Among the types of investments available in the financial market are cash investments, insurance/takaful, equity investments, collective investment schemes (CIS), and debentures and fixed income investments.

A cash investment simply means savings, or depositing money into a bank’s savings account. Examples of cash investments in conventional banks are Savings Accounts, Fixed Deposits and Certificates of Deposit. Cash investments are also available in Islamic banks. Instead of receiving interest, the return will be in the form of profit (eg through a Wakalah contract) and hibah (eg through a Wadiah Yad Dhamanah contract). Examples of cash investments in Islamic banks are Savings Accounts, Term Deposits with the Syariah concepts of Wakalah or Wadiah Yad Dhamanah.

Insurance and takaful products are the types of investments that give coverage in times of emergencies or unexpected events. Takaful provides financial protection based on Syariah principles by sharing risks between participants, while insurance works on the principle of transferring risks to the insurance company.

An equity investment means buying and holding shares of companies that are offered to the public, to gain income from dividends and capital gains when the value of stock rises. To determine whether a share is Syariah-compliant or not, the licensed dealer or stock exchange will carry out a Syariah screening process on the company. They will indicate whether a company is Syariah-compliant or not.

A CIS is made up of a pool of funds collected from many investors for the purpose of investing in a combination or portfolio of securities, such as stocks, bonds and money market instruments. This gives investors the opportunity to invest in various securities, which may give better returns depending on market conditions.

Debentures and fixed income investments are both debt instruments. This simply means investors give out a loan to a company or the government, for the purpose of raising capital to expand or carry out developmental projects. In return, investors get repayment with some profit (or interest for conventional debentures and fixed income) after a project is complete. Common examples are bonds, treasury bills and sukuk.

Sukuk is an Islamic Investment Certificate that is an Islamic (Syariah compliant) alternative to bonds. Sukuk grants the investor a share of an asset, along with the commensurate cash flows and risk. As such, Sukuk adheres to Syariah principles, which prohibit the charging or payment of interest.

In setting up a financial plan or investment plan, one may wish to seek professional advice. For security purposes, it is advised to ensure that the investment adviser and the financial planner holds a Capital Markets Services Licence or a Capital Markets Services Representative’s Licence. The List of Brunei Darussalam Central Bank (BDCB) Licensees is available on the BDCB website.

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