Letters to the Editor

Mohammed Abdul Rahman, Hyderabad, via email

I would like to know that whether investing money in mutual funds for a period of 3 years is haraam or halal. If yes which type of mutual funds can we invest in either equity or tax saving.

YMD

Your question pre-supposes our knowledge of all kinds of mutual funds and other investment schemes, while, we, on the other hand, are quite ignorant of the rules and regulations that govern these variety of schemes. To get our opinion, you will have to send us complete details of the investment schemes, not as you understand them, but as they (the companies) present them, not in your words, but in their own words; i.e., printed details concerning the rules that govern the investment scheme of reference.

In sum we might warn you that, firstly, most schemes are carefully worked out, taking into consideration the present-day factors, with the view to draw out money from those who have. It is not creation of profits which is the primary reason for investment schemes to emerge; but the presence of capital in the hands of a section of the people. To draw that surplus money out and invest it, is the primary reason for so many investment schemes to flourish in our times.

Consequently, success in drawing the surplus money out being the main point, all other economic elements and factors receive second preference in thought. Therefore, no matter how honest the investment schemes, one can never trust them for profits. Profits were never the first concern from the beginning. It is another thing that many of the schemes are just so much bogus with deceitful minds behind them, out to hoodwink the investors. But we are not speaking of them. We are speaking of those operated by honest men.

Secondly, the economy today is overloaded with surplus money. There is more money in the market than there is manpower, tools of production, raw material, and the need for the goods. But since money alone cannot produce profits, many investment ventures collapse because of the market forces mentioned. Therefore, extreme prudence is required in handling one’s surplus money today.

One more question: is it lawful to invest money in money-back policy where company offers to pay back up to 4 times the sum assured as in Standard Chartered Life Insurance Scheme.

YMD

Promise is one thing, rules are another. If the company promises a certain amount, in good hope, then it is lawful. But if the company gives it in writing that it offers you four times the return, after a certain period of time, which you will get, and which you can claim in the courts, regardless of whether the company earned profits or losses, then, this is pure ribaa’ and unlawful in Islam.

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