The following set of business activities are considered prohibitedin Islam, and thus investing in these kind of businesses is notsomething a Muslim should undertake.
Mutual Funds are groups of stocks and other investmentinstruments (Bonds, Certificate of deposits, ...etc.)managed by a "professional" and pooling money fromthousands of investors and leveraging the aggregatedamount of the pooled money in buying stocks and bonds.
Types of Mutual FundsAny Mutual Fund falls roughly into one of two categories (as below).Before you invest in a fund, you have to know which type it is, andwhether that type is suitable for your goals:
Debit Cards, also known as Check Cards, is a special form ofcards that look to the merchant just like a Credit Card, with the VISA or MasterCard logo on them. However, this card is actually an ATM card that allows you to withdraw money from ATMs (directly from your checking account) without incurring interest. Also, the purchases made are debited (thus the name) from your account instantly. Therefore there is no monthly statement, no interest, nothing.
Credit Cards is a very convenient method of making purchases without carrying cash. This convenience has has caused their proliferation, and almost everyone has one.
The way a normal credit card works is that you make purchases using your card and the bank issuing the card will pay on your behalf to the merchant providing you the product or service.
The bank deducts a certain percentage (2.5% normally) from the merchant in return for processing the transaction and adding the money to the merchant's account.
Mortgage is a long term loan, usually for a person or family topurchase a house over a long period (30 years). This is fairlycommon in Western societies (perhaps the only way onecould afford or buy a house in those societies).
This practice barely exists in Muslim countries, at least for now.
This involves interest (and a lot of it!), and therefore alternativeshave to found to this method.
Conventional Bank Accounts fall into two main categories:
- Saving Account: Here you keep your money in the bank (for safety reasons) as well as earn a fixed interest rate on it.
- Checking Account: This normally doesn't have interest paid by the bank.