Via email –Azmi
I practise dollar cost averaging (DCA) with my unit trust investment on monthly basis. What is the most appropriate way to measure my returns, which also include the distribution factors, based on DCA approach? Please correct me, the total return computation shown in annual reports of unit trust funds fail to take into consideration the DCA effect.

Dear Azmi,
Unit trust returns are computed based on ‘buy and hold’ assumption. For example; a cumulative 5 years return is the total returns for the investor who has held onto unit trust investments he bought 5 years before.

The total return computation shown in the annual reports of unit trust funds DO NOT take into account the DCA effect.

Fund managers generally adopt the global investment performance standards set by CFA Institute when evaluating portfolio returns.

There are various ways to calculate return:

1) Time weighted rate of return (TWRR)
Formula for calculating a true time weight portfolio return when ever CASH FLOW occurs is:

Return = (EMV – BMV)
__________________
BMV

EMV = market value of the portfolio at the end of the sub period before any cash flows in the period
BMV = market value at the end of the previous sub period
The sub periods are the geometrically linked as follows:

Return = [(1+R1) x (1+R2) …. (1+Rn)] -1

2) Modified Dietz method (easier to calculate)

A complete description of Modified Dietz or the true TWRR is out of the scope of this column. However, you may wish to visit as below for references:

https://www.cfainstitute.org/pages/index.aspx

http://www.byallaccounts.com/webportfolio/returns.htm

http://thefinancebuff.com/2007/07/personal-rate-of-return-dollar-weighted.html

http://www.andreassteiner.net/performanceanalysis/?Return_Calculation%3AReturns_with_Contributions%3ATime-Weighted_Returns

Computation of true TWRR usually involves more price data and may not be feasible for a retail investor who only wants to have a better “feel” of his return.

-ishamim

-ishamim

The article is discussing the prohibition of riba (usury), murabaha concept and fixed deposit. What is Murabaha and how does this concept applies to our daily life’s?

Take your free time to read this article on Islam & Usury. Happy reading and viewing ….

To view a full version of this video, plz visit my Vlog at:-

http://www.youtube.com/user/ishamim#p/a/42BE729589CF3A13/0/WMiGH4pJIZM

Islam has declared war on the moneylender who demands interest. It did so in the very last divine revelation (al-Baqarah, 2:279) to come down in the Holy Qur’an. Here is that last revelation:

“O ye who believe! Fear Allah, and give up what remains of your demand for usury (i.e., the interest due on a fixed deposit, or on any other loan on interest), if ye are indeed believers.” If ye do it not (i.e. if you persist in your claim or demand for the interest due to you), then take notice of (a declaration of) war from Allah and His Messenger: but if ye turn away (from such claim or demand), then you are entitled to the return of your capital sum (placed in the fixed deposit or otherwise lent); do not enter into (such) unjust transactions, nor allow yourselves to be subjected to such.

If (you forgo the interest due to you and then find) the debtor in a difficulty (in respect of returning the capital sum that was lent to him on interest), grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew.

And (in this matter in particular, i.e., lending money on interest) fear the Day when ye shall be brought back to Allah. Then shall every soul be paid what it earned, and none shall be dealt with unjustly.’ (Qur’an, al-Baqarah, 2:278-281)

Prophet Muhammad (peace be upon him) declared that the consumption of even a Dirham (a silver coin worth a few dollars) of Riba (usury) was equivalent to “committing adultery 36 times”. He also declared that Riba was comprised of 70 parts and that the smallest part (was so bad that) it was equivalent to “a man marrying his own mother”. Indeed “he cursed all four, and declared that they were all equally guilty—the one who took Riba (i.e., the money-lender), the one who gave Riba (i.e., while paying interst on a loan), the one who recorded the transaction (hence bank personnel), and the two witnesses.”

Fifty years ago my own Muslim community of Trinidad and Tobago was led by Haji Ruknuddin (may Allah have mercy on him). He was a leader who both ‘knew’ and ‘lived’ Islam. At that time a Muslim money-lender appeared on the scene and the leader of our community made every effort to get that man to give up his money-lending. When he failed in that effort he responded by prohibiting Muslims from even having a meal in the moneylender’s home. The Muslim community obeyed the command of its leader.

But times have since changed, and our Muslim community is now led, with but few exceptions, by men who neither ‘know’ nor ‘live’ Islam, and by scholars who betray Islam. We even have Muslim leaders here in Trinidad who are consummate money-lenders, placing their money in highest yielding fixed-deposits in the international money market. They then use their bloated check-books that drip with the blood of the masses they have exploited, to bribe their way into winning elections and assuming posts of President-General of Islamic organizations. Those with the intellectual acumen of cattle then legitimize such (checkbook) leaders.

