What is the position of the religion regarding savings and investment funds, and can a Muslim save his money in them and receive the annual interest?
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The questioner : What is the position of the religion regarding savings and investment funds, and can a Muslim save his money in them and receive the annual interest?
The Shaykh : The truth is that I know nothing about these funds.
The questioner : Yes.
The Shaykh : If you have a concept of them, please present it to me so that I can rule on it.
The questioner : In fact, his question is an inquiry into the fact that there are funds into which money is placed so that a person can save, accumulate, or set aside the white qirsh for the black day. These funds also utilize this money and give the participant an annual profit of a percentage of his money. Is this profit valid, and is saving in them valid?
The Shaykh : Saving in them, if it is for preservation, is similar to the issue of banks where money is kept without interest.
The questioner : Yes.
The Shaykh : If these funds where money is kept deal in a permissible manner, with no riba (usury or interest) or anything forbidden such as maysir (gambling), then placing money in them is permissible. As for the profit he receives, if it is the result of the transaction, meaning that these funds are invested and then the profit is calculated and each person is given his share, then this is also permissible because it resembles mudarabah (a profit-sharing partnership), which the Shari'ah has declared lawful.
The questioner : Yes.
The Shaykh : However, if the depositor is given a fixed profit, whether the funds invested yield more or less than that, then this is not permissible because it involves gharar (excessive uncertainty in a contract) and maysir (gambling).
The questioner : Yes, like the percentage rate.
The Shaykh : Yes, like the fixed percentage rate.
The questioner : Yes.
The Shaykh : Yes, if he sets a percentage of the profit from these funds when they are invested, there is no harm. But if a percentage is set on the funds he invested, whether these funds yield more or less, that is what is not permissible.
The questioner : Yes, yes.
The Shaykh : Yes.
The questioner : You said if a percentage is set, meaning on the profit.
The Shaykh : I mean, for example.
The questioner : Yes.
The Shaykh : If it is said to him, "You will have ten percent of the profit from these funds," it means he will take one-tenth of the profit of these funds if they yield a profit.
The questioner : Yes.
The Shaykh : Whether they yield a little or a lot.
The questioner : Yes.
The Shaykh : But if it is said to him, "You will have ten percent on your funds," for example, you deposited one thousand and you receive one thousand and one hundred every year.
The questioner : Yes, yes.
The Shaykh : Whether these funds yield more than ten percent from the investment or less, that is what is not permissible.
The questioner : Yes.
The Shaykh : Because in that case, the owner of the funds is a gainer in every situation, while the one who invests these funds may lose or may profit, so it becomes...
The questioner : So there is a branch of this question: if, for example, there is a percentage on the profit, and this is permissible according to what you have mentioned, but there is a guarantee on the principal capital, is it permissible or not?
The Shaykh : No, the principal capital is not guaranteed.
The questioner : Yes.
The Shaykh : After it is invested, because it is subject to loss.
The questioner : Yes.
The Shaykh : I mean, for example, if ten people gathered and placed ten thousand riyals in this fund and were told, "We will invest these funds and you will have ten percent of the profit."
The questioner : Yes.
The Shaykh : This is permissible, and in this case, if the profit is large or small, they are entitled to the tenth.
The questioner : Yes.
The Shaykh : The tenth is from the profit; it may be ten percent relative to the funds deposited, or it may be less, or it may be more.
The questioner : Yes.
The Shaykh : Because it is relative to the profit, not to the funds.
The questioner : Yes.
The Shaykh : Ten percent of the profit; likewise, if it incurs a loss or is destroyed, there is no guarantee for the worker; the guarantee is on the principal capital.
The questioner : Yes.
The Shaykh : But if it is said to these ten people who placed these funds in this fund, "You will have ten percent relative to the funds you deposited, not relative to the profit," meaning that we will give you at the end of the year one thousand and one hundred instead of one thousand.
The questioner : Yes.
The Shaykh : Whether the one who invests them yields a little or a lot, that is what is not permissible.
The questioner : May Allah reward you.
The Shaykh : Yes, so the percentage relative to the profit is permissible.
The questioner : Yes.
The Shaykh : And the percentage given relative to the money is the one that is forbidden because it is gharar (excessive uncertainty in a contract).
