Forget Me Nots & Second Thoughts

“Two more…”

“Two more people to give $5000.”

His gaze sweeps across the audience searching for a raised hand or finger. As he holds the mic up to his mouth, the people in the room shuffle and whisper. You turn to the left and then the right looking for the next donor. “Allahu Akbar!” You quickly look in the direction the speaker is faced, and catch a young man in the back of the room lowering his hand. “Just one more pers…”

“Allahu Akbar!” A woman two tables down nods her head.

That’s 50,0000. Now I need  to get just 10  people to give $1000?

We’re all way too familiar with this scene, you are at a fundraising dinner, the speaker is using every hadeeth and verse of the Quran on the topic to encourage, convince and literally beg you to donate to the cause. You eventually raise your hand when he mentions the category that you had decided on before you left the house.

“Allahu Akbar! May Allah SWT Bless you and your family, Say Ameen!” The crowd echos “Ameen.”

Feels amazing doesn’t it?

But, Is it right?

Why does your mosque/Islamic center/local Islamic organization have to book a hotel ballroom, get a speaker from out of state, feed and entertain you in order for you to give for the sake of Allah?

Giving in the way of Allah is for our safety,  and not giving is the real danger. We have to look out for the poor and support our local institutions, and we should do it without a second thought. Although there will come a time when it will be the first thing on our minds, this fact comes from surat Al-Munafiqoon – the Hypocrites verse 10:

“And spend something (in charity) out of the substance which We have bestowed on you, before Death should come to any of you and he should say, “O my Lord! why didst Thou not give me respite for a little while? I should then have given (largely) in charity, and I should have been one of the doers of good”.

The verse doesn’t say I will pray, nor I will fast, but I will give to charity. As though it will be the dearest thing to us at that time. We will be the ones begging, pleading for more time before our souls are taken, so we can give more charity.

When working with the MSA in university, we would go around to Muslim-owned restaurants requesting donations for Iftar. Which was served on campus daily in Ramadan, save for Fridays. Some offered a tray of rice, some chicken, others salad and at the end of the day something was better than nothing. Some shopkeepers and owners sent us off empty-handed. Why? Because they had already done their bit of charity this Ramadan; “we already donated food to the kids at the college.”

As though there is a cap on giving to charity.

In surat Al-Insaan verses 8 to 10, Allah SWT describes those that give for His sake:

“And they feed, for the love of Allah, the indigent, the orphan, and the captive,- (Saying),’We feed you for the sake of Allah alone: no reward do we desire from you, nor thanks. – We only fear a Day of distressful Wrath from the side of our Lord’.”

The verse above adds a second crucial point. Adopting, sponsoring and taking care of Orphans.

What about those kids without moms or dads? The ones whose parents left them there because they couldn’t afford to take care of them? What about the kids who get all these donated clothes and toys but can’t find a single person do give them the love and attention they really need?

The Prophet PBUH was an orphan. Have we forgotten?

A few years ago, in Cairo, we went to visit an orphanage as a tarbiyah exercise, and to see how they were. Of course they were adorable, and fairly well kept, which I don’t assume the case to be in most orphanages. We had been there for about 20 minutes when this young man came in, and the kids started screaming!

“Ammu Sherif! Ammu Sherif!” They all flocked towards him, almost knocking him over. He greeted them warmly and was smiling ear to ear. He stayed there for at least the other 2 hours we did, probably longer, and played with them, giving each their own time. Subhan Allah! Just taking out the time to visit them, obviously in a consistent manner, and it doesn’t cost him anything really. You cannot begin to understand how happy it made them.

Mashallah! How great is his reward with Allah SWT?

May Allah SWT bless him and everyone that tries to work with the unfortunate among us, and alleviate their suffering.

We worry about giving our own children enough attention. We agonize over being bad parents and try to find ways to be better to our children. We think back over our actions and hope they won’t affect them negatively as adults. What about the orphans? Have we given them a second thought?

