A guide to creating a Riba free Investment Portfolio
The Islamic finance industry has witnessed significant growth over the past decade, driven by a growing demand among Muslim investors for financial products that align with their religious beliefs. Shariah compliant investments, adhering to Islamic law principles, have become a crucial part of this trend, offering ethical alignment and competitive financial returns. This post explores the data behind the rise of Shariah investments and provides insights on how investors can leverage this to achieve their financial and spiritual goals.
The Growth of Islamic Finance
Islamic finance assets globally are expected to surpass $3.5 trillion by the end of 2024, according to the Islamic Finance Development Report 2020 by Refinitiv. This growth is not confined to predominantly Muslim countries but is seen worldwide, demonstrating a broad appeal for Shariah principles in investment.
Understanding Shariah Investments
Shariah compliant investments follow Islamic finance principles, which include prohibitions against interest (riba), uncertainty (gharar), and investments in businesses involved in activities considered haram, such as alcohol and gambling. Instead, Islamic finance focuses on profit and loss sharing, asset-backed financing, and ethical and socially responsible investing.
Key Principles of Shariah compliant Investments
- No Interest (Riba): Investments must not generate income from interest, deemed exploitative and unjust.
- Asset-Backed Investments: Investments should involve physical assets or businesses, contributing to the real economy.
- Ethical Restrictions: Investments avoid sectors like alcohol, tobacco, gambling, and adult entertainment.
- Profit and Loss Sharing: Investors share in profits and losses, promoting risk sharing and discouraging speculation.
Diversification and Risk Management
The risk-sharing principle in Islamic finance encourages diversified investment products. A study from the International Journal of Islamic and Middle Eastern Finance and Management found that adding Shariah compliant assets to a mixed-asset portfolio can enhance diversification and reduce overall portfolio risk.
The Appeal of Shariah compliant Investing
The appeal of Islamic financial products extends beyond religious adherence. Many investors are drawn to the ethical and socially responsible investing (SRI) aspects of Shariah compliant investments. According to a survey by HSBC, over 70% of investors are interested in sustainable and ethical investing, with Shariah compliant products fitting well into this category.
How to start your Shariah investment portfolio with Acorn Property Invest
As Acorn Property Invest grows and innovates, we continually look to find ways of meeting investors’ returns objectives. We’re delighted to announce the launch of our latest offering, a unique way for halal investors to access the vibrant UK property market, certified by the esteemed Shariah regulatory advisory firm Amanah Advisors. Acorn Shariah compliant portfolio offers halal investors quarterly or capital growth through our secure online platform.
If you are a certified investor seeking a potentially profitable Shariah investment opportunity, we invite you to consider adding the Acorn Shariah investment to your portfolio. Register for a look at the full Shariah investment summary.
YOUR CAPITAL IS AT RISK IF YOU INVEST
Investment opportunities available via Acorn Property Invest are exclusively targeted at exempt investors who are experienced, knowledgeable and sophisticated enough to sufficiently understand the risks involved, and who are able to make their own decisions about suitability of those investment opportunities. All investors should seek an independent professional investment and tax advice before deciding to invest. Any historic performance of investment opportunities is NOT a guide or guarantee for future performance and any projections of future performance are not guaranteed. All investment opportunities available via Acorn Property Invest are NOT regulated by the Financial Conduct Authority (FCA) and you will NOT have access to Financial Services Compensation Scheme (FSCS) and may not have access to the Financial Ombudsman Service (FOS).