Even Islamic scholars have fallen by the wayside so badly that when a Trinidadian (money-lending) bank organizes a function to commemorate Eid al-Fitr, an Imam who is described as a Maulana accepts an invitation to deliver a feature address at the function. Then his photograft appears in the daily newspaper posing with bank officials. And so, there is both widespread ignorance of the divine law pertaining to the prohibition of Riba, and, worse, wanton violation of that law.

In this essay we direct attention to ‘Fixed Deposits’ as well as to so-called Murabaha transactions in an attempt to explain such to be ‘money-lending’ transactions.

At the heart of the Islamic prohibition of usury (Riba) is the maxim that if you do not plant, you cannot reap. This constitutes a rejection of the false claim to a ‘time-value’ of money. Money by itself cannot increase over time without any input of labor, or without the risk (of loss or of gain) inherent in an authentic business transaction.

The blessed Prophet declared that any transaction involving an exchange of ‘money’ for ‘money’ must be an equal exchange, i.e., with no difference in amount of money exchanged. He declared that an unequal exchange (that would open the door for money to increase over time) would be Riba. Islam also insists that all business transactions must involve risk – and hence ‘profit’ or ‘loss’. Allah Most High can then intervene to distribute and redistribute wealth by taking from some and giving to others. In this way the rich would not remain permanently rich, and the poor would not be imprisoned in permanent poverty

In his masterpiece entitled ‘Merchant of Venice’, William Shakespeare likened Riba or usury to a ‘pound of flesh’. And in a dream Prophet Muhammad saw the moneylender exposed as a ‘bloodsucker’ since he was standing in a river of blood. We noted earlier that the Prophet cursed “all four”, and declared that “they were all equally guilty—the ones who ‘took’ Riba, ‘gave’ Riba, ‘recorded the transaction’, and ‘the two witnesses’.” Whoever dies with the curse of a Prophet upon him can never escape the hellfire. The Qur’an itself declared that the moneylender would be punished with eternal hellfire:

“Those who devour usury will not stand (before their Lord for Judgment) except as stands one whom Satan by his touch hath driven to madness.That is because they claim that: ‘Business is like lending on interest,’ but Allah hath permitted business and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who persist (in claiming the interest due from fixed deposits or other such loans on interest) are Companions of the Hellfire; they will abide therein (forever).”
(Qur’an, al-Baqarah, 2:275)

What, then, is the status of someone who makes a ‘Fixed Deposit’ with his money in a bank or any other financial institution? It should firstly be clear that he has not gifted the money. It must also be recognized that he has not entered into a ‘business’ transaction since he is guaranteed the return of his money plus an additional amount. There is no risk. There is no possibility of loss. And hence that is not business! In fact, in making a ‘Fixed Deposit’, he has lent his money on interest (Riba), and has hence become a cursed moneylender. Those (Muslims, Christians, Hindus, etc.) who read this essay and, in consequence of fear of Allah’s eternal punishment, promptly respond by breaking their ‘Fixed Deposits’, would want to know what they could do with their Riba money. They can neither use it themselves, nor can they give it to others as charity.

BACK-DOOR RIBA
Islamic Banks and other Islamic financial institutions are today lending money on interest through the back-door by disguising a loan as a sale on credit. They call it murabaha! But it is most certainly not murabaha! It is Riba! What the bank does is to offer an item on sale in a credit transaction with a price substantially higher than the cash price. While credit transactions are Halal, since the blessed Prophet (sallalahu ‘alaihi wa sallam) himself engaged in such transactions, there is no evidence that the credit price in such transactions was ever higher than the cash price. When credit price is higher than cash price then the implication would be that time has value. And the essence of Riba is that money grows over time. When a client wishes to purchase something, but does not possess the cash with which to purchase it, the so-called Islamic bank enters into the fiction of purchasing the item at its cash price and then selling it to the client on credit. The interest charges are added to the selling price thus making a credit price for the item substantially higher than the cash price.

In fact the bank never actually purchases the item. Rather, it writes out a check to the client who then purchases the item in his name with the bank holding a lien on the item until the sale price is eventually paid to the bank. The bank therefore sold something that it never actually owned – and that is Haram! In actual fact the ‘sale’, also, was entirely fictitious. What the bank actually did was to ‘lend’ a specific sum of money on interest over a specific period of time and to then denominate the ‘loan’ in the amount of a final total that included the total interest payments as money due on a ‘sale’.

