Interviews

How to invest in a Halal way

We recently caught up with Junaid Wahedna, CEO of Wahed Invest (https://wahedinvest.com/), a new Halal investment company based in the US. Wahed Invest offers interesting Halal investment solutions for Muslims all over the world. Read more about them below.

Interview questions for CEO of Wahed Invest

1. How did you come up with the decision to set up a company where Muslims can invest in a Halal and safe way as it sounds like a terrific and much needed service for the Ummah?

It was actually inspired by a Bangladeshi cab driver when I was working in NYC.

At that time I was working on Wall Street and he had just moved to the US. I got into the cab and started chatting with the driver. He asked if I was Muslim and that got us discussing different topics; I love learning about people’s experiences in New York so we ended up talking about his family’s retirement savings and how he was having a very hard time investing it. He told me he wanted to make sure that he invested the money in a halal manner, so he asked his local Imam. The Imam told him Apple stock was compliant so the poor driver was about to put all his family’s retirement savings into one single stock.

And that got me thinking that the Ummah needed an easy, accessible, and affordable halal investing platform. There are many brothers and sisters from all walks of life that do not invest because they don’t have a finance background, don’t have the time, or just don’t know where to start.

This is a serious issue because if we keep our money parked in a bank account while everyone else is investing, it may put us at a significant disadvantage.

So Wahed aims to help anyone become a halal investor. Our clients actually come from a very wide range of income brackets and age groups so Alhamdulillah we feel very blessed to be in a position to help the Ummah.

2. Halal Investment is a relatively new concept, how is Wahed Invest attempting to cater for this market?

The concept of halal investing isn’t actually a new concept, rather it’s merely getting more attention in recent years because of the growing wealth within the Muslim community and their increased awareness of how those funds can be invested. Our delivery method of making those halal investments accessible is what is new and unique. Catering to this market essentially employs a two-point approach:

1- Have the right product
2- Educate the community

Unfortunately the halal stamp can sometimes be abused, so it’s all about having the proper certification coupled with the right product that actually solves people’s problems. We feel that our platform, which is known in the industry as a robo-advisor, does exactly that. It was setup in a user friendly way, no complicated jargon, with just a $100 account minimum. Users are also able to open an account in minutes. In this age it’s all about efficiency and quick user-onboarding. We’ve also developed an extensive amount of learning materials and a help center to help users familiarize themselves with our platform and halal investing in general.

As for the second point, we believe education is key for our market. We want everyone to know what halal investing actually is and the opportunity it creates for them in supporting their financial future. We currently have a journal on our website where we post educational articles as well as on social media not just about halal investing but the halal economy as a whole. We also take part in local events, iftars, and conferences to raise awareness.

3. What efforts does Wahed take to build investor confidence?

You and I can both agree that you can’t open an investment account with a company you can’t trust. Even though our platform is the world’s first halal robo-advisor, we had to be creative to overcome this hurdle when we first started.

Our Ethical Review Board is headed by Sheikh Taha Abdul-Basser who MashaAllah is truly an expert in this field, and a former Harvard Chaplain. Clients gain peace of mind when they learn about us before opening an account as this highlights our commitment to halal investing.

We’ve recently announced our latest round of funding, which includes investments from Cue Ball and BECO capital. So far Alhamdulillah we’ve raised $7m, and that includes investments from renowned industry professionals and high net worth individuals. Especially in the US, the tech space is incredibly competitive and having more than one VC on-board attests our credibility, quality of our platform and organization in general.

We’ve also been mentioned on leading media outlets such as Reuters, TechCrunch, Mashable, Yahoo! Finance among others because what we’re doing is actually interesting (don’t take our word for it!).

Finally, we’ve sponsored the largest Muslim-focused events in the US, and that also helped us gain people’s trust. Even though we’re an online platform, people still like to put a face to the organization especially when it comes to investing.

Also, providing free educational content to our readers shows them that we actually care about their financial health. We want them to learn more about the benefits of halal investing and the latest industry trends, even if they aren’t ready to open an account with us yet. We feel this is extremely important to drive our mission of making halal investing much more accessible.

4. How can people invest with Wahed Invest? What is the process?

We are now live in the US and will be launching in the UK towards the end of the year inshaAllah. You can get started on our website wahedinvest.com

Our process is simple and can be explained in 4 easy steps:

– You answer eight quick questions, which would enable us to evaluate your risk tolerance and ideal strategy
– We recommend a portfolio that matches your risk profile
– Sign up and fund your account. We will place the trades for you according to the portfolio that you chose
– Sit back and monitor your performance

To open an account, clients need to be 18 years of age or older, with a US social security number and address. The reason that we require this information is becuase identity verification in the industry is done through the SSN.

