Glossary of Terms

1. Halal
Refers to anything permissible under Islamic law, including investments that comply with Islamic finance principles such as avoiding riba (interest) and unethical industries.

2. Riba
Interest or usury, which is prohibited in Islam. It involves earning profit from money through lending without real economic activity.

3. Gharar
Excessive uncertainty or ambiguity in contracts, which is prohibited in Islamic finance to ensure fairness in transactions.

4. Sukuk
Islamic bonds that represent ownership in an asset or business. Instead of earning interest, sukuk investors receive a share of profits generated by the underlying assets.

5. Zakat
A mandatory form of charity in Islam, usually 2.5% of one’s wealth, intended to purify wealth and assist those in need.

6. Sharia-Compliant
Refers to financial practices, products, and investments that comply with Islamic law, ensuring they do not involve riba, gambling, or unethical business practices.

7. Islamic Finance
A system of financial activity that follows Islamic principles, focusing on ethical investments and profit-sharing instead of earning interest.

8. Haram
Anything that is prohibited under Islamic law, such as investing in industries like alcohol, gambling, or tobacco.

9. Mudarabah
A partnership where one party provides capital and the other provides expertise. Profits are shared based on an agreed ratio, while losses are borne by the capital provider.

10. Musharakah
A joint venture where two or more parties contribute capital and share profits or losses according to an agreed ratio. Commonly used in real estate investments.

11. Halal Investment
Investments that comply with Islamic principles by excluding industries such as gambling, alcohol, and tobacco, and avoiding interest (riba) or excessive uncertainty (gharar).

12. Islamic Bonds
Also known as Sukuk, these are certificates representing ownership in an underlying asset, providing profit-sharing instead of fixed interest payments.

13. Takaful
Islamic insurance based on mutual cooperation where participants contribute to a pool that is used to support each other in times of need.

14. Wakala
An agency contract where one party (the principal) appoints another party (the agent) to act on their behalf in financial matters or investments.

15. Ijarah
A leasing contract where an asset is leased for a set period with agreed-upon rental payments, often used for property or equipment financing.

16. Qard Hasan
A benevolent loan where the lender only expects the principal amount to be repaid, with no interest or profit.

17. Murabaha
A cost-plus-profit financing method where the seller discloses the cost of an item and adds a markup. It is typically used for purchases like real estate or vehicles.

18. Salam
A forward contract where the buyer pays in advance for goods to be delivered later, commonly used in agriculture or commodity markets.

19. Istisna
A contract used in manufacturing or construction where payment is made in advance, and the goods are delivered later, often for customized products or projects.

20. Fiqh al-Muamalat
The branch of Islamic jurisprudence that deals with financial transactions and contracts, ensuring they align with Islamic principles.

This page is designed to help visitors understand the key terms related to Islamic finance and halal investing. Let me know if you would like to add more terms or modify any explanations!