Money management (complete)

Editor's Notes

1. Bismillah irahman irahim. Assalat o Salam ala Rasoolillah. Before starting the presentation let me highlight some points: This presentation has been prepared for non-financial executives. For that reason it is higher level and avoids tech details except a few slides. This presentation will take you gradually from basics to upper levels of understanding. It doesn't claim to make you Investment expert. Nor it claims to give you any insight into Islamic Fin. It only seeks to provide you enough fodder for thoughts & ideas and to enable you to choose intelligently from the choices presented by the Investment Committee.
2. Points to ponder for PRD members.
3. Investment is part of M M. The main components of which are ………. Income is what you earn through different means. This may include salary, profits from trading merchandise, gift / allowancce from parents in case you are student or youth, rent from property etc. Expenses are those cash layouts which are consumed in the current period otherwise they are investment. Reserves or Emergency Funds are those funds which have been set aside for meeting emergencies. Charity is investment for the life herafter. Investments, are those which bring fuure streams of income. Now let us see how they relate to each other.
4. To start anything you have to first plan, strategize and make provision for it. Planning cannot start without first being clear about Vision and Mission. How to verbalise Vision & Mission is a complete subject and under corporate strategy. For individual it is enough to understand what he wants to do now which is called Mission and what he wants to be in future which is called Vision. In other words you have to be clear about your aims, objectives and goals for indulging in financial activity. What will be your strategy and how you want to go about it. This brings us to the task of budgeting, what is your financial plan, what amount you want to allocate for which activity as per your preferences, the time horizon and the purpose. These questions require further deliberation..
5. This is pretty clear and easy to understand. Diff between Inc and Exp is saving. If exp is higher than there is negative saving which means drawdown from Res or Emergency fund or disinvestment. Exp can for necessity or for luxury.
6. If you want to increase savings you have to reduce expenses or increase income. Exp can be reduced reducing exp on luxury. Necessity may not be possible to reduce. And pay off all high interest debts or convert them into low interest debts. For incresing income there are a number alternatives few of which are listed here. If you want to save you have to reduce expenses and that can be done by reducing exp on luxury. Necessity may not be possible to reduce. Donor fatigue Unnecessary expenses example: Shaded Parking, Toilet Bidet Seats
7. With that basics on MM let us now come to specific topic: Investment.
8. Almost all our income comes from donations.
9. These are investment vehicles (avenues) irrespective of Islamic or conventional. We will look into each of them in more detail in coming slides
10. X marks show that they do not earn anything. But some funds in them may be necessary. +/- can earn and can charge.
11. Anything which contributes to saving is investment.
12. e.g. Al Rajhi
13. Closed or Open Redeemable or payable at maturity. Next slide will give some examples of Halal Funds.
14. LiquidityIn Finance, liquidity  refers to how easily assets can be converted into cash. Assets like stocks and bonds are very liquid since they can be converted to cash within days. However, large assets such as property, plant, and equipment are not as easily converted to cash A  market order  is a buy or sell  order  to be executed immediately at the current  market  prices. Generally,  yield is calculated  by dividing the dividends or interest received on a set period of time by either the amount originally invested or by its current price:  Alpha, The excess return of an investment relative to the return of a benchmark index is the investment's  alpha Beta  is a measure of a stock's volatility in relation to the overall market. ... If a stock moves less than the market, the stock's  beta  is less than 1.0. High-beta  stocks are supposed to be riskier but provide higher return potential; low-beta  stocks pose less risk but also lower returns.
15. More is the share of Foreign Share compared local share the higher will be the risk.
16. Fixed income stocks will be more in Low risk portfolio.
17. Computers.
18. Debt Trap Ratios should be less than 1.