The information contained herein is for Manitoba, Ontario, Alberta, BC and Saskatchewan residents only and does not constitute an offer to sell or solicit sales in any other Canadian or Foreign Jurisdictions. Mutual Funds are available through Global Maxfin Investments Inc. Insurance Products, Segregated Funds, HISA and GIC available through PPI Inc Financial Planning Service available through Jesse Reitberger This publication contains opinions of the writer and may not reflect opinions of Global Maxfin Investments Inc. The information contained herein was obtained from sources believed to reliable, but no representation, or warranty, express or implied, is made by the writer or Global Maxfin Investments Inc. or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any of the securities. The securities discussed in this publication may not be eligible for sale in some jurisdictions. If you are not a Canadian resident, this report should not have been delivered to you. This publication is not meant to provide legal or account advice. As each situation is different you should consult your own professional advisors for advice based on your specific circumstances.
Jesse Reitberger is registered as a Mutual Fund Advisor with Global Maxfin Investment Inc. Only mutual funds and exempt market products are offered and regulated through Global Maxfin Investments Inc
Debt and Interest can cripple individuals, families, and businesses. Even entire countries have been devastated in some way shape or form through systems of heavy debt and interest. There are many examples of African countries that have been impacted by high levels of debt and interest in recent decades.
One example is Ghana, which experienced a severe debt crisis in the 1980s. The country had accumulated a large amount of debt in the 1970s, and by the early 1980s, the country was unable to meet its debt obligations. Ghana was forced to implement austerity measures, which led to a decline in living standards for many of its citizens.
Another example is Mozambique, which in 2016, it was revealed that the country had taken out a series of undisclosed loans for a total of about $2 billion. This debt had been guaranteed by the government without parliamentary approval, and the high-interest loans were used to finance questionable maritime and tuna fishing projects. This led to a debt crisis and a decrease in state spending on social services, economic contraction, devaluation and a hit on the living standards of the population.
Another African country that has been severely impacted by debt and interest is Ethiopia, which has been facing a severe foreign currency crunch and a public debt burden. The country has been hit hard by the economic fallout of the COVID-19 pandemic, which has exacerbated its debt problems.
In general, many African countries are facing debt sustainability issues, and have been struggling to meet the interest payments on their debt. It is likely that this debt, in a rising interest rate environment, will cause further economic, fiscal, and even societal issues as these economies struggle to repay the debt under heavier levels of interest.
We get this question a lot. Is it halal to work at a bank? If we are talking about an Islamic Bank, of course. You can work there with no problem. If we are talking about a conventional bank that is where problems may arise. Some of the more strict scholars of Islam have outright said that working at a conventional bank is impermissible for a Muslim. We totally respect that opinion and if you tend to follow more strict rulings on other matters you might as well follow this one too.
Another opinion is that you can work at a conventional bank provided your role at the bank is a halal one. What does that mean? If your role at the bank is in any way tied to riba or other haram transactions then it is not permissible for you to have this job and your income is NOT halal. So you could not have a role as someone who sells bank credit cards, mortgages, or other interest-based loans. You also, would not be allowed to have a position where you construct/ create interest-based financial products.
“Jabir said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: They are all equal.”
On the other hand, many scholars have said you can have a job at a conventional bank that does not involve you promoting anything haram. For example, you could be a bank teller helping customers withdraw and deposit money. You could work in human resources and help with the hiring of staff, you could work in management helping organize personnel. These positions are likely to be halal and you do not have to do anything riba-based.
It is certainly a safer choice to work in another industry or for an Islamic Bank. However, It does appear there are a few ways to work at a bank and have your income be halal.
Allah Knows Best.
Most of the time you will find us at Canadian Islamic Wealth sharing with you simple and easy ways to grow your wealth in a halal way. Many of the suggestions we have are things you may have heard before, found online and may not be all that complicated. But Why?
In our humble opinion, the best advice, especially for people starting their investment journey, is simple, easy to understand, and easy to do consistently. Advice that is difficult to implement rarely gets implemented, advice that is difficult to understand often is ignored and advice that is difficult to do consistently tends not to yield very good results.
So, if you are looking to begin your investment journey, first, you should ask yourself why you are investing. Second, you should start by investing a small amount. An amount you will not miss, an amount you will not touch, an amount that feels like you have not done anything. For some that is $500, others $50, others $50,000. Either way, it is easy and feels like nothing. finally, you should aim to invest a little bit regularly, again, $50, $100, $200 per month. It should feel easy like it is nothing. Over time, this really adds up and you begin to feel a sense of accomplishment and financial freedom.
