In this article by our experts, we will analyze why the halal investment companies are failing without bias to either the companies or investors. We will see some of the practical reasons for failure:
1. Education: One of the main reasons for the failure of companies and investors is the proper lack of education on halal investments. Unfortunately, there is very less or no proper information regarding halal investments and business from Islamic scholars or academics. At Islamic Investments, we are trying to break that barrier and give each bit of information to help companies and investors understand the actual process of business. What makes the business halal is just two important things (i) no interest based transactions (ii) no business on prohibited items in Islam. That’s it apart from that, we have to follow all the conventional tactics and rules just like other companies to be successful in business. Hence our focus should be primarily on business success while ensuring the process is halal as per the above two important things.
2. Practice: While companies claim to be following halal principles and investors claiming to require only halal earnings. In practice, both of them fail to abide by Islamic principles. (Alhamdulillah, there are few who still practice).
For example, companies claim to follow halal principles and still give expected profits in percentages, like 15% per annum or 20% per annum which is purely haram practice.
And investors claim to take halal earnings and still pressurize companies to give monthly returns on time and give police complaints or legal notices if the company is not giving profits which makes their earnings purely haram.
As per Islamic Shariah, companies are required to give share in the profits like for example 70% for investors : 30% for company. and the investor requires to accept what ever share is given by the company even if the company is not giving during the tenure of investment agreement. The investment made here is purely based on trust on the company to give what ever profit/loss earned during the period.
3. Unrealistic Expectations: The companies are setting unrealistic expectations to the investors in order to attract more investments. Some of the unrealistic expectations are:
1. High returns
2. Monthly Returns in certain range.
3. Refunds with 30 days or 15 days notice without lock-in periods.
4. Full refunds
5. Surities and Security of Investment
Note: If you have experienced more such unrealistic expectations, please do let us know in the comments section.
4. Spreading Rumors: While companies are setting unrealistic expectations, investors are not behind in spreading rumors about the companies. Investors should know that it is their responsibility to keep the company safe from any rumors and spread positivity unless proven guilty. But unfortunately, investors panic on silly things like employee grievances, customer reviews or negative feedback.
Investors have to understand, every terminated employee gives a negative feedback which is absolutely common. And an employee/investor is terminated when he/she is not adding value to the company, as a responsible investor you shouldn’t take their grudge seriously.
Getting negative reviews or feedback from the customer/investor is absolutely normal. It is practically impossible to make everyone happy, as a responsible investor you have to help the company rectify the issue but not take the matters personally and find faults with the company without reason.