ISLAMIC

FINANCIAL
PLANNING
FORUM
Fundamentals of
Financial Planning
In Islam
22 Rabiul Akhir 1437 Ustaz Abdul Aziz Mohd Nor
1 February 2016 @ Ustaz Lariba
 Topics for Discussion
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Concepts of Financial Planning in Islam

Shariah Compliant Investment Guide
Examples of Shariah Compliant and
Non-Shariah Compliant Investment and
Business
 Concepts of Islamic Financial Planning
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Islamic financial planning or Shariah financial planning, could

be defined as follows:
It is a process of determining our financial goals and
priorities and the resources to meet them optimally within the
parameters of the Shariah.
It is also the process of meeting life goals
through the management of finances in
accordance with the Shariah
Islamic financial planning is grounded on
the Islamic concepts and theoretical
framework
The following are 5 key key concepts of
Islamic financial planning
 Concepts of Islamic Financial Planning
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1. WEALTH IS A TRUST (AMANAH)

Allah SWT is the provider of bounties and all resources and
that wealth belongs to Allah SWT
Thus, wealth is a TRUST to be managed and planned
according to Shariah:

For Allah is He Who Gives (all) sustenance. (Al-Dhariyat: 58)

Human beings are just the vicegerent or trustee of Allah
Therefore, we must acquire wealth in accordance to Islamic
teachings and should use wealth for the right objectives.
 Concepts of Islamic Financial Planning
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2. FINANCIAL PLANNING AS AN ACT OF WORSHIP

(IBADAH)
Man has to plan in order to face adverse events in life.

The only event that is certain to happen is death.

Hence, a proper planning is required to alleviate hardship to

the surviving family members and the deceased in his

afterlife
As such, it is in the context of
avoiding hardship and rewards
in afterlife (including sadaqah
jariah or ceaseless charity),
planning becomes part of
worship
 Concepts of Islamic Financial Planning
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3. MANS TIME HORIZON

There is an eternal life after death and everyone will be judged
in determining how he or she lives in the Hereafter.
This is referred to as mans time horizon

The belief in the Hereafter shapes our

conduct in this world and how they
prepare for the world after death.
Financial planning is an example of an
act of ibadah because the intention and
practices are following Shariah
guidelines
 Concepts of Islamic Financial Planning
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4. MAQASID SHARIAH
Maqasid Shariah means the objectives of Shariah

Imam Al-Ghazali, defines Maqasid Shariah by the significance

of Shariah in safeguarding five basic objectives:

Safeguarding their faith (din), their lives (nafs), their intellect

(aql), their posterity (nasl) and their wealth (mal).

Islamic financial planning aim to
preserve one of the five essentials
needs, the preservation of wealth
Requirement pay zakat implies the
need to develop and grow the
wealth such as through investment
 Concepts of Islamic Financial Planning
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5. PROHIBITION FROM ENGAGING IN RIBA, MAISIR AND

GHARAR
Three fundamental prohibitions of Islamic financial planning

are prohibition of interest (riba), uncertainty (gharar) and

gambling (maisir)
All financial planning aspects must be free from these

elements.
Islam does not allow any gain from

financial activity unless the beneficiary

is subject to potential loss
Any profit should be through mans

own exertions and not through

exploitation of others
 Shariah Compliant Investment Guide
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Licensed from the authorities, not against the laws of

the country

Structure, marketing plan and associated activities

must be approved by a certified Shariah Advisor
Must have at least two shariah advisors
Not involved in the business as a director or an agent or
sales person
Must be registered with the authorities (JAKIM)
*Hj Razli Ramli, Senior Managing Advisor, IBFIM
 Shariah Compliant Investment Guide
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Investment is long term (3 5 years), be patient

Investment scheme should not guarantee return of capital
If guaranteed, it is not shariah compliant (ijma by all mazhab)
Returns or profit must not be fixed, promised or guaranteed
If it is, it becomes a loan contract with riba (ijma by all mazhab)
Even though the rate of guaranteed profit is inconsistent, since the
profit is still guaranteed
Must determine the subject matter of the investment, must be
halal and not money game
Avoid deception, be 100% certain of the subject matter

*Hj Razli Ramli, Senior Managing Advisor, IBFIM

 Examples of Shariah Compliant Investment
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 Examples of Shariah Compliant Business
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 Examples of Shariah Compliant Business
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 Examples of Non-Shariah Compliant Business
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Riba contents
were not
disclosed to
investors

Capital is guaranteed by PNB

There are 8,619,092 investors
*From ASB Financial Report 2014
 Examples of Non-Shariah Compliant Business
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Why didnt mention riba?

 Examples of Non-Shariah Compliant Business
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Forex trading involves riba al-buyu

and not shariah compliant because:
Money is a ribawi item
Selling of currency through credit
Delay in currency exchange

Elements of bay al-najsy the trader offers the price not

to take ownership but to take advantage of the price
fluctuations
Elements of gambling since it is solely dependent on price
fluctuations

*From Majlis Fatwa Kebangsaan

 Examples of Non-Shariah Compliant Business
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*From Dr Azman Mohd Noor - UIA

 Examples of Not Shariah Compliant Business
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