The concept of wealth in Islam

IKIM VIEWS
By MUHAMMAD HISYAM MOHAMAD
Fellow
Centre for Economics and Social Studies
Institute of Islamic Understanding Malaysia

IN ISLAM, it is understood that the real owner of all wealth is Allah. Man only owns wealth by proxy as guardian for which purpose he has been made vicegerent (khalifah) of Allah on earth.

Unlike capitalism and socialism which believe that man – in his quest for wealth – must deal with scarcity of resources, Islam views the concept of wealth differently.

In Islam, wealth is considered a bounty of God and thus it is not scarce, for Allah says: “God is rich but you are poor” (Muhammad:38).

What is actually scarce is the ability of mankind to utilise the bounties of God. The situation is worsened by their inability to explore new resources due to the limitation of knowledge.

Islam regards wealth as a means of human satisfaction in his endeavour to attain al-falah or prosperity that leads to a good life in this world and hereafter. Therefore the quest for wealth is not condemned in Islam.

Yet each individual Muslim is bound to work as it is a means to accumulate wealth in his search for his livelihood as Allah says: “He it is who made the earth smooth for you, therefore go about in the spacious sides thereof, and eat of His sustenance, and to Him is the return after death.” (al-Mulk:15)

Needless to say, Muslims must follow all the commandments of Allah, as such those who fail to do so are condemned.

However in their quest for wealth they must observe that all economic activities must not bear any elements that contravene syariah principles. Therefore man should manage wealth in accordance with the syariah requirement.

Good wealth management is important, because any possessions or assets would not grow without proper planning and implementation. In contemporary terminology, it is known as financial planning.

Comprehensive financial planning encompasses a number of critical areas such as wealth creation (e.g.: working or earning a living); wealth accumulation (e.g.: investment, inheritance); wealth protection (e.g. retirement planning, insurance); and wealth distribution (e.g. taxation, charitable and planned giving).

Nevertheless, this explanation is actually the generic concept of financial planning and it must be refined to ensure the concept can be recognised as Islamic financial planning. However the process of refinement does not require an abandonment of the existing generic concept.

The concept can be recognised as Islamic financial planning by adding a clause that it must comply with syariah requirements.

What is important is to ensure that whatever activities pertaining to wealth creation, wealth accumulation, wealth protection or wealth distribution must comply with the syariah.

Therefore instead of dealing with insurance, Muslims should opt for takaful; instead of investing in non-halal shares, they should only buy shares or stocks that are approved by the syariah advisory board.

On top of paying tax, they must also pay zakat and should be great-hearted and chivalrous.

Muslims believe that their lifespan does not end upon death as there is another life after the worldly death. This worldly life is a breeding ground for the fruits to be enjoyed in the life hereafter.

Therefore when they plan for something, they should consider this criterion and, as such, their financial planning should also stretch to cover life in the hereafter as well.

Thus, by having proper financial planning and implementation, Muslims will strike a balance between fulfilling his needs and wants and executing religious obligations.

Adherence to religious teachings – in this context – will definitely prevent any hostility that often occurs among people while engaging in economic activities especially when wealth and money are considered the most important elements in society.

This ill feeling has been clearly spelt out by the Prophet when he says, “The heart of an old man remains young in two respects: his love for the world (its wealth, amusements and luxuries) and his incessant hope.” (as narrated by Abu Hurairah)

For this reason, the wealth in Islam may function as a means of trial and test to find out the level of faith of an individual in Allah; whether he is a true Muslim or vice versa.

As Allah says, “And as for man, when his Lord tries him, then treats him with honour and makes him lead an easy life, he says: 'My Lord honours me'. But when He tries him (differently), then straitens to him his means of subsistence, he says: 'My Lord has disgraced me'.” (al-fajr:15-16)

Nonetheless, Islam highly encourages its believers to be financially stable for the reason that poverty or hardness among Muslims may lead them to infidelity.

In spite of this encouragement, they must bear in mind that the acquisition of wealth and the usage of possessions should be in a proper manner and must be in accordance with the syariah as in one hadis of the Prophet, it is reported that every single man an woman will not proceed to subsequent proceeding in the hereafter until he is asked about how he acquired and spent his property.

Millionaires From Different Planet?