It is when the client defaults on payment of installments of money due to the bank that one is treated to ridiculous and utterly scandalous financial gymnastics. Consider the following: a client entered into a so-called murabaha transaction with an unnamed Islamic Bank to purchase a house with a market price of $500,000. The bank wrote out the check to him for $500,000. with which he then purchased the house in his name. He thus became legal owner of the house. The bank then transacted with him a fictitious sale agreement to sell to him on credit a house that the bank never owned (and hence could not sell) for a total of $1 million. The difference between the credit and cash prices was thus $500,000.

One month after entering into the agreement the client defaulted on his payments. The bank then repossessed the house and sold it on the open market for $500,000. But the bank went on to sue the client for an outstanding balance of almost $500,000. The court, however, dismissed the claim and ruled that the bank was entitled to nothing more than the interest payment for the actual duration of the contract (i.e., the amount of time it took the bank to recover its $500,000.)

We have a stern warning to deliver to those scholars of Islam who persist in defending the so-called murabaha transactions of Islamic Banks today. They defend the transaction with Fatwas (fatawa) that are as invalid as the Fatwas (fatawa) which today blindly declare paper money of the modern world to be Halal, and would equally blindly declare tomorrow’s ‘electronic money’ to be Halal. If they obstinately persist in their defense of today’s so-called Murabaha transactions, and then learn in Allah’s court that it was not Murabaha but Riba, at that time they cannot plead for mercy from Allah for they will have misguided people, nor can they say “I did not know”.

Source: http://imranhosein.org/articles/islam-and-money/100-islam-murabaha-and-fixed-deposits.html

KFH is introducing GOLD ACCOUNT-i first in Malaysia (the first syariah gold account). Happy reading …..

KUALA LUMPUR, April 30 (Bernama) — Kuwait Finance House (Malaysia) Bhd (KFHMB) aims to sell 50kg of gold under its newly-launched KFH Gold Account – i by year-end, says its Retail and Consumer Banking Head Attar Salleh.

He said since the soft launch of the account two-and-a-half-month ago, the bank had received more than RM1.08 million and transacted nine kilogrammes of gold.

“The KFH Gold Account-i, is the first Shariah-based gold account offered in Malaysia, where KFHMB sells physical gold to the customer,” he told reporters after the official launch of the account here on Friday.

“Through the account, customers are able to purchase and invest in gold in a convenient and secure way. Customers have a choice to either collect the gold or keep it with the bank for safe custody at no charge,” he said.

Attar also said customers can start investing from as low as 10 grams of gold and must maintain a minimum balance of two grams.

He said the gold price is about RM125 per gram.

“Customers can always sell or withdraw their gold at the branch based on the bank’s daily purchasing price. The physical withdrawal of gold can be made in denominations of one, five, 10 and 50 grams,” he said, adding that the account is available at all its seven branches nationwide.

Attar said the bank also plans to launch automobile financing in the second half of this year.

He said the bank has target its consumer business to constitute half of its undertakings by 2015.

“We plan to form business alliances with several third parties. I can’t reveal their identity at the moment. We believe such alliances are important to growing the business,” he said.

Source: http://www.bernama.com/bernama/v5/newsbusiness.php?id=494639

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Produk Baru KFH: Akaun Emas-i (Berlandaskan Syariah)

KUWAIT Finance House (M) Bhd (KFH) yakin menjual 50 kilogram (kg) emas menjelang akhir tahun ini menerusi produk terbarunya, Akaun Emas-i.
Akaun Emas-i sedia kemudahan beli, simpanan tanpa caj

KUWAIT Finance House (M) Bhd (KFH) yakin menjual 50 kilogram (kg) emas menjelang akhir tahun ini menerusi produk terbarunya, Akaun Emas-i.

Ketua Perbankan Runcit dan Pelanggan KFH, Attar Salleh, berkata sejak pelancaran tidak rasmi produk berkenaan akhir awal Februari lalu, bank itu menjual kira-kira sembilan kilogram emas bernilai kira-kira RM1.08 juta kepada pelanggan individu dan korporat.
Katanya, sebagai institusi perbankan pertama di Malaysia yang menawarkan jualan emas berlandaskan Syariah, ia memberi kelebihan kepada KFH untuk menarik pelanggan baru.

“Pelanggan kami bukan saja daripada kalangan individu dan korporat, tetapi juga peniaga emas yang mendapatkan komoditi berkenaan untuk dijadikan barang perhiasan sebelum dijual kepada pelanggan,” katanya selepas pelancaran Akaun Emas-i oleh Pengerusi KFH, Shaheen Alghanem, dan Ketua Eksekutif KFH, Jamelah Jamaluddin.

