“As Muslim women, we need to stand strong,” said Shazia Imam, a 22-year-old Virginia Tech graduate.
She was not talking about the tests of the West, or the tribulations of American Muslims after September 11. She was referring to the importance of Muslim women being financially aware, and more specifically, having the courage to invest.
“What if something happens and you are left on your own?” she said. “If you don’t have something backing you then you are just going to fall.”
Her example is an unusual one. There are not many Muslim women who take charge of their own financial circumstances by investing – but investing can be a potent tool for empowering Muslim women, and it can also serve as a means of attaining goals in the interests of their families.
Shazia recently put down her first investment dollars just before graduating this year. She realized that the burden of paying for retirement will fall more and more upon individuals due to rising numbers of retirees and their longer lifespans and the proportionally decreasing social security funds that normally shoulder this burden. In fact, up to 80 percent of the retirement burden could fall on individual retirees within the next 20 years. So she opened an Individual Retirement Account with the Dow Jones Islamic Index Fund in order to begin saving for retirement.
When a person owns a stock, they are also part owner of a company, sharing in the profits and losses a company makes. Historically, stocks have outpaced other investment vehicles like bonds, money market accounts, and real estate, averaging almost 10 percent over the past 7 decades. Let’s say you take $2000 of your savings and put it into the stock market. If your money returned 11 percent a year (the S&P 500's historical average), that amount would be worth $53,416.19 after 30 years. Investing in stocks has become part of mainstream America ; more than 50 percent of households invest in stocks.
Most 22-year-olds don’t think so far into the future as Shazia has, nor do they take the initiative to learn about how to invest intelligently or Islamically. “This isn’t something that is talked about much in the Islamic community… especially at my age” said Shazia.
She herself began reading about investing at the age of 16, and after 6 years of deliberating finally made the decision to invest. “The reason I didn’t invest for so many years… I didn’t know what to invest in,” she explained. “You don’t want to put all your money in one place and then all your money is gone.”
A wife and stay-at-home mother of two college graduates, Zainab Patel was afraid of investing and losing her family’s money, especially as retirement drew closer. But she saw that people were investing for their financial security, and she didn’t want to be left out.
Initially, she didn’t know anything about the stock market. “Dow. What is Dow? I didn’t even know what the Dow was,” she says. Dow refers to the Dow Jones Industrial Average, the main measure of how the stock market is performing.
Having a postgraduate degree in economics, she had some confidence that she could learn about the market. However, she didn’t want to spend hours reading books, and was not internet savvy. She did have cable TV, though. Zainab would tune into CNBC, the news network that covers the stock market, during the day as she was cooking or doing other household activities. She continued this routine every day, gaining exposure to advice from financial analysts, advisors, money managers, and corporate spokespeople, developing familiarity with important investing concepts and ideas. She finally gained enough confidence to open a brokerage account in the late 1990’s.
Zainab would choose individual stocks based on the recommendation of her broker and the advice given on CNBC to create a diversified portfolio – a number of different stocks. She did not invest in companies that involved themselves with unlawful businesses such as tobacco or alcohol.
Shazia didn’t know there were special alternatives available for Muslims until she came across a mutual fund that invested according Islamic principles. ”It’s Islamic. It’s investing… perfect, “ she said.
She was looking to invest in a mutual fund, a basket of stocks, and was very happy to find one that invested according to Islamic ethical principles. These investing guidelines have been developed by reputable Muslim scholars retained by Dow Jones. They helped her to narrow down her investment choices, since she didn’t want to spend the time choosing which stocks to own and didn’t want to invest in companies that compromised her Islamic beliefs. Shazia even went so far as to have a halaqa (study circle) on Islamic finance and investing to teach what she had learned.
When asked what she would advise other Muslim women to know before investing, she replied “Invest Islamically… Know what your goals are.”
Your goals could be anything from retirement to your children’s education, from a Hajj pilgrimage to that trip to the Cayman Islands . Let these goals be the compass for how you invest your money.
But even beyond having goals, simply taking the initiative and having the courage to learn and be decisive about your financial future is important for yourself and your family. Allah helps those who help themselves; with the knowledge and skill of investing in hand, Muslim women who control their household finances can both improve their own and their families’ lives and simultaneously work towards the hereafter.
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