Wealth Planning


It is the hope of every individual, irrespective of religious belief, to be able to live comfortably to the end of his or her life in this world. For those whose religion emphasizes on the after life as well, they will certainly wish that they will also be comfortable, in fact successful, in the hereafter as well.

One of the most important ingredients for comfortable living in this world, in fact in the next world as well, is to have sufficient wealth throughout life. This is to ensure that all the needs are met without much change in life style, the extraordinary or unexpected expenses can be easily met, and the social, legal as well as all religious obligations are fulfilled. It is only then that one can feel that he or she has led a very balanced and fulfilled life to meet the Creator in the end.

It is this imperative that makes every individual work hard when young to set aside sufficient savings to achieve all the objectives stated above if ever he or she lives to a reasonably old age.

Objectives of Wealth Planning

 To get a certain minimum level of return at no risk

 To get consistent regular income

 To obtain capital gain

 To get a level of return within a certain level of risk

 To have a high level of liquidity

 To preserve assets

Wealth planning from Islamic perspective

In the first place, Islamic concept of wealth is such that all wealth belongs to God and man is appointed as a trustee to the wealth that he has generated. As a trustee of someone else’s wealth obviously we need to be responsible for its safety, for its use and even the way we obtain them. In other words we will surely be accountable for how we acquire and use them.

The concept of spending is the second principle in Islam that should be applied in Islamic wealth planning. Spending in Islam implies the sharing of whatever we have with others. Of course the order of priority is that one should first spend on himself, then his family, then his next of kin then on others. After all, the Holy Prophet Muhammad (saw) is reported to have said to the effect that “the wealth is not yours until you spend it”

Thirdly is the principle of moderation in consumption which is also strongly encouraged in order to prevent Muslims from inculcating greed. Greed could lead man to various other vices. This may include the development of excessive love of wealth that one becomes stingy or even prepared to devour other people’s wealth for vanities. The Holy Quran in Surah 2 verse 188 states, “And do not eat up your property among yourselves for vanities, nor use it as bait for the judges, with intent that ye may eat up wrongfully and knowingly a little of (other) people’s property.” Here the Quran is very specific in outlining one of the dangers of greed which is to use one’s own property for corrupting others – judges or those in authority – so as to obtain some material gain even under the cover and protection of the law. The words “other people’s property” may also mean “public property”.

Fourthly, moderation in consumption also implies that one should not be spendthrift or extravagant in spending. The Quran clearly abhors such habit calling those who over spend as following the foot steps of Satan. The Holy Quran in Surah 17 verse 27 states, “verily spendthrifts are brothers of the Evil Ones; and the Evil One is to his Lord (himself) ungrateful”. In some cases, man deliberately incurs huge amount of expenses to exhibit their wealth. I know of a Minister from some Muslim country who ordered a villa by the beach in Copenhagen to be renovated. The renovation according to his taste cost him not less than one million USD. After the renovation he stayed in the villa for only three weeks to attend an international conference. On top of paying for the renovation cost he even paid an exorbitant rent to the owner. On the contrary, the Holy Prophet Muhammad (saw) even forbids man to wear silk and yellow gold in order not to create an elite class among Muslims who are too different in lifestyle and taste from the masses.

But this does not in any way mean that we should not enjoy the benefits of the abundance of wealth that we have been trusted with. The proper use of wealth is also a means of showing gratitude to Allah for having bestowed such abundance of wealth to us. This is because moderation is not an absolute but a relative concept. Moderation for someone rich may be excessive for a poor man.

Fifthly, we should not accumulate wealth and hoard it thinking that it will help make us last forever. The Holy Quran in Surah 104 verses 1 to 4 states, “Woe to every (kind of) scandal-monger and backbiter, who pileth up wealth and layeth it by, thinking that his wealth would make last for ever. By no means! He will be sure to be thrown into that which breaks to pieces”. Three vices have been condemned here in the strongest terms: (1) scandal-mongering, talking or suggesting evil of men or women by word or innuendo, or behaviour, or mimicry, or sarcasm, or insult; (2) backbiter who speak ill of others behind their backs, even if the things suggested are true, where the motive is evil; (3) piling up wealth, not for use and service to those who need it, but in miserly hoards, as if such hoards can prolong the miser’s life or give him immortality: miserliness is itself a kind of scandal. Those who hoard wealth will only contribute towards shrinking the economy. Wealth should be invested so that it will circulate in the economy. Similarly it should not be allowed to circulate among the rich only. The Holy Quran in Surah 59 verse 7 states, “…in order that it may not (merely) make a circuit between the wealthy among you.” This verse which was revealed in conjunction with the distribution of the spoils of war by the Holy Prophet Muhammad (saw) clearly shows that distribution of wealth should be done widely to spread out the benefits as much as possible.

Sixthly, Islam makes it compulsory on Muslims who have enough wealth and have kept it for a year to pay the compulsory dues or Zakat. Apart from a mechanism to purify one’s wealth Zakat is also a fiscal means of reallocating surplus resources. Those who hoard wealth would certainly suffer erosion of the quantum of their wealth by at least two and half percent of Zakat per annum.