This blog post explores how the financial choices of individuals, particularly within the Muslim community, inadvertently support systems that contradict their values. It discusses the flow of money through banking, property investments, and stock markets, highlighting the need for a shift towards local economies and ethical investments.
Millions of people have marched for Palestine and protested against far-right ideologies in Europe and the USA. However, a startling reality emerges: 90% of those fighting against hate are unknowingly funding the very systems they oppose with their wallets. This blog post delves into the financial behaviors that contribute to this paradox and offers insights on how to redirect our money towards more ethical and community-focused investments.
As someone who manages over $130 million for more than 2,300 wealthy Muslims, I have witnessed firsthand where Muslim money flows within the global financial system. The findings are both shocking and concerning. Most individuals are unaware that their money is often supporting systems that diverge from their values.
When you earn money, it typically goes into a bank account. This money originates from another bank account, such as your employer's. Essentially, all money within the banking system is interconnected, moving from one account to another. The reality is that 96% of our money is circulating within this banking system, with only 4% held in cash.
This means that every time we deposit money into a bank, we are supporting the banking system itself.
Many believe that purchasing property is a significant financial move that removes their money from the banking system. However, most property transactions involve mortgages, which are loans from banks. Thus, when we invest in property, we are inadvertently supporting an interest-based debt system, which is fundamentally at odds with Islamic principles. The Quran explicitly forbids ribba (interest), equating it to a declaration of war against Allah and His messenger. Yet, through property investments, many Muslims are contributing to this very system.
Another avenue through which our money exits the banking system is through investments in the stock market. A significant portion of global stock market investments flows into the United States, which comprises at least 50% of all global stock markets. For many in the Muslim community, this figure is even higher; for instance, 84% of the HSBC Global Equity Index, a common pension fund for Muslims in the UK, is invested in the US market.
This means that our investments are not only supporting the US economy but also reinforcing the dominance of a financial system that often contradicts our values.
The implications of where our money is allocated are profound. By keeping our wealth in banks, investing in properties through interest-based loans, and funneling money into the US stock market, we are inadvertently empowering large corporations and contributing to a system that perpetuates inequality.
The top ten largest US companies alone dwarf all other stock markets globally, meaning that our investments are often enriching a select few while neglecting local economies and businesses. This concentration of wealth and power is detrimental, especially when considering the socio-political implications of our financial choices.
It is crucial to rethink how we structure our investments. Instead of allowing our money to flow into systems that do not align with our values, we must consider investing in local economies and ethical businesses. This shift requires building new financial infrastructures—"pipes"—that direct our money towards fields that will benefit our communities.
The current state of our financial habits indicates that 96% of our money is contributing to a world we may not want to support. However, there is a better way forward. By consciously redirecting our financial resources towards local economies and ethical investments, we can foster a more equitable and prosperous future for all. Together, we can build the necessary infrastructure to ensure that our money works for us and our communities, rather than against them.
Inshallah, with collective effort and awareness, we can create a financial landscape that reflects our values and supports the growth of our communities.