I heard about the above book in a morning radio show in Malaysia. The host - Halim Othman was introducing the writer of the above book in his morning show and it gets me interested. Why? One of the reason is that the writer is someone I can relate to - a Malay, Malaysian, pilot for the national airline and he talks with confidence and authority as he himself has made it as a millionaire!
That night I went to a bookstore nearby to search for the book. After reading some part of it, I purchased the book and finished reading it within 3 days.
Talked with my wife about it and though the book did not cover how to make wealth according to Syariah's way, we intend to take the local concept and customised them accordingly.
For Malaysian people trying to learn about personal financial planning, this is the book for you. All the basic is there. You can easily adapt the ways as it is local content from fellow Malaysian and differed from other personal financial books authored by foreigners.
The concept to pay yourself first makes sense. And this is especially to build reserve fund for emergency cases later or to save for rainy days. Then you can start to build turbo charged income. Turbo charged income can be from various ways and it can include what you like doing i.e if your hobby is fishing, perhaps you can write a book about how to hand-made certain fishing tools. Or if your hobby is photography, you can write something on photography or sell your pictures to the magazines or papers. Almost anything can be done and most importantly is that you will be doing what you like and make money from it!
The most serious thing to make money as informed by the writer is to invest in yourself. That can be from attending seminars, reading related books, socialising with like-minded people and etc.
Once we are well informed and well equipped with knowledge about what we want to invest and also being ready mentally, we can invest in lots of things i.e building businesses, stocks, properties and etc. This book will teach you about investing in properties and to be specific residential properties. In fact, the writer actually made his million from investing in properties. That is why most of his subject will touch about investing in properties and this is shown through his other published books that will cover more in the properties subject.
Equipped with the little knowledge from the book and Azizi Ali's advise to invest in knowledge, we then look up for ways to learn about investing in stocks and properties. One day, I saw a newspaper advert about a half day seminar titled How to get rich from Malaysian stock and Properties. We immediately registered to attend this half day seminar at Holiday Villa Subang and reserved our schedule to attend this first seminar for us.
The presenter Milan Doshi is great. He has the authority to speak on these matters due to his background, experience and knowledge. He first talks about Stocks and how we can make money from market in crisis. Though he admits that it is slightly different in Malaysia due to political interference and etc. In all, to make money in stocks, you have to spend much of your time to study the market and the fundamentals of the counters to invest, there is another way that is to invest in trust fund. With trust fund you will actually let other people to manage your investment for you with certain fees of course. If they make the right call then you'll be ok otherwise you'll not make much money or worse if the fund manager doesn't do his homework well then you'll be paying for it as the fund manager will still be paid his salary. Thus, it is the reason why Robert Kiyosaki does not encourage people to invest in Unit Trust or Mutual Fund as you'll be handing over you money to other people to manage and with that you lose control. Unless then if the fund manager or unit trust agent will advise and update you of your investment. But this is rarely so! As per experienced by myself, I have not received any updates on my investment in a Syariah Unit Trust even when asked for. Anyway I do keep track of the performance from my own reading.
Then going on to properties, as per Robert Kiyosaki's mentioned, you make money when you buy. Milan informed that we can look for desperate seller or something like it. We may also look for properties put up for auction. At the end of the seminar, they invite us to attend their 3 days property workshop in which they'll teach us all about properties investing. The promo video looks interesting and with the follow-up made it looks irresistable. However as the fee is quite high and with the workshop includes to purchase a property or more within the 6 months of follow-up we waited until we attend Azizi Ali's property seminar.
Yes, in between the registration to this seminar we have actually enrolled to attend the 1 day property seminar by Azizi Ali also at Holiday Villa Subang. The Master of Ceremony for this seminar was Halim Othman. We attended another seminar on making money through internet at Holiday Villa Subang before the scheduled Property Seminar.
I'll be writing more about the Property Seminar and also about the internet seminar in my next entry. I'll also write about our experience buying a residential unit with just only 1% down payment at one of the Home Expo before the Property Seminar.

When it all started..

It all starts on my birthday. My wife knowing my knack for reading books bought me a book by Robert Kiyosaki - Rich Dad Poor Dad. I actually finished reading the book within a week and it got me all interested to know much more on the technics to accumulate wealth. The basic understanding is that the most prized and ultimate step to be good investor is to be well informed and knowledgable in the business of making wealth. And this is through investing in your ownself by learning, reading books and attending seminars that can improve and increase your knowledge in that area.

The four quadrants of Employee, Business, Sole-proprietor and Investor all makes sense. Now, we start thinking of getting out of the Employee quadrant.

Being an Employee means you are doing all the hardwork and you can only get just a portion of what you've worked for as opposed to be the owner of the business. As owner of business your income will be like much more if you worked hard and if your business is good you can just employ ppl to work much harder where you can have the time to relax. Meaning you can leverage your time when you have employees working for you. However, when you do start your own business you'll know that this is not the case. You still have to do all the hardwork before you can reap all the success. Even then, once you are successful you've got to maintain it and this is the hardest part! You then got to diversify and all other strategies to be implemented to sustain your business. This is the time when you go to the Investor quadrant to invest in other businesses or ventures.

And all these knowledge about managing your personal finance are not taught in your school, colleges, universities and etc. All these things need to be learned. We heard about ppl in well to do position in their companies faced financial problems and all these is due to the fact that they are not managing their financial standing or their wealth properly. You wonder why with all the high pay, high salary they still living on the edge. It is actually because bad and poor financial management. They can have all the best position in the companies with high salaries but if they are poor in financial management all the money in the world will not be enough. This books tell you that you don't have to worry much about how you do in your school, college or university as what is more important is how you survive the real world. The world where only the fittest survives. It is not to say that education is not important, in Islam education is very important but once you've learned about it, you've got to do it or practice what you've learned and you've got to spread what you've learned. Knowledge without practicing it is like a tree that can't bear any fruits.

However, due to local regulations and others, much of the information contained in Rich Dad and Poor Dad book could not be practised here. We however can try to find ways to work around it and filter the parts where it does not follow our syariah rules.

My next entry will also be about how I update myself accordingly via books and my first participation in a seminar.

Greetings

Salam,

This is my first entry to this blog.

My aim is actually to inform readers about my journey for halal and baraqah way of life. Apart from that, I would like to deepen and increase my knowledge in this area of islamic finance and muamalat. Hopefully someone can provide feedback and also learn together about this topic.

My keen interest in islamic way for wealth management started about 4 years back. Previously, I just worked and do my little part according to Islam. I have been trying to find someone or guru or ppl that can assist and help me in finding the path and way of islam to acquire and manage wealth.

Anyhow, at the same time I have also learned and attended seminars about acquiring wealth the conventional way. I will post what I have learned here and maybe readers can also learned about it together.

wassalam!