If you are asking the question how do I get started making higher returns than the bank gives me, or just getting a return while avoiding interest / riba as well as a profitable return.Over the next few paragraphs I’ll share with you four simple techniques of investing that can generate you from 12% to excess of 100% of return in the stock market.

Over my own course of learning and investing in the stock market I have learned that you must use all of these strategies together to earn significant returns while reducing the risk. For obvious reasons you should start with the easiest first and then move up towards higher risk / bigger rewards.

The strategies are as follows from least risk to highest risk and from least return to highest return;

1. Buying the market
2. Value investing
3. Momentum investing
4. Options trading.

Each of these investing strategies are distinct in their nature and used for specific purposes.

Buying the market

This is the easiest strategy with the least amount of risk and the lowest return (still significantly higher than what you are earning with keeping your money in the bank or under the mattress). You just invest in the S&P 500 index, or buy a fund that tracks the S&P500 index. The easier of the two is to buy units in a fund that tracks the performance of the S&P 500 index. This will ensure you get returns equal to the overall increase of the market. This is a long-term strategy and any investment should be typically made for more than 5 years.

Value investing

This strategy is used by investors like Warren Buffet, where you identify an undervalued company, invest in it for the long term and get a profit based on the increase in the company’s market value. There are specific criteria for identifying undervalued companies that we will discuss in a future post. However because of following the specific criteria, such as the company is a monopoly, or has a monopoly over a product or service, has consistent growth over the past 10 years, has significant future growth potential, is priced below its intrinsic value etc. This strategy typically returns between 15-20% years over year. Investments in this strategy are done for an average of 1 to 5 years.

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Momentum investing

This strategy includes an element of probability analysis based on past performance. This is used by sophisticated investors like George Soros to beat the market when it is going up or down. Just by estimating which direction the market is going to move and buying and selling on that basis. Though often thought of as speculative investing, modern traders have modified this strategy to include value investing through which you can make educated calculative predictions on which direction that market will take a value investment and buy and sell in the short term to earn profits in excess of 25%. This is typically a 3 month to 6 month trading strategy.

Options trading

Options trading is the most complex type of trading on the stock market, with the highest returns. In reality it is neither complex nor risky but it does require higher discipline and specific systems to be in place for you to make a profit. This strategy is used by highly sophisticated investors to earn returns in excess of 100% on their investments in a few days. Options trading involves controlling a vast number of shares based on a small amount of initial investment. (This is a complex trading strategy requires a more detailed explanation which will be dealt with in future posts).

Here’s what you hear on the TV and advertising all the time.

Spend on credit cards and your credit score will improve, you will get more miles that you can use for vacation, the more  you spend on your credit card the bigger discounts you get (the more you spend – the more you save), or the classic ‘some things in life are priceless, for everything else there is_____.’

So for everything that has a price we swiftly take out our card and swipe it.

Here’s the question though, if you are buying a credit card, buying on a credit card, someone is selling the card as well. The company or person selling the credit card must not be doing it out of the goodness of his heart – esp. if it is a company. The company is there to make a profit.

And how does the company make a profit?

By charging you interest on your purchases. Typically 16% to 25% annual percentage rate (APR). This means that anything that you buy today for $100 will actually cost you $125 at the end of the year. I know, I know – you always pay the full balance. So far. The company gives you more credit than you make in a month, but you are a smart consumer so you spend less than you make on your credit card being sure not to exceed your monthly income. So far. The company also promotes gift schemes and points for spending on your card, telling you the more you spend the better rewards you win. This is the only reason you spend on your card – to earn the points. So far.

Think about it for a minute – if everyone pays the complete balance on their credit card, how does the company make money? So logically a percentage of people must not be paying their credit card bills entirely for the credit card company to make any money. This is what determines the high percentage rate on the credit card itself.

The credit card company is giving you the credit because they understand math and probabilities. That’s why they let you keep paying the whole amount of your credit card each month. Because so long as you are spending on your credit card; so long as your credit limit is higher than your monthly earning (which it will always be); so long as you keep collecting points on your card – the credit card company will make a profit.

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Because someone will not pay all that they spend on their card; or an emergency purchase will occur on their card; or they will unknowingly exceed their monthly earning and use some of that extra credit. Eventually.

A credit card is a credit for the company – they get the credit for selling you all of this. You buy the debt because you have yet to pay for it from your own money; money that you have yet to earn, yet to receive.

Take a look at a dollar in your pocket. Go ahead, take it out, and look at it.

What does this dollar signify to you? What’s it real value.

