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Types of Islamic investment instruments

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We talked a lot about the Islamic instruments and how flexible it is as one of the Islamic economy tools opens the door to a lot of the serious economic projects compatible with the Islamic shari’a to build strong Islamic economy. In addition it’s stable and the owners share profit and loss. But the types of instruments differ by the aim of using it, which entrenches the idea of the ability of taming those instruments and using it according to the shari’a. Those types are:

  • Speculative instruments

Those instruments are a practical solution for those who have the experience and others who can finance, as the founder of the project use the instruments’ money in establishing the project and he participate in finance and manage the project in return for a percentage of the profit which is more than the others instruments holders percentage because he works and manage the project.

  • Industrial instruments

Those instruments used in big industries and projects like the instruments issued by the government or big companies to finance huge projects, they collect this money to establish those big projects like factories or infrastructure projects.

  • Commercial instruments

They are called finance instruments too, when government ask banks and finance entities to issue instruments so they can use it to by some items with specific profit percentage.

  • Profit instruments

They have the same value of what is bought, they are used to finance a product and the instruments holders became the owners of this product, and the concerned company or organization deal with the buyer on behalf of the instruments holders, and company use the money of the instruments to buy a product and get the price before selling it, as the instruments holders could sell this product and get the profit.

  • Sharing instruments

Issued by the projects’ owners and it is similar to buying stocks in a company.

Conclusion

We can make use of the types of instruments to achieve a lot of different investment objectives compatible with the Islamic shari’a.