Y = C + S + I

Looking at the above equation, I am sure you guys already knew what it represents. For those who have no idea at all, let me brief you.

Y= income C= consumption S= saving I= investment

If I ask you which one is the most important, I am quite sure majority of you guys would answer saving. Well, if you answer that, your answer is wrong. According to Islam, the most important one is investment. One would argue that saving is really important. Say for example saving for the future either for your own self or family. Without saving, one could get in trouble for not having enough cash when needed. In some sense, it is true. There is no denial in that.

But from an Islamic perspective, too much saving can lead to hoarding. This activity has been clearly prohibited by the Shariah. You see, hoarding leads to money being unutilized. Do you get the picture? Too much saving = lots of money sitting idly in the bank’s account. In Islam, the purpose of saving is actually for emergency. Therefore, it should not be too much since emergency rarely occur.

What Islam encourage most is investment. It should look like this: I > S > C . Through investment, there is an opportunity to generate more money. Still remember, 9 out of 10 wealth in this world originated from doing business. Investment is related to business. When we talk about investment, we have lots of instrument. For example like unit trust, bonds, mutual funds, fixed account and etc. If you got extra money, Islam highly encourage you to invest it rather than put it in a saving account. Just choose any investment instrument that suits you best.

The problem with people nowadays is that, they are afraid to invest. The fear of losing their money through investment is the main problem. Yes, there is a risk. But you need to remember, the higher the risk, the higher the gain and vice versa. If you want to invest, I suggest you start with small sum of money first and choose a low risk investment instrument like bonds. Choose a reputable company whom bonds are rated highly by RAM. Examples like AAA or AA+ rated bonds. If you guys still want to put your money in an account, choose saving + investment account, for example, Mudharabah saving account. Please google to find out more about this type of account. I hate spoon feed. LOL

Now what are you waiting for? It’s time to start investing! =p