Did you estimate the power of this $1 to be less than the one dollar – did you think it was just a dollar, or did you understand this was a seed for your million dollar money tree.

Just this one dollar alone is worth a million dollars. I’ll get to that in a bit. Before we do though, let’s assume for a second that whatever we have learned growing up about money is not true. Because we have incorrectly learned the mere basics of money to such a fraction and formed all the rules and thoughts around that money, that whatever we do with it is not correct.

A few realities that we have to accept before we can get to the million dollars.;

1. Taking interest is haram (forbidden by Allah’s decree in the Quran) so we will look at ways and methods which don’t involve haram.
2. Interest, even if we accept that current day interest is not haram, gives us a return of between 0% to 5%
3. The inflation rate on average is 8% year over year.
4. Based on these assumptions even if interest is not haram you lose 3% of your buying power each year just by doing nothing and keeping your money in the bank.
5. As an example if a loaf of bread costs 100 cents today (1$) – and you had 100 cents in the bank. Today if you took all you money out you could buy that loaf of bread.  At the end of the year, the bank would give you 5% interest on your 100 cents so you would have a 105 cents in the bank. However, due to inflation, which is 10%, the loaf of bread would now cost 110 cents. So even if you took out all your money from the bank you would not be able to buy that same loaf of bread that you could buy a year ago.
6. The stock market has given a consistent return of 12% since 1912 (in the USA). This is by merely looking the S&P500 index (the S&P 500 index tracks the stock markets 500 top companies in exactly the proportion in which they are part of the stock market).
7. Most large companies, like Wal-Mart, Nike, Coca Cola etc have been giving a consistent return of 15 – 25%

Now the Magic, we will look at what the $1 can do for us when invested in different places (without looking at the effect of inflation and reinvesting all profits).

Do you dream about making it big in life, making millions while avoiding riba / interest as a muslim. Discover the best selling method of increasing your wealth when you download your copy of the bestselling book ‘Wealthy Muslims Will Inherit Jannah’ NOW. Check out this link!

1. $1 invested today not invested
2. $1 invested today in the bank (giving us a 5% interest)
3. $1 invested today in the S&P 500 (giving us a return of 12%)
4. $1 invested today in a low growth company (giving us a return of 15%)
5. $1 invested today in a medium growth company (giving us a return of 20%)
6. $1 invested today in a high growth company (giving us a return of 25%)

So the simple question is – do you want to leave a legacy of a million dollars when you leave this world or do you just want to tear this dollar up. The choice is entirely yours.

Go ahead, rip this dollar into pieces, or buy a cup of coffee – same difference.

P.S. The above calculation is condensed for this post. If you want to see the actual calculation with yearly figures, return rates and the whole bells and whistles you can download it from here.

P.S.S To learn how you can invest this dollar into a million download your copy of the Wealthy Muslims Will Inherit Jannah ebook.

Listening to the news we come across numerous examples of people striking rich through a lottery ticket (Lottery winners who lost their money) or an inheritance. Maybe some of us secretly dream of being one of these people. I know, I have in the past dreamt of winning a million dollar lottery or discovering a long lost relative who left me their million dollar inheritance. Truth be told, secretly we all have; the allure of instant riches is just so consistent in our lives with the media, news, television and sometimes our friends and family.

We hear examples of people squandering their millions on fast cars, huge boats, and fake relationships and consciously we think, ‘I’ll never be like that’ – the brain think ‘I’ll never be rich’. Money-rage is what this gets us on. We are upset with people with money internally and we are upset with money itself. We become defensive when someone talks about money, and we shun people around us who flaunt their money. We look for excuses and errors in the rich. He’s corrupt, he’s a liar, a fake, a cheater, a gambler. And so we aren’t rich and wealth. It appears that these observation are very common, even popular on the TV shows that we watch and apparent in the opinions of our favorite news anchors.

These are however extreme manifestation of wealth; the fast cars, the huge boats and the fake relationships. On the other extreme are the philanthropists, like Bill Gates and Warren Buffet who have donated billions of their own personal money to charitable causes. Of course, we think to ourselves, they can do this because they are billionaires.

What most people feel near the end of their paycheck cycle is ‘being-broke-anxiety’. Each month they are nearing being broke. They know if they don’t get the next paycheck, they won’t be able to pay the mortgage, the car payments, and the credit card bills and will just be plain broke. This causes them much grief and keeps them tied to a job they don’t particularly like. Some people are so high strung on this anxiety that any disruption, even the ordinary, everyday kind (like a flat tire, or a broken glass at home) can send them into a homicidal, unthinking rage. We wonder how these people lose control so quickly and completely, and are comforted knowing that we are more rational, more balanced and better adjusted. Are we, really?

