Glossary

Asset allocation—creating a portfolio which distributes investments across multiple asset classes that are not closely correlated, such as equities, cash, real estate, foreign securities and/or precious metals, to potentially reduce risk and volatility in your portfolio.

Diversification—spreading money across a broad number of investments to reduce the overall risk in the portfolio.

Dollar-cost averaging—a strategy that invests the same amount of money on a regular basis so you automatically buy more shares of a security when the share price is low and fewer shares when the price is high. Over time, this strategy can lower your average price per share.

Fatwa—a religious opinion or decree issued by an Islamic scholar pertaining to Islamic law

Gharar—the prohibition of any element of risk or chance in a financial transaction or contract

Hajj investing—investing to prepare financially for the Hajj – a pilgrimage to Mecca, mandated for all Muslims

Halal—any object or action permitted by Islamic law. Halal investing is guided by the principles of Shari’ah law as described in the Qur’an and Sunnah.

Haram—any object or action forbidden by Islamic law

Money managers—individuals or firms hired to manage investment portfolios. Azzad performs a thorough due diligence review of all our money managers and regularly adjusts our money manager team to meet the best interests of our clients.

Probate—the legal process of settling an estate during which the validity of the deceased person's wishes is proven, assets are collected and accounted for, debts and taxes are paid and remaining probate assets distributed. May be costly and time consuming for larger estates; probate is also subject for public disclosure.

Purification—the annual cleansing process requiring any investment income generated from activities that violate Shari'ah-based investing principles be given to charity

Qur’an—the central religious text of Islam

Rebalancing—periodically shifting funds from one asset class to another to regain the ratios you determined were appropriate for your investment portfolio

Riba—prohibited interest or usury

Shari’ah—the religious law or code of conduct of Islam

Sukuk—securities or certificates specifically structured to comply with Islamic principles which forbid riba (the charging or paying of interest)

Sunnah—the practice or way of life instituted and taught by the Prophet Muhammad in accordance with Shari’ah

Usury—originally the practice of charging interest; now commonly understood as charging excessive or illegal interest rates

Zakah—annual financial obligation every Muslim must pay on surplus wealth above a certain amount (nisab) considering their holding period of time (hawl)