Investment ; permissible ? : how to best manage a small amount of money

Fatawa Question

[Question One] Bismillah Asalam Alaykum Wa Rahmatu Allah Wa Barakatuh, I pray to Allah you are doing great Dr Monzer, Jazaka Allah Khair for the incredible work and benefit you are providing the Ummah. My name is Hazem Awad, a PhD student in Ottawa Canada (and a startup founder). I would like to ask you 3 critical questions (for me) and hope you will be able to answer me as soon as is convenient for you : 1. Alhamdulillah, my father lends me around 7000 CDN so I may use it to pay some of my student loans (which Alhamdulillah are now in interest free phase for 1 year). He also recommended that instead of paying the money now, I should use this money to make some additional money and then pay all of it before the interest free period is up. My question is : what are some Islamic ways that I can do this AND are low risk ? I am all for taking high calculated risks (hence starting a high tech company) but these 7000 are for paying loans so my risk tolerance is low. I read that guaranteed investments are not allowed so the only other option I have is stocks (which are too risky right now). (Please note I am not asking you for financial advise per say, more I would like to know from your experience what are some Islamic financial options available). 2. I wanted to confirm with you regarding Venture Capital / Angle Investment money : are they Islamically allowed ? I am not talking about debt financing but the typical VC and Angle financing ? 3. Can you recommend any resources that a Muslim Entrepreneur in North America like myself should read with regards to what is Halal and Haram in the financial world so I am better prepared and InShaAllah only make or accept Halal business deals and investments ? Jazaka Allah Khair for your great work. May Allah provide you with ultimate success in this life and next with ease and comfort. Asalam Alaykum Wa Rahmatu Allah wa Barakatuh Hazem [Question Two] Bismillah I pray to Allah you are doing great. Jazaka Allah Khair for your rapid and very helpful response. Angel investment is very similar to Venture capital (the only difference is the size of investment). Typically angel investment serves as "seed" for later investments. They are also equity based. Thank you for the clarification about VC as well. I have a follow up question : please let me know the ruling on this approach of making money : some people make money by the difference in the currency exchange rate (particularly between US and Canada), based on the difference, they make their money. Is that allowed and if not, I would greatly appreciate an explanation to the wisdom for it not being allowed. I want to make money and spend it in the right way but if the money is not halal then there is no point. Jazaka Allah Khair Asalam Alaykum [Question three] Bismillah Asalam Alaykum Wa Rahmatu Allah Wa Barakatuh, I pray to Allah you are doing awesome ya Dr Monzer. It has been a long time since I contacted you and a lot has changed. One surprising thing I discovered was that I knew your Son Ammar from a LONG time ago when we were both students in Manarat at Saudi Arabia. In fact I did Alhamdulillah meet Ammar in 2009 (after more than 15 years, SubhanAllah). I have asked Ammar to speak with you regarding a very important matter that I would like your Islamic opinion on. I believe it falls in your area of expertise. He asked me to contact you using this email (and you have responded in the past). Jazaka Allah Khair in advance. The matter in question is attached in this email as a windows document. If you require further information, please let me know. Jazaka Allah Khair Hazem

Fatwa

Click hereto view more

Publication Date

2011-02-16

Main Subjects

Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Islamic jurisprudence
• Management
• Finance
• Investments
• Capital
• Money
• Risk management
• Corporations
• Venture capital

No. of Pages

3

Data Type

Fatawa

Language

English

Record ID

BIM-734406

• APA
• MLA
• AMA