Scholar Answers

Pursuing Careers in the Conventional Finance Industry

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: I am employed in an insurance company (my whole career of 28 years) in the capacity of an M&A analyst and management professional. Is there guidance around theacceptability of this employment --- in context of the exclusion of insurance industry from Shariah acceptable companies? Does my salary have to be purified? If so, how --- your lessons are focused on shareholders, not employees? What if, after so many years and having reached an older age, I am not easily employable at even 30% of my income if I shift industries?

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Companies Dealing in Gold and Silver

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question:: The discussion about which kinds of companies Islamic Equity Funds should avoid includes those companies dealing in gold and silver. What is the basis for this? Surely trade in gold and other precious metals/minerals is permissible in Islam? Answer: Trading in gold and other precious metals/minerals is indeed permissible in Islamic law. Mining and exploration operations are often financed by Islamic banks and financial institutions by means of perfectly acceptable Islamic contracts. Moreover, the DJIMI universe includes several companies involved in the mining of precious metals like gold and silver.

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Small Investors can make a difference

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question: It seems to me that the best way a Muslim can object to the way the company might be dealing with Riba is not to hold any of its shares. Furthermore acquiring shares of a company with the intention of objecting to its practice does not seem logical because as a very small shareholder any protest will just be ignored and would not cause the company to alter the way it does business. Any comments will be appreciated.

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Termination of a Mudarabah Contract

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question: I am a bit confused about the Termination of a Mudarabah contract. On one hand, the lesson indicates that, according to general usuli principles, no minimum limit can be placed on the cancellation of such a contract.

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Mortgage for a Home

Question:: I am a simple muslim residing in the UK. Alhamdo-lellah until now I did the best of my try to earn halal and avoid interest. Now I feel I should buy a house of my own (my children being growing). There is a prelimenary Islamic modaraba and ijara home purchase introduced by a bank in UK.Unfortunately some of its conditions are difficult to meet by an average earner like me e.g a condition of 20% down payment is a prerequisite, it is difficult to provide that much money. So I cannot avail it. I can afford the conventional mortgage. I realy feel 'krahiyat' for it, but I do not know what to do. Is the conventional mortgage allowed in Islam in any way? or I have to live in a rented house for life.

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Working for a Bank

Question:: I am currently working for a bank and have been told many conflicting stories about this act being allowed or prohibited in Islam and am really confused over the issue as this job is also the my main source of income?Answer: Answered by Sheikh Yusuf Talal DeLorenzoThe same question was asked of Shaykh Muhammad al Ghazali, may Allah bless his soul, in my presence over twenty years ago. The answer he gave was the answer given by his teacher, Shaykh Hasan al Banna, to someone who had asked the same question.

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Mortgage on Investment properties

Question:: I own 3 properties on interest based mortgage. I receive rental income from 2 properties and live in one. There are surpluses on rental income after paying monthly interest and other expenses. However, I use the surplus to repay my personal loan. ( Allah willing, I am seeking an Islamic solution to my financial affairs)Please comment on my situation and advise me if I could borrow further(interest bearing) to help the Muslims in Chechnya.

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Day Trading in Stocks vs. Investment

Question::I have a question regarding buying stocks for couple of months and then sell it. Is that considered to be day trading and prohibited or (not)!Thanks.Answer: Answered by Sheikh Yusuf Talal DeLorenzoIn answer to your question, it may be necessary to first explain the stance on day-trading I believe to be the one most consistent with the teachings of the Shariah.To begin with, equity investing offers Muslims the opportunity to profit, not by lending at a guaranteed rate of return, but by sharing in ownership, and thus commiting to share in the risks associated with ownership.

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Employee Stock Option Plans

Question:: Can you suggest any other literature regarding the propriety of granting stock options in a company to Muslim employees? Are Muslims able to participate in employee stock option plans? If not, what other options are available in lieu of partcipating in employee stock option plans? Answer: Answered by Sheikh Yusuf Talal DeLorenzoThank you for your question. This is one which many Muslims puzzle over, and with good reason.

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