Overall, we choose to give simple and easy financial advice because we know it produces results and is easy for our clients to implement.
If you have done any browsing of the internet in recent months/years, you have probably stumbled upon videos and articles discussing Life Insurance. Specifically the benefits of Term Insurance vs. Permanent Life Insurance. The scenario goes something like this:
Imagine two friends Bob and Doug. Bob and Doug are both 40 years old and are looking into purchasing life insurance as a way to pay off debt if something happens to them. Doug is really excited about the permanent life insurance policy he just bought. Although he realizes he is paying 10x more than his friend Bob, he likes the fact that his policy is permanent and down the road, if he doesn’t need it anymore he will be able to get what he put in back plus some profit.
Bob is also happy with his insurance choice. “Why pay more when I don’t have to?” Bob thinks to himself.
After they have painted this scenario out, they will say. Although it may appear that Doug has the better deal ( he gets back money at the end of his policy plus some returns) then Bob (he gets nothing, if he doesn’t die that’s money down the drain), if bob were to invest the difference in their premiums over a 20 year period, assuming a return of 7% per year, Bob would end up ahead ($178,969 vs. $122,316).
While I don’t necessarily disagree with the math, I do disagree with an all else equal scenario they often use to make this point. What the scenario above does is suggest that if all else were created equal and Bob invested the difference in his premium he would end up ahead. The problem with this way of thinking is that it is rare all things are ever created equal.
Firstly, Bob may not be able to invest the difference which is why he chose the cheaper insurance option. Generally speaking most people choose insurance based on their ability to afford the premiums.
Secondly, Bob may not be disciplined enough to invest the difference anyway. If Bob really did have the ability to afford $380 per month would he save the extra $340 per month in an investment. Unlikely, he would likely pay the minimum premium maybe save an additional $100 per month and spend the rest (the way most people do).
Thirdly, Bob may have a great family medical history compared to Doug. Doug may have chosen the permanent plan because his family has a history of heart diesase, cancer or stokes. If he chose the Term option, he may not be able to get insurance when the term plan expires, compared to Bob who has no family medical history.
The reality is, many of the scenarios you see in regards to Life Insurance or any other type of investment use “all else created equal” scenarios to make it seem like one is clearly better then the other and should be a no brainer. However, everybody is different and what may be a great idea for someone could lead to a financial disaster for another. The best thing to do is to speak with a professional (obviously I mean me) and work out the different scenarios and it never hurts to get a second opinion (especially if it agrees with my opinion).
In the last few weeks, we have seen some ups and downs in the investment market. Nothing new, the market goes up at times and goes down at other times. Even though September was not a great month for investors, the overall investment market is still up 15% in 2021. Most years see gains of 6%-8%. The problems tend to start when investors see a loss in their accounts. Human beings are emotional and when we see our investments drop in value we equate it to the hard work we’ve put in saving, working, and sacrificing. To see some of that work “evaporate” makes us do irrational things and can cause us to make expensive investment mistakes. Here 5 tips to help you remain calm during a period of market volatility.
- Reassure yourself that this is what makes my investment Halal.
We do not like to lose money. But the reality is when it comes to your investments being halal you should be earning a profit when everybody is earning profit. You should lose when everybody else is losing. Know that these days of losses and investments going down are proof you have invested in something halal and this puts you in good standing with Allah SWT.
2. Remind yourself why you are investing.
Are you investing for your kids education? Are you investing for your retirement? Are you investing for a trip to hajj? Unless you are planning to use the money in the next few days, waiting and being patient is not going to hurt you. Further, over time the markets have historically always gone back up after a period of being down.
3. Re-examine what you are invested in?
Are you invested in stable and profitable investments or are you gambling? If you are invested in good profitable companies, ask yourself will the companies you are invested in stop selling their goods and services now that the market is down? If the answer to this question is no then hold on to your investments. If the answer is yes, it might be worth exploring alternatives.
4. Buy More!
If you know you have good investments, when the markets go down, you have an opportunity to get them at a cheaper price. Imagine going to a store and a laptop costing $1000. If you go to that same store on boxing day or black Friday, that exact same laptop will be selling for $800. Obviously, we would rather buy the laptop at a discount. Think about your investments in the same way. When the markets go down, you can buy more investments at a discount.
