For many other Muslims, both in the United States and abroad, saving for retirement means steering clear of investments in companies and funds that trade in a host of forbidden goods and services, which are known as haram.
The list includes alcohol, tobacco, pork products and media or entertainment considered immoral, such as pornography.
Investments are banned in companies with too much debt as a percentage of their assets. Interest on loans (known as riba) is also haram, which rules out investing in conventional banking and insurance sectors.
In spite of these challenges, the global Islamic financial sector is healthy and growing.
The bulk of the Islamic financial sector’s assets lie in Malaysia, the United Arab Emirates and Bahrain. However, financial services managers in the United States are steadily addressing the retirement savings needs — and dollars — of a steadily growing number of observant Muslim-Americans.
A vast range of customized, equally nuanced Islamic financial products structured like standard investments but operating within Shariah are gaining traction in the market. Sukuks are among the most prevalent. These are essentially Shariah-compliant bonds. Yet whereas standard bonds pay investors a set rate of interest over a period of time, sukuks offer a fixed rate of profit instead, thus avoiding forbidden riba.
It doesn’t matter if you’re Muslim or non-Muslim — one just does not like to lose capital.
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