MAY-JUNE . 2023 | @ Halal
Column
19 financial goals , investment strategies , and risk tolerance . Professional fund managers will invest these funds in a shari ’ ah-compliant portfolio of securities following the fund ’ s objective and investment strategy .
A typical example of unit trust in Malaysia is Amanah Saham Bumiputera ( ASB ). There are also other unit trust products offered in Malaysia . Bursa Malaysia has introduced Bursa Malaysia ’ s interactive fund information platform , which gives investors in-depth knowledge of unit trusts and wholesale funds .
This initiative represents another innovation in the promotion of the value of investment in unit trusts to the general public and could be considered a positive step towards assisting investors in making betterinformed investment choices and enticing more investors , particularly young investors , to put their money into diversified portfolios .
SHARES
In addition , young investors can also invest their money in shares . The shares are traded on Bursa Malaysia , and investors can buy and sell them anytime during trading hours . However , Muslim investors must ensure that the shares they buy are from a shari ’ ah-compliant company . The SC usually updates the list of shari ’ ah-compliant securities twice a year , in May and November .
EXCHANGE TRADED FUNDS ( ETFS )
Next , exchange-traded funds ( ETFs ) are another investment option for young individuals . The ETFs are referred to as openended investment fund that is listed and traded on a stock exchange . It combines the characteristics of an index fund and a stock .
Therefore the liquidity of an ETF will also reflect the liquidity of the underlying basket of shares . ETFs are classified into several types , including equity ETFs , leveraged and inverse ETFs , fixed-income ETFs , and commodity ETFs .
These ETFs are composed of baskets of stocks , bonds , futures contracts , or commodities that are based on an index . As for the Islamic ETFs , it tracks an index whose constituent securities are comprised wholly of shari ’ ah-compliant securities .
Currently there are six shari ’ ah-compliant ETFs listed and traded on the Bursa Malaysia such as MyETF Dow Jones Islamic Market Malaysia Titans 25 ( MyETF-DJIM25 ), MyETF Dow Jones US Titans 50 ( MyETF-US50 ), MyETF MSCI Malaysia Islamic Dividend ( MyETF-MMID ), MyETF MSCI SEA Islamic Dividend ( MyETF-MSEAD ), MyETF Thomson Reuters Asia Pacific ex-Japan Islamic Agribusiness ( MyETF-AGRI ) and Trade Plus Shari ’ ah Gold Tracker ( GOLDETF ).
GOLD INVESTMENT Young investors also have the opportunity to diversify their portfolios through gold investment . It is because gold is perceived as safe and is always in demand . Gold can be invested in physical form or through a gold investment account .
Those who choose to invest in physical gold may buy few types of physical gold , such as gold coins , bars , or jewellery to keep in their possession while reaping additional benefits soon . In addition to investing in physical gold , investors can also invest in gold through bank accounts .
Numerous financial institutions offer gold accounts as a convenient method for clients to invest in gold without storing the precious metal . A gold investment account enables customers to invest in gold conveniently , securely , and cost-effectively , thereby maximising their capital gain .
REAL ESTATE
Real estate is one of the best long-term investments , but it may be challenging for young investors as it takes a lot of money to invest in real estate . As an alternative , real estate investment trusts ( REITs ) are available for those looking to invest in real estate but with limited funds .
REITs allow young investors to buy commercial , luxury , and real estate like hotels and malls at affordable prices without purchasing the buildings outright . REITs typically generate rental income from the tenants who occupy their properties .
Investors can invest in REITs on stock exchanges such as Bursa Malaysia . Bursa Malaysia lists four Islamic REITs , including Al- ’ Aqar Healthcare REIT , Axis REIT , KLCC REIT , and Al-Salam REIT .
As for retail investors , it is essential to identify good REITs investments that can increase their income distributions and accomplish long-term capital appreciation .
In addition to profit , Muslim investors must ensure that the income from REITs is derived from shari ’ ah-compliant activities or , in the case of mixed activities , adheres to the 20 per cent benchmark set by the Shari ’ ah Advisory Committee ( SAC ) of the SC .
DERIVATIVE INSTRUMENTS
In addition to the opportunities mentioned above , investing in derivative instruments is another possibility . Commodity , equity , and financial derivatives are the three types of derivatives now being made available by Bursa Malaysia Derivative ( BMD ), respectively .
At present , futures contracts on crude palm oil ( FCPO ) are one of the most actively traded types of derivatives in Malaysia . The SAC of the SC concluded that the contracts provided in Bursa Malaysia derivatives , such as FCPO , are per the principles outlined in the shari ’ ah .
In an unpredictable market conditions , investors may consider diversifying their portfolios with futures contracts .
DIGITAL ASSETS
Lastly , investing in digital assets is an interesting and additional option . Digital assets refer to any piece of text or media that has been converted to a binary format and comes with the right to use it . Digital assets include cryptocurrencies , non-fungible tokens ( NFTs ), stablecoins , and security tokens .
The SAC of the SC announced in July 2020 that it is permissible to invest and trade in digital currencies and digital tokens on registered digital asset exchanges ( DAXs ) that meet the SAC ’ s resolution requirements .
This acknowledged the significance of digitalisation in the capital market and the growing interest among market players in using digital platforms . Essentially , the SAC concluded that digital assets are assets from a shari ’ ah perspective .
Meanwhile , in 2021 , the SC recognised Bitcoin Cash as a digital asset that can be traded on local DAXs . To date , the DAX-regulated operators in Malaysia include Luno Malaysia Sdn . Bhd , MX Global Sdn . Bhd , SINEGY DAX Sdn . Bhd , and Tokenize Technology ( M ) Sdn . Bhd .
CONCLUSION
It is essential to begin investing early for a more secure financial future . For Muslims , several factors must be considered to guarantee that the investment complies with shari ’ ah law and principles . The variety of products available today makes the investment much more accessible than a few years ago .
However , different stages of young investors may react differently to investment decisions based on their requirements and financial goals . To this end , knowledge of halal investment is what every young person needs to be a smart investor .
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