Fundamentals of Shariah Financial Planning
What this domain tests
This domain tests whether you can build a financial plan from Shariah first principles rather than retrofitting conventional products. Expect questions on the sources of Shariah, maqasid al-shariah, the prohibitions of riba, gharar and maysir, and contract validity.
Core rules
- Shariah financial planning protects five maqasid: religion, life, intellect, lineage and wealth. Wealth preservation is not an end in itself; it must not override the others.
- Primary sources are Qur'an and Sunnah; secondary tools include ijma', qiyas, maslahah and urf. A product is not Shariah-compliant merely because it avoids interest.
- Key prohibitions: riba (interest or unjust increase), gharar (excessive uncertainty in price, subject matter or delivery), maysir (gambling/speculation), and haram activities.
- Contracts must have offer and acceptance, contracting capacity, lawful subject matter, and clear price or profit-sharing ratio. Ownership and risk transfer (qabd) matter.
- Sequence matters: a murabaha sale cannot precede the institution's ownership; a mudarabah profit ratio must be agreed, but profit cannot be guaranteed.
Worked example
A client asks for a five-year savings plan with a guaranteed 8% annual return. The planner should reject the guarantee: a guaranteed return on a loan-like arrangement is riba, and a capital guarantee in mudarabah is generally not permissible unless it comes from a separate unilateral undertaking or tabarru' structure with proper documentation. Restructure as a mudarabah-based savings product: capital is contributed, profit is shared at an agreed ratio, and the client accepts periodic profit uncertainty. Show a lower expected return and a liquidity reserve.
Traps
Assuming "Islamic" means only no interest; ignoring gharar in fine print; treating zakat as optional in the plan; mixing contract sequences; using conventional insurance assumptions in a takaful plan.