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Investing in Stock Markets vs. Shariah Investment

Today’s economy has transformed into a “sharing economy,” a world of decentralization where services and capital flow online—observe Amazon, Airbnb, and Uber. Investment opportunities have never been so varied; cryptocurrency was not viewed as an investment option not very long ago. This begs an important question for avid investors; what is considered a worthy investment today? 

For many investors, especially first-time investors, investing can seem more like a challenging endeavor that requires a lot of research. Let’s simplify this a bit by comparing two popular types of investments. Let’s take a look at stock trading and compare it to ethical investing in crowdfunding. Sharia compliance is guaranteed in terms of risk management, asset tracking, ethical implications, and diversification options. Related: Time Deposit vs. Investing in Halal Crowdfunding.

How does stock trading work and what are the risks involved?

If everyone agrees, there is risk in investing; the most conscientious and analytical person still cannot say with certainty that his investment is completely risk-free. After all, not even the best-trained Olympic swimmers can battle the unpredictable ocean. But you can still adapt by predicting the weather and testing the waves. Investing in the stock market can make making a profit look easy. While many have actively tried to beat or predict the outcome of the stock market, few notable people have succeeded. 

Trading stocks is much more difficult than it sounds, because the stock prices of a given company may not follow logic; markets tend to be influenced by sentiment, including rumors about it. In today’s world, a simple tweet from an influencer can move the markets. When a publicly-traded company publishes its earnings report, its share price will go up or down depending on whether the company has met expectations along the way. In some cases, even with a good performance report, investors withdraw their investments from the shares of a company when the performance is perceived as lower than expected, the controversy surrounding the company’s public image and, not infrequently, the occurrence of apparently unrelated events, such as political incidents. or personal scandals in this industry. 

There is always some risk when investing in any facility, and the same goes for investment crowdfunding. However, there is a layer of protection to manage such risks: Ética works with local businesses to review their members’ projects. Before reaching the ethics platform, projects are questioned and companies evaluated based on past successes.

The best thing about ethical real estate investing is that there are assets that can be collateralized. While a publicly-traded company or company can collapse and burn out, fixed assets generally retain most of their intrinsic value, even in a bad economy. In most cases, its value will increase over time.

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