5. Tax-Loss Selling
If you truly made a bad investment and that investment lost money. You could sell the investment at a loss and use it to offset taxes on capital gains. It is always a better strategy for the investments you make to be profitable, however, in some circumstances, this tax-loss selling strategy could be beneficial.
Overall, when markets go down it is best to try and remove our emotions from the situation and think logically and critically. We need to do our best to remain calm and wait out the volatility. Remember historically, the markets have always come back.
Articles on this website contain opinions of the writer and may not reflect the opinions of Global Maxfin Investments Inc. The information contained herein was obtained from sources believed to be reliable, but no representation, or warranty, express or implied, is made by the writer, or Global Maxfin Investments Inc., or any other person as to its accuracy, completeness, or correctness. This website is not an offer to sell or a solicitation of an offer to buy any of the securities.
Riba can be simply defined as excess. Within the context of Islamic Finance Riba can be broken down into two major categories. Riba an Nasiyah and Riba Al Fadl.
Riba An Nasiyah
Riba An Nasiyah is the primary and most common form of Riba (Interest) in the modern-day. This is a type of loan where money is lent out with a term of repayment and an excess amount (interest) is clearly defined in the contract. The prophet saw said, ” Every loan that draws profit is one from Riba”. It is also quite clearly defined in the Quran 2:275-279. Modern-day mortgages, car loans, student loans, and personal loans all fall under this category.
Wisdom Behind the Prohibition of Riba an Nasiyah
Firstly, we should realize that there is nothing in the entire creation of the world which has no goodness or utility at all. But it is commonly recognized in every religion and community that things that have more benefits and fewer harms are called beneficial and useful. Conversely, things that cause more harm and offer fewer benefits are taken to be harmful and useless. Even the Quran, while declaring liquor and gambling to be haram, proclaimed that they do hold some benefits for
people but the curse of sins they generate is far greater than the benefits they yield. Therefore, these cannot be called good or useful; on the contrary, taking these to be acutely harmful and destructive, it is necessary that they be avoided.
The case of Riba an Nasiyah is not different. Here the consumer of Riba does have some casual and transitory profits coming, but its curse in this world and in the hereafter is much too severe compared to this benefit and even in this world most revenue earned from Riba is quite low when compared to other halal opportunities. The Riba consumer suffers both spiritually and financially because they could have used this money in a more productive manner. Further, the issuer of this riba-based debt contributes to a society ridden with debt which slows down the rate at which people spend, consume and donate.
Riba Al Fadl
Riba Al Fadl is rarer in modern society but still exists. With Riba Al Fadl it is impermissible to exchange the same type of goods for goods of greater or lesser quantity/ quality. For example, you can not exchange 1lb of dates of lower quality for 0.5lb dates of higher quality. This falls under Riba Al Fadl. In fact, there are six items that are expressly prohibited to do this with. Gold, Silver, Dates, wheat, salt, and barely. If extrapolated this would include most items that are the same in nature.
The Prophet (Saw) Said :“Sell gold in exchange of equivalent gold, sell silver in exchange of equivalent silver, sell dates in exchange of equivalent dates, sell wheat in
exchange of equivalent wheat, sell salt in exchange of equivalent salt, sell barley in exchange of equivalent barley, but if a person transacts in excess, it will be usury (Riba). However, sell gold for silver anyway you please on the condition it is hand-to-hand (spot) and sell barley for dates anyway you please on the condition it is hand-to-hand (spot).”
Wisdom Behind the Prohibition of Riba Al Fadl
Mainly this prohibition is to keep things fair and to close any backdoors to other types of Riba.
There are many members of the Muslim community looking for the most efficient and cost-effective way to save up for their down payment for a house. And for many of the bigger cities in Canada, these down-payments can range from $30,000-$40,000 to $100,000-$150,000. The reality is this is a lot of money for your average Canadian and requires a bit of planning to accumulate it in an efficient manner. One of the strategies we often recommend for families is accumulating money in an RRSP and a Spousal RRSP. By using the RRSP you can accumulate $35,000 under your name and $35,000 under your spouses
name. By doing this it should save you between $20,000- $35,000 in taxes. Further, under the first-time home buyers plan. You will be able to withdraw $35,000 each to put towards the down-payment on your first house.
How does it work?
