How Should A Muslim Invest?

Sponsored by Lotus Capital

Have you ever wondered if your investment portfolios are Shari’ah compliant? Or you find the whole investment world so confusing and so, you’ve left all your funds in a savings account?

We understand that the investment world can be intimidating to an outsider. What’s the difference between treasury bills and bonds? What are bonds, and are they better than shares?

For a Muslim, there are even many more questions because any method you choose has to be compliant with the Shari’ah (Islamic law).

These days, Muslims are becoming increasingly aware of their financial decisions, and also looking for ethical ways of investing money.

Why is Halal investment important for Muslims?

People wonder why Muslims cannot buy shares in certain sectors like everyone else, or earn interest on their money in fixed deposit accounts. Under the Shari’ah, Muslims are not permitted to participate in any economic sector deemed haram (forbidden) such as companies providing alcohol, pork, tobacco, gambling, ammunition or conventional financial services.

What can you invest in as a Muslim?

There are a number of halal investment funds provided by certified fund managers. In such funds, a lot of people pool their money together to invest in Shari’ah compliant products and instruments. The fund manager sells units of the Funds, similar to shares, to investors and unlike investing in shares, the fund manager buys back those units from investors who wish to leave the fund.  One such fund is the Lotus Halal Fixed Income Fund.

“Fixed income” refers to any investment that pays periodic, often predetermined, returns over time. For example, when a landlord leases a property to a tenant, the landlord receives “fixed income” from the tenant. When you buy machinery on credit from a supplier with the intention to pay the cost in installments, the amount owed is “fixed income” to the supplier. These types of fixed income are different from conventional interest based transactions and are considered permissible by The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

The objective of the Lotus Halal Fixed Income Fund is to generate competitive returns in the short–medium term from fixed income investments while avoiding exposure to the risks associated with the stock market. The fund is particularly useful for investors with low risk appetite, short/medium term investment horizon and preference for ethical or Shari’ah compliant investments.

How is the Lotus Halal Fixed Income Fund different from other fixed income mutual funds?

The Lotus Halal Fixed Income Fund is different from other fixed income funds as it will invest in wholly Shari’ah compliant fixed income securities, which are based on leasing and trading contracts. It will not invest in any interest-based securities such as conventional treasury bills or bonds, neither will it invest in any areas that are impermissible under the Shari’ah.

As Muslims, we have an obligation to ensure that our money is earned from permissible sources. Apart from this, we also have a duty to ourselves to grow our wealth. Savings may be good, but it is much better to take the leap and invest your money in funds that will yield profits for you.

What type of halal investments do you have? Share with us in the comments below.

You can learn more about the Lotus Halal Fixed Income Fund by sending a mail to or dialing 01-2914624/0807 709 9551.

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