Online Course Launched – A Muslim’s Guide to Mastering Money

I’m excited to announce that today I launched my first online course. This is the perfect solution for those who prefer an audio-visual learning experience over reading a book.

My goal with this course is to help students invest and build wealth the halal way, have control over their finances, buy real estate with as little as 5% down and without paying interest, and have a solid retirement plan.

There are plenty of books and resources out there that teach how to invest, how to manage money, how to plan for retirement, etc. But how many of these are specifically designed for Muslims living in Western countries? This course addresses that issue and is presented in an easy-to-understand manner.

Check out the course at:

https://www.udemy.com/a-muslims-guide-to-mastering-money/

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Meet Wahed – Your Halal Robo-Advisor

Investing can involve a lot of work, with the investor having to research stocks, review financial statements, and check out various financial ratios to ensure that the investment is a wise choice. For a Muslim investor, it can involve even more work to make certain that the investment is halal, or Islamically permissible. For example, before buying shares of stock in a company, a Muslim investor has to check if the company’s core business clashes with Islamic principles (i.e. an alcoholic beverage company), and confirm that the company doesn’t have too much leverage (i.e. debt).

There are some of us who want to invest and grow our wealth by putting our money to work, but don’t exactly have the time or desire to do the research required. One option is to hire a financial advisor and pay them a commission to do the work. Yet another option, and one that is growing in popularity, is the use of robo-advisors.

In short, the investor provides the robo-advisor with some information — such as time horizon and aversion to risk — and the automated advisor will then apply algorithms to determine what mix of investments would be suitable for this investor. It will then apply the investor’s funds to that investment mix. The investor won’t have to worry about buying individual stocks or paying a brokerage fee for each trade. The robo-advisor essentially does all the legwork.

Pretty cool concept, huh? Even cooler is that there is now a Muslim robo-advisor called Wahed. As with other robo-advisors, the investor provides information and Wahed will come up with an optimal portfolio of investments. The beauty is that Wahed will automatically filter out certain industries like gambling and alcohol, as well as interest-based investments like conventional bonds.

Depending on your risk assessment, Wahed will allocate your funds accordingly. For example, if you want to take a more conservative and safe approach, the majority of your money will be invested in fixed income investments. This is referring to sukuk, or the Islamic equivalent of a bond. The return on investment won’t be very high for fixed income investments, but they are far less likely to lose value and at least protect against inflation.

On the other hand, if you are young and want to take a more aggressive approach to investing, more of your money will be invested in equities. This will include stocks for medium and large corporations, plus dividend-paying stocks. A good portion of money may also be allocated to commodities, which refers to metals, agricultural products (i.e. rice, grains), or raw materials. These types of investments are more volatile and will see more price fluctuation, but provide the potential for higher gains.

wahed

Of course, using a service like Wahed is not free, but will likely cost an investor less than a human financial advisor. The nice thing is that Wahed “wraps” all fees related to investing (i.e. investment advising, transaction fees for buying/selling) into one fee. If you have less than $50,000 US invested with Wahed, it will charge a management fee of .99% annually, which is in line with the management fees of many mutual funds. There are cheaper robo-advisors, but they are not designed to filter halal investments.

If you have more than $50,000 invested with Wahed, the management fee will decrease, as low as .29% annually. To give you an example, if you invest $1,000 with Wahed and the total value reaches $1,100 by the end of year one, Wahed will take the total asset value of $1,100 and deduct .99% to cover its fees for managing the account. In this case, that would be 1100 * .0099 = $10.89.

If this sounds like a good investment service for you, check out Wahed’s website to register and fill out the assessment form to get started. If you are new to investing and want to learn the basics, check out my Kindle book, The Stock Market Made Simple.

Fulfillment by Amazon (FBA) as a Business Opportunity

I recently began looking into Fulfillment by Amazon (FBA) as a business opportunity. It sounds like a good way for someone to start a home-based online business while utilizing Amazon’s large customer base and distribution network.

How does it work? One would first choose a product to sell. It should be something you have familiarity or expertise with. If you’re unsure of what to sell, you can look at Amazon bestsellers in a category of your choice. From what I’ve heard, products costing $10 to $50 tend to be ideal choices. Think about what you’d buy online versus what you’d buy at a local store. Lightweight, simple products seem to be a better choice. If you try to sell something high-tech or expensive, it could prove to be more difficult in terms of customer service & satisfaction.