The questioner : May Allah reward you.
Ladies and gentlemen, we have reached the end of this session.
The Shaykh : The truth is that I know nothing about these funds.
The questioner : Yes.
The Shaykh : If you have a concept of them, please present it to me so that I can rule on it.
The questioner : In fact, his question is an inquiry into the fact that there are funds into which money is placed so that a person can save, accumulate, or set aside the white qirsh for the black day. These funds also utilize this money and give the participant an annual profit of a percentage of his money. Is this profit valid, and is saving in them valid?
The Shaykh : Saving in them, if it is for preservation, is similar to the issue of banks where money is kept without interest.
The questioner : Yes.
The Shaykh : If these funds where money is kept deal in a permissible manner, with no riba (usury or interest) or anything forbidden such as maysir (gambling), then placing money in them is permissible. As for the profit he receives, if it is the result of the transaction, meaning that these funds are invested and then the profit is calculated and each person is given his share, then this is also permissible because it resembles mudarabah (a profit-sharing partnership), which the Shari'ah has declared lawful.
The questioner : Yes.
The Shaykh : However, if the depositor is given a fixed profit, whether the funds invested yield more or less than that, then this is not permissible because it involves gharar (excessive uncertainty in a contract) and maysir (gambling).
The questioner : Yes, like the percentage rate.
The Shaykh : Yes, like the fixed percentage rate.
The questioner : Yes.
The Shaykh : Yes, if he sets a percentage of the profit from these funds when they are invested, there is no harm. But if a percentage is set on the funds he invested, whether these funds yield more or less, that is what is not permissible.
The questioner : Yes, yes.
The Shaykh : Yes.
The questioner : You said if a percentage is set, meaning on the profit.
The Shaykh : I mean, for example.
The questioner : Yes.
The Shaykh : If it is said to him, "You will have ten percent of the profit from these funds," it means he will take one-tenth of the profit of these funds if they yield a profit.
The questioner : Yes.
The Shaykh : Whether they yield a little or a lot.
The questioner : Yes.
The Shaykh : But if it is said to him, "You will have ten percent on your funds," for example, you deposited one thousand and you receive one thousand and one hundred every year.
The questioner : Yes, yes.
The Shaykh : Whether these funds yield more than ten percent from the investment or less, that is what is not permissible.
The questioner : Yes.
The Shaykh : Because in that case, the owner of the funds is a gainer in every situation, while the one who invests these funds may lose or may profit, so it becomes...
The questioner : So there is a branch of this question: if, for example, there is a percentage on the profit, and this is permissible according to what you have mentioned, but there is a guarantee on the principal capital, is it permissible or not?
The Shaykh : No, the principal capital is not guaranteed.
The questioner : Yes.
The Shaykh : After it is invested, because it is subject to loss.
The questioner : Yes.
The Shaykh : I mean, for example, if ten people gathered and placed ten thousand riyals in this fund and were told, "We will invest these funds and you will have ten percent of the profit."
The questioner : Yes.
The Shaykh : This is permissible, and in this case, if the profit is large or small, they are entitled to the tenth.
The questioner : Yes.
The Shaykh : The tenth is from the profit; it may be ten percent relative to the funds deposited, or it may be less, or it may be more.
The questioner : Yes.
The Shaykh : Because it is relative to the profit, not to the funds.
The questioner : Yes.
The Shaykh : Ten percent of the profit; likewise, if it incurs a loss or is destroyed, there is no guarantee for the worker; the guarantee is on the principal capital.
The questioner : Yes.
The Shaykh : But if it is said to these ten people who placed these funds in this fund, "You will have ten percent relative to the funds you deposited, not relative to the profit," meaning that we will give you at the end of the year one thousand and one hundred instead of one thousand.
The questioner : Yes.
The Shaykh : Whether the one who invests them yields a little or a lot, that is what is not permissible.
The questioner : May Allah reward you.
The Shaykh : Yes, so the percentage relative to the profit is permissible.
The questioner : Yes.
The Shaykh : And the percentage given relative to the money is the one that is forbidden because it is gharar (excessive uncertainty in a contract).
The questioner : May Allah reward you.
Ladies and gentlemen, we have reached the end of this session.