Kindly suggest me Shariah compliant mutual funds . I am aware of Tata Ethical & Tarot

Ans: Hello Sultan. For the goal of 1 Cr., you can start sip in MF of around Rs 15000 with the below-mentioned schemes:

• Nippon India Multicap Fund
• Quant FlexiCap Fund
• Mirae Asset Midcap Fund
• SBI Small Cap Fund

Ans: It's great to hear that you're considering Halal Sharia-compliant mutual funds for your future investments. Here are some options for you to consider, keeping in mind your desire for low-risk funds that can potentially provide a steady income through a Systematic Withdrawal Plan (SWP):

Tata Ethical Fund Taurus Ethical Fund: These funds follow ethical and Sharia-compliant investment principles and invest in a diversified portfolio of equities. It aims to provide long-term capital appreciation while adhering to Islamic principles.

Before making any investment decisions, it's essential to carefully review the investment objectives, strategy, and past performance of each fund. Additionally, consider consulting with a financial advisor who specializes in Sharia-compliant investing to ensure that your investment choices align with your financial goals and values. Remember to assess your risk tolerance and investment horizon before investing in any mutual fund.

Additional Resources on this topic https://www.holisticinvestment.in/the-ultimate-guide-to-sharia-islamic-investment/

Ans: Hello; The currently available Sharia compliant funds are mostly equity rather index funds replicating Nifty 50 Sharia, Nifty 500 Sharia or similar indices.

I would not like to recommend you to invest your retirement corpus into pure equity funds since the risk is very high.

Also even if you buy immediate annuity for your corpus of 30L the possible monthly payout is 15 K(6% assumed).

You can invest corpus of 30 L in conservative hybrid debt type of fund but if you do SWP at the rate of 10% (3L annually so 25K monthly payout as desired) you run the high risk of eating away your corpus.

My suggestion is invest this corpus of 30 L in an equity savings fund (say for eg Kotak equity savings fund-growth) for 5 years, assuming 11% annual return you will reach a corpus of 50.55 L.

You can transfer this corpus to conservative hybrid debt type fund(say SBI conservative hybrid fund-growth) and do an SWP at 6% to get monthly payout of around 25K.

Other option is with this corpus you can buy an immediate annuity(6%) to get a monthly payout of around 25K.

If you are not in a position to wait for 5 years for the corpus to grow then another option is(assumed that you are 60 years of age) investing your corpus of 30L in senior citizen saving scheme. It offers quarterly payment of interest. Current rate of interest is 8.2%. So you can expect quarterly payment of 61.5 K equivalent of monthly income of 20.5K(pre-tax).

If you have any further queries feel free to revert.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing

Happy Investing!!

Ans: You wish to invest in Shariah-compliant funds and avoid interest-based returns. This aligns with your faith and values. Your financial goal includes building a home next year and planning for retirement.

Your focus is also on your dependents: wife, daughter, and parents.

Let us structure a detailed plan tailored to your needs.

Principles of Shariah-Compliant Investing
Shariah-based investing prohibits interest (riba) and promotes ethical investments.

Avoidance of Prohibited Activities:
Investments must not involve gambling, alcohol, pork, or other restricted sectors.

Equity-Based Investments:
Shariah-compliant funds invest in stocks of ethically governed companies.

No Fixed Returns:
Shariah investments rely on profit-sharing or equity appreciation, avoiding fixed interest income.

Professional Guidance is Key:
Work with a Certified Financial Planner experienced in Shariah-based investments.

Investment Options Aligned with Shariah
Shariah-compliant investment options cater to your values and financial goals.

Shariah-Based Mutual Funds:
Invest in funds screened for Shariah compliance. These avoid interest-generating or prohibited sectors.

Equity Markets:
Directly invest in stocks of companies that adhere to Islamic principles.

Gold Investments:
Gold, in physical or electronic form, is permissible and a stable investment.

Retirement Planning
Retirement planning requires a disciplined and structured approach for 22 years until you turn 60.

Shariah-Compliant Equity Funds:
Allocate a significant portion to equity funds for long-term growth.

Diversify Across Geographies:
Consider international Shariah-compliant funds to reduce country-specific risks.

Gold as a Hedge:
Allocate a small percentage to gold for portfolio stability during economic downturns.

Flexible Withdrawal Plans:
Shariah investments can be designed to provide regular income during retirement.

Investment Strategy for Different Goals
Building Your Home
You plan to save sufficiently by next year for this purpose.

Preserve Capital:
Use low-risk Shariah-compliant options like Sukuk or liquid Shariah funds.

Avoid Volatile Investments:
Equity investments are unsuitable for short-term goals like building a home.

Daughter’s Education
Your daughter’s education is a critical long-term goal.

Long-Term Shariah Investments:
Invest in equity-based Shariah funds for wealth growth.

Start a Dedicated Portfolio:
Separate this portfolio to ensure funds are available when needed.

Periodic Reviews:
Monitor the investment performance and adjust as her education timeline nears.

Retirement Corpus
Retirement planning requires consistent investments over the next 22 years.

High Allocation to Equity:
Invest 70%-80% in Shariah-compliant equity funds for higher returns.

Gradual Risk Reduction:
Shift to lower-risk gold investments as retirement approaches.

Automated Investments:
Use SIPs in Shariah-compliant funds to ensure disciplined investing.

Managing Family and Dependent Needs
Your parents, wife, and daughter depend on you financially.

Emergency Fund:
Maintain 12-18 months of expenses in a non-interest savings account.

Takaful Insurance:
Consider Takaful, an Islamic alternative to traditional insurance, for life and health cover.

Health Provisions for Parents:
Ensure adequate health coverage for your aging parents under Shariah principles.

Key Advantages of Shariah-Compliant Funds
Ethical Investments:
They align with Islamic principles and provide peace of mind.

Global Opportunities:
Shariah-compliant funds offer access to international markets for diversification.

Potential for Long-Term Growth:
Equity-based funds typically outperform fixed-income investments over the long term.

Avoiding Index and Direct Funds
Shariah-compliant funds are actively managed by experts. Avoid index funds and direct funds due to:

Limited Customisation:
Index funds follow benchmarks and cannot adapt to specific Shariah requirements.

Professional Expertise Needed:
Direct funds lack the oversight provided by MFDs and Certified Financial Planners.

Tax Implications for Shariah Investments
Although you reside in the Middle East, taxation may apply if you invest in India.

Equity Investments:
LTCG above Rs. 1.25 lakh is taxed at 12.5%. STCG is taxed at 20%.

Sukuk and Gold:
Gains are taxed as per your income slab.

Consult a tax professional to optimise your tax liabilities based on your investments.

Final Insights
Shariah-compliant investing offers ethical and growth-oriented options aligned with your faith. Focus on a diversified portfolio for retirement, education, and family needs. Regularly review your investments with a Certified Financial Planner for sustained growth and compliance.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment