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Why can’t I invest in insurance companies?

“Why don’t you invest in health insurers like Humana?” That’s a question I’ve heard recently. The short answer is that insurers of all types, whether they’re property, life or medical, do not meet the threshold requirements for investment as outlined by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The long answer takes a little more analysis. Here’s a brief explanation. A word about gharar Simply put, Humana and insurance companies of all sorts deal in gharar, or excessive uncertainty. This term generally refers to game of chance or speculation, or any financial transaction or contract (such as

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Purifying Impermissible Assets

ABSTRACT Purifying non-halal conventional investments in a savings vehicle like a 401(k) plan and rendering them halal is a difficult subject. This issue is often raised by Shari’ah-sensitive investors who have resolved to make the transition to Halal in their financial affairs. The desire to more fully follow the principles of Islam is in itself commendable and should be considered guidance from God. The purification of assets that are at their base impure is not possible, however, according to the tenets of Islamic Sacred Law. Instead, there are several steps that should be taken to embrace a halal strategy in

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The benefits of tax planning

Taxes can take a big bite out of your total investment returns, so it’s helpful to look for tax- advantaged strategies when building your portfolio. You don’t want to pay any more in tax than you have to. That means taking advantage of every strategy, deduction, and credit that you are entitled to. Tax-deferred and tax-free investments Tax deferral is the process of delaying, until a future year, the payment of taxes on income you earn in the current year. For example, the money you contribute to a retirement account (such as a 401(k) or deductible IRA) isn’t taxed until

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