of domestic funds to invest offshore up to the permitted limit which resulted in the launch of 10 offshore funds with an intended overseas investment exposure of more than 50%. As at the third quarter of 2006 the number of offshore funds with an intended overseas investment exposure of more than 50% is 38 which is clear evidence of the continued interest by the investing public for a better slice of the overseas market.
Achmade Zachary Ghazali,
http://dca2u.blogpsot.com
Malaysia introduced the unit trust concept relatively early compared to its any Asian countries. In 1959, a unit trust was first established by a company named Malayan Unit Trust Ltd.
The Development of Unit Trusts Industry
The Formative Years: 1959 -1979
The first two decades in the history of the unit trust industry were characterised by slow growth in the sales of units and a lack of public interest in the new investment product. Only five unit trust management companies were established, with a total of 18 funds introduced over that period. The industry was regulated by several parties including the Registrar of Companies, The Public Trustee of Malaysia, Bank Negara Malaysia and the Ministry of Domestic Trade and Consumer Affairs.
The 1970s also witnessed the emergence of state government sponsored unit trusts, in response to the Federal Government's call to mobilise domestic household savings.
The Period from 1980 to 1990
This period marks the entry of government participation in the Unit Trust Industry and the formation of a Committee to regulate the unit trust industry, called the Informal Committee for Unit Trust Funds, comprising representatives from the Registrar of Companies (ROC), the Public Trustee of Malaysia, Bank Negara Malaysia (BNM) and the Capital Issues Committee (CIC).
The 1980s marked a significant development in the history of the industry when the Skim Amanah Saham Nasional (ASN) was launched by Permodalan Nasional Berhad (PNB) in 1981. Despite only 11 funds being launched during this period, the total units subscribed by the public swelled to an unprecedented level because of the overwhelming response to ASN.
The 1980s also witnessed the emergence of more unit trust management companies, which were subsidiaries of financial institutions. Their participation facilitated the marketing and distribution of unit trusts through bank's branch network which widened investor reach.
The Period from 1991 to 1999
This period witnessed the fastest growth of the unit trust industry in terms of the number of new management companies established, and funds under management. The centralisation of industry regulation, with the establishment of the Securities Commission on 1 March 1993, coupled with the implementation of the Securities Commission (Unit Trust Scheme) Regulations in 1996 and extensive marketing strategies adopted by the ASN and ASB (Amanah Saham Bumiputera), played key roles in making unit trusts household products in Malaysia. Consequently, the total asset value of funds under management grew more than threefold from RM15.72 billion at the end of 1992 to RM59.95 billion at the end of 1996. The period also saw greater product innovation and deregulation of the industry.
Although the pace of growth of local unit trust funds has moderated since the financial crisis of 1997-1998, it has nevertheless maintained its upward trend.
The Period from 2000 to current
In 2005 the unit trust industry experienced another year of strong growth which saw the net asset value of managed funds capitalising 14.2% of Bursa Malaysia¡¦s market at RM98.5 billion at the end of 2005. Further, the liberalisation of overseas investment rules (such as the increase in overseas investment limit from 10% to 30%) by Bank Negara Malaysia has seen unit trust management companies launching numerous offshore funds or realigning investment strategies of domestic funds to invest offshore up to the permitted limit which resulted in the launch of 10 offshore funds with an intended overseas investment exposure of more than 50%. As at the third quarter of 2006 the number of offshore funds with an intended overseas investment exposure of more than 50% is 38 which is clear evidence of the continued interest by the investing public for a better slice of the overseas market.
Achmade Zachary Ghazali,
http://dca2u.blogpsot.com
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