Question
I would like to know if the following investment is halaal and if not, what should be done with the payment one receives back. the investment is as follows-
1. It is a fixed return policy (e.g. a person invest 10000 and after 5 years one will receive 15000 back, this is guaranteed irrespective if the investment company makes a profit or a loss or if it makes additional profit)
2. The investment company collects all the money received and puts it into a general fund and thereafter invest the money as it sees fit (they invest it in various different income streams ranging from property to government bonds).
3. Upon maturity the guaranteed amount is paid back to the investor.
Can you please inform me if this is permissible and if not, what should be done with the payment received on maturity (the capital amount and the profit amount)?
Answer
Such types of investment are not permissible in Shariah. This is pure interest which is totally Haraam. If a person does carry out this type of investment and on maturity receives the extra money (in the example which you gave, R5000), it will not be permissible for him to utilise this extra money. It should be given away in Sadaqah to some poor people, without making any intention of receiving reward. However It will be permissible for him to make use of the capital amount which was initially invested (R10 000).
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.
References
(فتاوى محموديه ج ١٨ ص ٢٣٦)