The Prophet PBUH said, “Me and the one that takes care of Orphans are like this in Jannah”, and he demonstrated by putting his index and middle finger together.

Enough said, now for the doing part.

Everyone that reads this needs to do one of two things, or both.

1) Pick an Islamic Charity and sign up to give a monthly amount from your income. You won’t regret it. For example Islamic Relief has this option to donate to ‘where its needed the most’ which I think is an easy way of making up your mind on what specifically you want done with your money.

2) Sign up to sponsor an orphan, and pledge a monthly amount that is probably much less than your cable and internet bill.

There is no excuse when we have the means we do, as Muslims, not to be looking out for our Orphans and Poor. When we have to answer for being blessed with wealth and safety and why we haven’t tried to establish the same for others.

In verse 8 from Surat At-Takathur we are reminded of just that.

“Then, shall ye be questioned that Day about the joy (ye indulged in!).”

May Allah SWT bless us all with good deeds that bring us closer to Him.

Ameen.

Thinking of Investing? Make sure you’re familiar with the Finance Lingo First!

Bond: A promissory note issued by a business or governmental unit.

Treasury Bond: Bond issued by the federal government that are not exposed to default risk. Sometime referred to as government bonds.

Corporate Bond: A debt issued by corporations and exposed to Default Risk.

Municipal Bond: Issued by the state and local government. The interest earned on municipal bonds is exempt from federal taxes, and also from state taxes if the holder is a resident of the issuing state.

Foreign Bond: A bond sold by a foreign borrower denominated in the currency of the country in which the issue was sold.

Par Value: The nominal or face value of a stock or bond. The par value of a bond generally represents the amount of money that the firm borrows and promised to repay at some future date. It is often $1,000 to $5,000.

Maturity Date: The date when the bonds par value is paid back to the bondholder. Maturity dates generally range from 10 to 40 years from the time of issue.

Coupon Payment: The Dollar amount of interest paid to each bondholder on the interest payment dates.

Coupon Interest Rate: Stated rate of interest on a bond defined as the coupon payment divided by the par value.

b) Floating-rate Bond: A bond whose coupon payment may vary over time, the coupon rate is linked to the rate on another security such as a Treasury security or some other rate such as LIBOR.

Zero compound Bond: Pays no coupons at all but is provided at a substantial discount below its par value and hence provides capital appreciation rather than interest income.

Original Issue Discount (OID) Bond: Any bond initially offered at a price significantly below its par value.

c) Call Provision: Gives the issuing firm the right to call the bonds for redemption at a price greater than the par value. This increase in price is called the Call Premium.

Redeemable Bond: Gives investors the right to sell the bonds back to the corporation at a price that is usually close to the par value. If interest rates rise, investors can redeem the bonds and reinvest at the higher rates.

Sinking Fund: Facilitates the orderly retirement of a bond issue. This can be achieved in one of two ways. 1. The company can call for redemption at par value a certain percentage of bonds each year. 2. The company may buy the required amount of bonds on the open market.

d) Convertible Bond: A security that is convertible into shares of common stock at a fixed price at the discretion of the bondholder.

Warrant: A call option issued by a company allowing the holder to buy a stated number of shares of stock from a company at a specified price. Warrants are generally distributed with debt or preferred stock to induce an investor to buy those securities at a lower cost.

Income Bond: Pays interest only if interest is earned. These securities cannot bankrupt a company. But from an investor’s standpoint they are riskier than other bonds.

Indexed (Purchasing Power) Bond: The interest rate of such a bond is based on an inflation index such as the consumer price index (CPI), so the interest paid rises automatically when the inflation rates rise, thus protecting the bondholders against inflation.

Premium Bond: When the going rate of interest is below the coupon rate a fixed rate bond is sold at a price higher than its par value or at a premium.

Discount Bond: When the going rate of interest is above the coupon rate, a fixed rate bond will sell below its par value or at a discount.