After deciding what you want to sell, you have to find a supplier that can make the product on your behalf with your own branding. One option for finding suppliers is to use a site like alibaba.com and look for Verified/Gold suppliers.

Suppose you want to sell gourmet coffee. You can do a Google search for “private label coffee supplier” or something similar. After interviewing suppliers and choosing one, you’d have to acquire their label template file and design your brand label (or hire someone to design it using a website like fiverr.com). The supplier would then produce the product with your label and ship it directly to Amazon.

Then you need to set up a seller account on Amazon, which does have a monthly fee. Plus, there’s a fee for storing the items in inventory. Amazon would store the product in its warehouse, and ship to customers after they purchase online. Amazon takes care of the grunt work, essentially. For their work, Amazon takes a commission, or cut of the profits. Thus, the product must be priced to account for your cost of manufacturing + Amazon’s profits + your costs for having a seller account.

To market your brand and product, you can use social media and offer free samples to people. You can’t explicitly ask for product reviews in exchange for free samples, but product reviews will help with visibility and ranking on Amazon’s site, and it helps build credibility for your product. Also, be sure to have high-quality photos of your product on Amazon’s selling page, and verbiage that specifies what benefits the customer will receive by purchasing your product.

I have not personally tried Amazon FBA. However, it sounds interesting and I’d like to look into it further. This is just a primer of what it is and what it entails. You can learn more at this link. If you have experience with it, please share your thoughts.

If you’d like to learn about other money-making opportunities and how to invest and build wealth in a halal way, check out my book: Open the Door to a Wealthier Life. It’s available on Amazon and Barnes & Noble.

Charity Does Not Decrease Wealth

In Islam, we believe the charity does not decrease one’s wealth. We also believe that it’s our duty to help our fellow human beings out of the blessings God has bestowed on us. Prophet Muhammad (peace be upon him) stated:

“Charity does not in any way decrease the wealth and the servant who forgives, Allah adds to his respect; and the one who shows humility, Allah elevates him in the estimation (of the people).” (Sahih Muslim)

Hence, I’m proud to announce that half of all royalties from the sale of my book will be donated in charity, insha’Allah.

Halal vs. Haram Investment Choices

Muslims should strive to have earnings that are pure. This means that the money one earns comes from halal sources, without gambling, and without cheating or scamming anyone. Money can’t be earned by working for, or running, a company that provides a forbidden product or service. This would include, for example, alcohol, pornography, and pork, among other things. Additionally, interest, or usury, is prohibited in Islam, so earnings can’t come from giving out loans or interest-based investments.

As far as investing, let’s first look at some examples of what is not considered halal. Bank products are typically not allowed. For example, savings accounts, money market accounts, and certificates of deposit are all interest-based. In short, each of these investment options involves the individual giving money to the bank which the bank turns around and loans out to others. The bank earns its own interest, and gives a small cut of the profits to the individual.

Bonds are not allowed either. This includes both Treasury bonds and corporate bonds. Bonds are basically loans that the investor makes to the government or to a company, and that entity makes an interest, or coupon, payment to the investor.

So what is allowed? Trading stocks is permissible, but you do have to be careful. It’s not allowed to buy stocks for companies that produce products or services forbidden in Islam. Plus, you have to review the company’s leverage, or how much debt it has, as well as the company’s level of liquidity, or how much cash and cash equivalents it holds.

Real estate is also allowed. This can be either as a house that is purchased, fixed up, and sold at a profit; or, a home that is purchased and rented out to others for an income stream.

Sukuk, or Islamic bonds, are another option. I have a separate post that explains what sukuk are.

Additional options include venture capital, or investing in other companies, jewelry and precious metals, as well as fine art and collectibles. If & when those things go up in value, the investor can sell.

A couple of investment choices that I consider gray areas are commodities and foreign exchange. The problem with commodities is that they’re a speculative investment and might take advantage of others’ economic hardships. Also, commodities investing is often done via futures contracts, which I consider to be like gambling. As for foreign currency (or FOREX) trading, it’s not forbidden, but it’s typically done via leverage, or money that’s loaned to the investor by the broker.

This was a very brief overview of investment choices, but to find out more detail, check out my book: Open the Door to a Wealthier Life. It’s available on Amazon in paperback and Kindle format. Thanks for reading.