First things first, You have to contribute money to your RRSP and save on taxes. This could be any
amount up to $35,000 per person. $35,000 is the maximum amount that can be withdrawn from the RRSP. So you and your spouse can
withdraw a total of $70,000 from the RRSP for the first-time homebuyers plan.
Note: If you have previously owned a home in Canada you cannot withdraw money under the first-time homebuyers plan. This seems obvious but I have had a few clients ask me this question.
The money in the RRSP must remain in the RRSP for 90 days in order for it to be eligible to withdraw under the first-time homebuyers plan. After you have successfully used the money from the RRSP for the First-time homebuyers plan you will have two years before you must begin repaying the money. You must repay the money to your RRSP at a rate of 1/15th per year. If you do not repay the money that you did not repay will be subject to income tax. Therefore if you took out the $35,000 from your RRSP after 2 years you have to put back $2333 per year or $194.44 per month.
Things to keep in mind:
1) First-time home buyer withdrawal only works on your First House
2) Money must remain in the RRSP for 90 days prior to first-time homebuyer withdrawal
3) Repayment begins after 2 years of the FHBP being used
4) You must repay 1/15th per year of what you took out.
Basically, if you have made an investment, in general, it is unwise to sell that investment at a loss. However, the exception to that is if you do not see a scenario in which the investment will recover, then you can sell the investment at a loss and use it to your advantage from a tax perspective.
How People Think It Works:
I invest $5000 in investment ABC. That $5000 I invested in ABC becomes worth $2500. I have lost -$2500. I sell the investment at a loss and use that -$2500 to lower my INCOME TAX (this is wrong).
How it Actually Works:
I invest $5000 in ABC investment. That $5000 becomes worth $2500. I have lost -$2500. I sell ABC Investment at a loss and use that -$2500 to offset my Capital Gains Tax (this is right).
You can only use a loss to offset a gain from a tax perspective. So if you had $5000 worth of DEF investment and it became $10,000. You Would have a $5000 GAIN. If you bought $5000 of ABC Investment and it became worth $2500. You would have a -$2500 LOSS. This loss can make it so you only pay Capital Gains tax on $2500 GAIN instead of $5000 GAIN.
Don’t create a tax problem for yourself by trying to offset your INCOME with a CAPITAL LOSS. The CRA will find you!
Let’s get right to it! Is it halal to invest in gold? The answer is yes! Of course, it is halal. Back during the time of the prophet (PBUH) most trade was done using gold and silver coins or simply trading one item for another. Therefore, investing in Gold, Silver and other precious metals is halal.
Just because something is halal does not necessarily make it a good investment or even the right investment for you and your family. That requries some research, thought, and in-depth analysis of your situation. If you are going to invest in gold here are some things to keep in mind:
1) Why are you investing in gold?
Is it for diversification? Many people add gold to their portfolios to diversify their investments and their downside risk. Many studies show that there is an inverse relationship between how the equity market performs and how gold performs. Therefore, many people invest in gold to limit some of their downside risk and
use it as a hedge against a volatile market.
2) Are you speculating?
Often I will get calls from clients asking me to move their ENTIRE portfolio into gold. Specifically because they read an article on how Gold prices will soar or equity prices will plummet. Even if the article ends up being right, this is an extremely risky maneuver based on speculative data. It could be catistrophic and ruin long-term financial plans. Avoid speculating especially with large amounts of money.
3) How will you invest in Gold, Silver and other precious metals?
Consider how you intend on investing in Precious metals. You have 3 options. Firstly, you could buy physical bullion. Gold coins, Silver coins, etc. If you choose this option you must considerwhere you will store them and how quickly you can liquidate (sell) the precious metals if you need cash. Another thing to consider is the point of entry. Gold is expensive and you may need to come up with a large amount of cash to purchase physical bullion. Secondly, you could buy individual shares or funds of precious metal mining companies. This would certainly give you exposure to precious metals and the point of entry is generally lower then buying a physical gold block or coin. The drawback is, the company could have excessive debt and other financial dealings that are impermissible in Islam. A third option is to invest in bullion funds, you get the benefit of investing in precious metals without having to worry about what the business is doing, they are easy to liquidate and the point of entry is relatively low. Some of the drawbacks are you do not have the physical gold in your possession and there are management fees associated with these funds.
The reality is, investing in Gold and other precious metals is halal. And it is something worth considering as an addition or compliment to your current portfolio. Like anything else it should be considered along with your goals, your risk tolerance and other factors.
Always do your research and Allah Knows best.