Current Yield: The annual coupon payment divided by the current market price.

Yield to Maturity (YTM): The rate of interest earned on a bond if it is held to maturity.

Yield to Call (YTC): The rate of interest earned on a bond if it is called. If current interest rates are well below an outstanding callable bonds interest rates then the YTC may be a more relevant estimate of expected return than the YTM, since the bond is likely to be called.

Reinvestment Risk: The risk associated with changes is interest rates at which an investor will receive on future securities.

Interest Rate Risk: Arise from the fact that bond prices decline when interest rates rise. Under these circumstances, selling a bond prior to maturity will result in a capitol loss, the longer term to maturity the larger the loss.

Default Risk: The risk that borrowers will not pay back the interest or principal on a loan as it becomes due.

Indenture: A legal document that spells out the rights of the bondholder and issuer.

Mortgage Bond: A bond for which the corporation pledges certain assets as a security. All such bonds are written subject to an indenture.

Debenture: An unsecured bond, and as such, it provides no lien against specific property as security for the obligation. Debenture holders are, general creditors whose claims are protected by properties not otherwise claimed.

Subordinated Debenture: Debentures that have claims on assets, in the case of bankruptcy only after senior debts as named in the subordinate’s debt indenture has been paid off. Subordinate debentures maybe subordinate to designated notes payable or to all other debt.

Development Bond: A tax-exempt bond sold by state and local governments whose proceeds are made available to corporations for specific uses (deemed by congress) to benefit society.

Municipal Bond Insurance: An insurance company guarantees to pay the principal and interest on a bond, should its issuer (municipality) default. This reduces the risk to investors who are willing to accept lower coupon rate for an insured bond issue compared to an uninsured issue.

Junk Bond: High-risk, High-Yield bond issued to finance leveraged buyouts, mergers, or troubled companies.

Investment-grade Bond: A bond with the rating of Baa/ BBB or above.

Real risk-free rate of Interest r*: That interest rate that equalizes the aggregate supply of, and demand and riskless securities in an economy with zero inflation. The real risk-free rate can be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury Securities if the expected rate of inflation were zero.

Nominal rate of risk-free interest rRF: The real risk-free rate plus a premium for expected inflation. The short-term nominal risk-free rate is usually approximated by the U.S. Treasury bill rate, while the long-term nominal risk-free rate is approximated by U.S. Treasury bonds.

Inflation Premium (IP): The premium added to the real risk-free rate to compensate for the expected loss of purchasing power. It is the average rate of inflation rate over the life of the security.

Default Risk Premium (DRP): When a bond has default risk, a default risk premium is added to its risk-free rate to compensate investors for bearing default risk.

Liquidity: Refers to a company’s cash and marketable securities and to its ability to meet maturing obligations. A liquid asset is any asset that can easily be sold and converted into cash at its “fair” value. Active markets provide liquidity.

Liquidity Premium (LP): A liquidity premium is added to the real risk-free rate of interest, in addition to other premiums, if a security is not liquid.

Interest rate risk: Arise from the fact that bond prices decline when interest rates rise. Under these circumstances, selling a bond prior to maturity will result in a capitol loss, the longer term to maturity the larger the loss.

Maturity Risk Premium (MRP): The premium that must be added to the real risk-free rate of interest to compensate for the interest rate risk, which depends on a bonds maturity.

Reinvestment Rate Risk: Occurs when a short-term debt security must be “rolled over” If interest rates have fallen, the reinvestment of principal will be at a lower rate, with corresponding lower interest payments and ending values.

Term Structure of Interest Rates: The relationship between yield to maturity and term to maturity for bonds of a single risk class.

Yield Curve: The curve that results when YTM is plotted on the Y-axis and the years to maturity is plotted on the x-axis.

“Normal” Yield Curve: When the yield curve slopes upward it is said to be normal because it is like this most of the time.

Inverted “Abnormal” Yield Curve: A downward sloping yield curve.