How do I go about doing investment?

9/01/2015 12:02:00 am

Assalammualaikum everyone!

I wish all my blogreaders are in the pink of health and may Allah bless you with abundance of wealth. Aamiin.

In my last blogpost, I explained about the basic fundamentals of Investment. In this blogpost, I will uncover some advise and tips that I have shared with my ex-clients or friends when they asked me on how do they go about doing investment and also what are the best investments that are available in the market (do get an advisor to provide you a complete financial portfolio plan).

Let's go back to basics again.

I have mentioned in my previous post the basics but I will reiterate it again in this blogpost.

First and foremost, check your financial and personal plans which I have gone through in my previous post. Ask yourself, how long you would like to invest. Keep in mind that investment requires a long period of time, in order to reap high profits and be aware of the risk.

Make it a habit that you have to set aside 10% of your salary, as savings, before you make deductions for expenses. If you plan to invest, check that you have 6 months worth of savings in order to cover 6 months of expenses (Example: Monthly Expenses= $1000, 6 months worth of savings for expenses= $6000 (this amount should be in your savings account-Use a separate account from your salary crediting account and expenses account).

Ensure that you are fully covered in terms of Insurance (Life insurance, hospital insurance, personal accident insurance). You would not want to be running a risk of not having enough money if you fall sick or met with an accident (may Allah forbids this from happening).

Finally, when you have done the above pointers, then you can now plan for your investment.

If you look for short term investment, you may want to consider taking up Fixed Deposits, of usually 1 year duration (this depends as there are products such as Structured Deposits and Step-up Fixed Deposits. Remember to read the fine prints.) Always ask if it is Principal protected (means that your principal is protected if in the case the bank defaults or the fixed deposit stops halfway).

There are a wide variety of investment products in the market. Choose wisely according to your financial and personal plans. Not all products that are suitable for you.

  1. Unit Trust (via your banker/adviser/fundsupermart): It is a subset of a stock fund. You can either invest one lump sum or you can choose to do it Regular Single Premium (RSP) where you do monthly subscriptions as low as SGD500. You can opt to have a Unit Trust portfolio being customised for you with a balance of Equity funds and Bond funds)
  2. Stocks (via Singapore Exchange (SGX)): Stocks are units that are being issued from public-listed companies. You will receive dividends (profit earnings) from these stocks you obtained when the company makes announcement on dividends. Beware that this investment is high-risk as there are factors affecting its profitability, thus it is advisable for you to do your research first before investing..
  3. Bonds (via Singapore Exchange (SGX)/bankers): Bonds is an I-Owe-You from public-listed companies or the government. You will receive dividends too for this investment. There is usually a long duration for this investment.
  4. Commodities-Gold (via online trading platform-virtual gold/jewellery shop/pawn shop): This investment is highly volatile. Best for those who prefer to keep the physical gold for a long period of time.
  5. Investment Linked Policies (ILPs) (via bankers/advisers): This type of investment is high on investment but low on insurance protection. The investment that is being tagged by this investment product are usually Unit Trust.
  6. Forex (Foreign Exchange) (via online trading platform): This is one of the easy way to gain profit in the shortest time, but also the fastest way to burn your wallet. It is important to do Technical Analysis and Fundamental Analysis before you start trading. It is not advisable for you to trade by speculating or base on luck, as it is considered as gambling. Gambling is not permissible in Islam. (I shall not talk much about this investment product as there are some muslim clerics who are against Forex Trading.)
  7. Derivatives, Securities and other complex investment products are available in the market but not open to public. Shall not confuse you further as these products comes with high risk but high returns.
  8. Crowdfunding (via Facebook/Kickstarter): This is a unique type of investment whereby funds were being invested in a collective manner, to fund businesses, trade and real-estate. The profits are usually profit-sharing.
I have listed down the different types of investment products in the market. Now ask yourself if you are using your CPF Ordinary Account (OA) money or cash. If you are using your CPF OA, make sure that you have more than SGD20k in your CPF OA or more than SGD40k in your CPF Special Account (SA).

Since I am advocating a holistic Islamic Financial Planning, I would like to add on some tips which is useful before you start looking into the investments.
  1. Check if the Unit Trust is Syariah Compliant by checking their level of debt, check the list of companies that are in the unit trust (make effort to research on each companies, make sure it is from permissible sources)
  2. You can download this apple or android app of Ideal Ratings, where you can check whether the company stocks or bonds that you intend to invest on is Syariah Compliant.
  3. Remember to pay zakat on investments of 2.5% upon receiving your investment profits.
Alhamdulillah. I have managed to explain about Investments in details. I hope with this blogpost, it further widens your knowledge on investments and financial planning. Do engage with your advisers or bankers to ask for their professional advice. If you have further questions pertaining to this post, feel free to email me at .


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My objective of creating this page is to reach out to more people, to educate about Islamic Finance and Individual Finance, share tips on financial planning and also be able to answer to everyone's queries. So, feel free to share this page and ask me questions. Let's share the knowledge and practice them together. In syaa Allah. Aamiin.