Menerusi Akaun Emas-i, KFH bukan saja menyediakan kemudahan membeli emas, tetapi juga kemudahan menyimpan komoditi itu yang dibeli pelanggan tanpa sebarang caj tambahan.

Attar menjelaskan, harga emas yang stabil menjadi faktor utama urus niaga emas semakin menjadi pilihan pelaburan, selain kemudahan berurus niaga yang ditawarkan oleh pihak bank.
Dari segi harga pula, katanya, umum mengetahui harga emas yang kini semakin kukuh, lazimnya tidak mengalami turun-naik yang mendadak.

Dalam tempoh lima tahun lalu, harga komoditi berkenaan yang kini berada pada anggaran RM125 segram, meningkat tiga kali ganda.

Akaun Emas-i ditawarkan kepada pemegang akaun persendirian yang berumur 18 tahun ke atas dan bukan persendirian seperti syarikat korporat, persatuan, kelab, pertubuhan, profesional dan agensi kerajaan.

Pemegang akaun persendirian disyaratkan membuat pembelian permulaan 10 gram emas dan setiap lima gram bagi deposit berikutnya. Setiap deposit atau pembelian hanya dalam gandaan satu gram.

Bagi pemegang akaun bukan persendirian pula, disyaratkan membuat pembelian permulaan 50 gram emas dan lima gram bagi setiap deposit seterusnya.

“Pelanggan boleh membeli dan menjual emas yang dipegang pada bila-bila masa, namun harganya pula bergantung kepada kadar semasa,” kata Attar.

Urus niaga emas itu juga boleh dibuat di mana-mana tujuh cawangan KFH yang masing-masing terletak di Kuala Lumpur, Shah Alam, Klang, Pulau Pinang, Johor Bahru dan Kuching.

Source: http://www.bharian.com.my/bharian/articles/KFHyakinjual50kgemas/Article

Sebarang Pertanyaan:
Contact: Roslan/Faizan/Fazhi
Tel: 03-7880 9595
Email: general@as-salihin.com
Email: ihamim@gmail.com

1. Amalkan teknik “Dollar Cost Averaging” (DCA)

2. DCA adalah teknik pelaburan tetap dan terkawal bagi meminimumkan kos risiko pelaburan bagi sesuatu dana unit amanah.

3. Buat pelaburan dalam nilai yang tetap setiap bulan dalam sesuatu tempoh masa tertentu

4. Tanpa mengira pasaran baik atau merosot, wang dilaburkan dengan jumlah yang sama. Bermakna, jumlah unit yang dibeli kurang apabila harga meninggkat, dan unit meninggkat, apabila harga turun.

5. Kesannya, harga setiap unit adalah pada kos purata atau lebih mudahnya, harga yang lebih setara.

6. Selepas 3, 5 atau lebih tahun, pelabur boleh menjual balik unit2 ini pada harga yang lebih tinggi daripada kos purata seunit dan menikmati kenaikan modal dan unit percuma daripada bayaran dividen.

-ishamim

Having fire insurance would certainly ease the homeowner’s financial loss. Without it, the homeowner might be left homeless if he can not afford to rebuild or buy a new house.

Homeowners who have mortgages on their property are required by law to take up a fire insurance policy or takaful as the financial institutions have a vested interest in making sure that they get back the money loaned out.

There are TWO types of fire insurance; basic fire policy or a house owner policy.

The basic fire policy provides coverage for the building ONLY, covering loss or damage caused by fire, lightning or explosion. While, house owner policy provides more protection including fire, lightning, explosion, hurricane, windstorm, flood, cyclone, typhoon and earthquake.

When compared to the basic fire policy, after adding the same perils as found in a house owner policy, the latter is still cheaper.

Bear in mind, houseowners are required to purchase a comprehensive fire or houseowner policy when taking up home loan with a bank.

For a completed landed properties, the bank take up the insurance upon the 1st disbursement of the home loan but for house under construction, the fire insurance is purchased upon 80% completion.

For apartments or non-landed properties, whether under master title strata or strata title, the developer is required to purchase fire insurance master policy to cover the whole building.

Therefore, unit owners are not required to buy fire policy individually nor will the banks purchased it. To protect the customer as well as the bank’s interest, upon full completion of the property, a copy of the master title and the original certificate of insurance is required to be lodged with the bank as evidence that the fire insurance is taken up.

If the unit owner feels that the insured amount is insufficient, he may take up additional coverage under a more comprehensive house owner policy to cover the building.

Where the master policy is concerned, individual unit owners do not have much control on the amount insured and coverage. what the unit owner can do is talk to the representative to ensure that the sum insured is reviewed every year. Most developers only take up the basic policy.