Though most of us are not on a path to self-destruction and committing obscenities when things don’t go our way; thankfully, many of us have serious problems dealing with unexpected events that require an outlay of money, even if a small amount of money. We are a nation of Jones, keeping up with each others material possessions; albeit subconsciously. Our plan is plan B; there is no plan. We rush through our monetary problems as if in a crisis management agency, rushing to take care of one problem before we get to the next. Obviously becoming adept at juggling our money management problems by pushing the thought of money management to the side each time it is mentioned.

Are you buried under debt even though you want to avoid riba – Discover the best selling method of reducing your debt 10 Steps to a Clean Slate when you download your copy of the bestselling book ‘Wealthy Muslims Will Inherit Jannah’ NOW. Check out this link!

Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!

—Lewis Carroll (1832–1898) English author, Through the Looking Glass

Here’s a simple test to see if you are suffering from ‘being-broke-anxiety’. Ask your spouse or a partner or a friend to order anything they want off of Amazon.com without telling them how much it cost, or what they can order. To start the test you give your partner your credit card / debit card and let them order whatever they want for themselves without you peering over the computer screen.

Once they are done – gauge how long it takes you to actually see what they ordered from Amazon and your reaction to it.

Did you jump to see how much it cost? Did you throw a tantrum? Did you cancel the order immediately? Did you overestimate the amount of money they would spend?

If so you’re in the majority.

The solution of escaping ‘being-broke-anxiety’ is simple – don’t be broke. Each month even before you do anything else, put aside 10% of what you earn, if that seems too big, put aside 5%, put aside even a 1$ and you are on you way to becoming a millionaire – escaping the ‘being-broke-anxiety’.

What can 1$ do for you – that’s for another post. Watch this space.

If you search on Google for the term “money management” it gives you nearly 79 million results. A similar search on Yahoo (934 million), Alta-Vista (950 million) and Ask.com (117 million) you quickly realize that clearly money management is a consistent issue across the globe. A similar search on Amazon.com reveals over 10,000 books for this particular issue.

It can be said without doubt that money and it’s managements is an deeply important issue with numerous resources, articles, CDs, workshops etc catering to numerous markets and segments. The increasing number of money management resources and products reflects it’s necessity. The increased number of money management techniques and products reveals how many of us are under pressure with regards to our money. Each day, consciously or unconsciously we make hundreds of decisions regarding money.

Many of us struggle with it and have problems coping with the daily and monthly demands that it puts on us. Why do so many people have so much trouble managing their money? Why is it that people with above average incomes end up living just above bankruptcy? Why is it that people earning above the national averages still end up with little or nothing to show if they are laid off?

When any of us falls ill, we visit the doctor, when we need medicine we visit the pharmacist, when we need our clothes stitched we visit the tailor. When it comes to money we either don’t ask any advise, or we ask of it in the wrong place. We believe that money is not an issue to be discussed, most of us think of it like a hidden disease that we should not talk about and it will go away.

Many of us believe that the solution to the money management problems lies in getting additional jobs, working 2 or three jobs, working over time, or getting a better, higher paying job. We think of getting out of our situation by running faster and pushing our boundaries. Making it our goal to earn more and more, yet as our pay increases our situation remains the same. When we get a pay raise, we come home excited about being free since we now have more money, and then six months later we are back to the same situation; thinking of the next escape in the form of a new job, a new place or a new life.

We end up filling the void in our life by getting more things, buying stuff that we did not want, or that our neighbor / friend sold us on buying. Some people believe that the answer to money management is to consistently keep earning more and more by working harder and longer hours. There is a limit to that though – there are only so many hours in a day. Also, working all the time is great if you don’t have a family, personal aspirations, hobbies or relationships; or need sleep.

But that’s not money management either, atleast it’s not a healthy and sustainable way of managing money.

Do you dream about making it big in life, making millions while avoiding riba / interest as a muslim. Discover the best selling method of increasing your wealth when you download your copy of the bestselling book ‘Wealthy Muslims Will Inherit Jannah’ NOW. Check out this link!

Money management is an expense management and involves defining who you want to be, what you want to do and what things do you want to have. It involves defining your activities in terms of money spent doing them, and finding a realistic way in which to do them.

Having more money than you spend is a fool’s solution – managing your expenses to spend less than you have is the real solution. Having more money than you are able to spend is not the right attitude – spending less money that you have is the real solution.

Think about it.