You can watch our video here https://www.youtube.com/watch?v=Hb3r5rDvzec

5. What are the key differences between Halal Investment and mainstream non Halal investment? Is it just the issue of Riba or are there more differences?

There are several conditions that have to be met for an investment fund to be halal, one is the absence of Riba as you suggested.

However there are four main points that have to be addressed:

1. AAOIFI-Conformant Shari’ah Board

Each and every halal investment fund must have appointed a Shari’ah board whose membership conforms to the competency standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

2. Business and Financial Screening

There are two main screening levels for halal investments. A business screening by default refers to the review of a company’s business practices, products sold, and revenue sources (including Riba). The financial screening refers to certain limits imposed on a company’s debt levels to better control for excessive risk taking.

3. Operational level compliance

The company operating and managing the investment fund must also comply with Shari’ah regulations. The management company must refrain from taking on interest bearing debt and follow certain business practices.

4. Investment Policy

A fund must also establish an Islamic investment policy where the Sharia Board vets the investment products for Shari’ah compliance, and conducts ongoing due diligence on them. The policy will clearly outline the screening methods employed, the criteria used, and investment methodology implemented

A more transparent Shari’ah board will also provide the investors with a “purification report”. This will highlight any returns that may have been generated from impermissible sources, which are advised to be donated to charity to purify one’s income.

6. There are many internationally recognised investment companies and also some new Muslim Halal investment companies. How is Wahed Invest attempting to be distinct?

Our clients are the first thing we think about when it comes to product, and that’s why it’s accessible with just a $100 account minimum and an online onboarding process that can be done in minutes.

Clients can even place a deposit or withdrawal request at any time so they don’t need to commit to a certain period, which helps put them at ease knowing that they have quick and easy access to their money.

We spend a significant amount of our budget on technology to ensure that user experience is seamless. That also helps us reduce our fees, and allows clients to fund their account free of charge.

Finally, having solid infrastructure also allows us to provide diversified portfolios to our clients, as opposed to investing their money in a handful of stocks. This goes in line with one of the concepts we discussed previously which is controlling the level of risk taking. Wahed clients get access to Sukuk (Islamic bonds), which can be relatively inaccessible by retails clients, as well different equity funds and a gold fund.

7. Are you the guys who did the Times Square ad recently in New York! That was pretty awesome, how did you come up with that idea?

We were trying to come up with ideas that would spread a positive message during Eid. That is when we created the Eidi campaign, where we gifted anyone who signed up $100 to help them become investors. It was difficult to top that, but we were informed that a spot is opening up on the Times Square NASDAQ billboard. Clearly, tourists on Times Square are not our target market so our first thought was that it would not be worth the effort.

We were previously thinking about a Eid campaign, on much smaller scale on social media, not to generate leads but simply to use our platform to wish everyone a Eid Mubarak. We wanted to help in creating a sense of togetherness during these times. What was funny was that when we were discussing this with our teams internally we all had the same idea at the same time – to use this Times Square opportunity to really make a buzz about Eid and that’s what we tried to do.

We thought that this would be the perfect opportunity to send a message of peace and love on behalf of the Ummah to the world, on this iconic stage.

People were posting stories on Snapchat, Instagram, it was all over social media which was very humbling.

8. What message do you have for global Muslims who wish to invest with you?

At the end of the day, what Wahed aims to do is make halal investing accessible and help our community grow their wealth. We don’t want them to think this is a quick way of doubling their money, because it’s not.

We want to raise awareness on the benefits of halal investing, and show global Muslims that there is way to grow their wealth in a halal manner.

Instead of keeping all of your savings in a bank account which can get you a 0% return, Wahed provides the much needed alternative of a simple, yet revolutionary halal investment platform. We’re trying to make this idea much more common, where people from all different income brackets and professional backgrounds can talk about and discuss investing.

It is truly humbling when users sign up because we feel like we’re helping move the islamic community forward. This is mainly because our platform is not there just to serve high net worth individuals, rather to serve to people, the Ummah.

This is not an endorsement or recommendation for any of the organization’s products or services. This information contained therein neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell any securities and is for informational purposes only. “This article was produced for Hadith of the Day as part of a promotional package for Wahed.”

Disclaimer: By reading this, you agree to all of the following: You understand this to be an expression of opinions and not professional advice. HOTD makes no guarantee or other promise as to any results that may be obtained from using the information provided by third parties. You are solely responsible for the use of any content and hold HOTD and all members and affiliates harmless in any event or claim.

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