For landed property under financing, the fire insurance coverage arranged by the financier will be only for the loan amount taken, thus, the amount insured might not be enough to cover the cost of rebuilding the property, especially if major renovations had been made.

I would suggest, the owner should insure as per market value of the house, excluding cost of land, but take into account the renovations and enhancement made to the property. Importantly, homeowners need to insure adequately to cover revuilding costs in the event of total destruction.

The fire insurance premium are standard as fire insurance policies are governed by Bank Negara Malaysia (BNM). The tariff are reviewed periodically to maintain healthy growth of the industry.

CLAIMS
Proper and complete documentation is essential for speedy claims and refunds.

It depends on the complexity of the claim. A small claim (below RM50k) would take about 30-60 days, while claims above RM50k could take up 3 months. It is note that claims should not take longer than 90 days.

However, if it is a minor damages it would take less than a week or two.

In cases where the property is TOTALLY destroyed, claims may be even faster because there’s nothing to investigate.

Delays are often caused by the lack of documentation from homeowner. The documentation required are:

1. Police report
2. fire brigade report
3. estimation of repair from the claimant
4. copy of title deed – to prove ownership, receipt or bills pertaining to the contents of the house, if the contents have been insured.

Where banks are not involved, claims are paid to the policyholder.

Fire insurance is a matter of necessity and should not be deferred or neglected.

Baru-baru ini saya ada menonton rancangan ‘sebutan syariah’ di astro awani tentang kes harta pusaka peninggalan arwah Tan Sri Nasimuddin S.M. Amin, yang mana isteri kedua arwah mengfailkan saman terhadap isteri pertama tentang harta pusaka peninggalan arwah.

Walaupun arwah ada meninggalkan wasiat, namun hukum faraid tetap diutamakan sekiranya salah seorang daripada waris faraid tidak bersetuju dengan wasiat yang ditinggalkan, sebagaimana sabda nabi saw bermaksud:

“TIDAK HARUS wasiat kepada waris…KECUALI, diizinkan oleh waris yang lain”
(Riwayat Daruqutni daripada Ibnu Abbas r.a)

Justeru, ingin saya JELASKAN di sini bahawa, objektif utama penulisan wasiat bukan bermaksud pemberian harta pusaka kepada waris-waris tetapi, MELANTIK PENTADBIR untuk pengurusan harta pusaka & pemberian harta 1/3 kepada bukan waris faraid (sekiranya ada).

Saya harap masyarakat yang beragama Islam perlu faham apakah yang dimaksudkan tentang penulisan wasiat, dan perancangan harta seperti hibah, hibah amanah, amanah & waqaf.

Berbalik kepada topik perbincangan yang ingin saya kongsikan di sini adalah mengenai apakah maksud / kesan jumlah pusaka kecil daripada RM600,000 kepada RM2 juta ?

Ia membawa maksud bahawa apabila seseorang yang telah meninggal dunia TANPA MEMBUAT WASIAT maka surat kuasa mentadbir (LA) perlu di pohon seperti berikut:

1- sekiranya seseorang muslim meninggal dunia, meninggalkan harta alih dan tak alih bernilai RM 2 juta atau kurang maka, Surat Kuasa Mentadbir perlu dipohon di unit pusaka kecil, PEJABAT TANAH DAERAH; atau

2. sekiranya seseorang muslim meninggal dunia, meninggalkan harta alih sahaja bernilai RM 2 juta atau kurang maka Surat Kuasa Mentadbir perlu dipohon di Amanah Raya Berhad.

BAGAIMANA KALAU MENINGGAL DUNIA DAN ADA WASIAT?

1- sekiranya seseorang muslim meninggal dunia berwasiat dan meninggalkan harta alih dan tak alih bernilai dibawah RM2 juta dan melantik individu sebagai WASI, permohonan dilakukan di pejabat tanah daerah;atau

2- sekiranya seseorang muslim meninggal dunia berwasiat dan meninggalkan harta alih dan tak alih bernilai dibawah RM2 juta dan melantik individu syaraikat amanah sebagai wasi, permohonan adalah di mahkamah tinggi.

Anda boleh rujuk, “apakah maksud harta pusaka kecil” di portal JABATAN KETUA PENGARAH TANAH DAN GALIAN (PERSEKUTUAN), KEMENTERIAN SUMBER ASLI DAN ALAM SEKITAR:

http://www.kptg.gov.my/index.php?option=com_content&view=article&id=78%3Apusaka-kecil&catid=57%3Apusaka-kecil&Itemid=57&lang=ms

-ishamim