Is there an Islamic way where you can guarantee percentage of profitability for the investor?

Q: Is there an Islamic way where you can guarantee percentage of profitability for the investor?

 

الجواب حامدًا و مصليًا و منه الصدق و الصواب

A: It is not permitted to guarantee a percentage of profit to the investor.  Rather, the very basis for his eligibility for profit is that he is also exposing himself to loss.  However, it is possible to give a projected rate of profitability with a certain degree of certainty when the income stream is generally constant.  E.g., if the investor buys a share in a rental property where a rental has been agreed or is currently being paid by a lessee.  Whilst this normally provides a known and stable income stream and the profit for investors can be projected with a degree of certainty there is always the possibility that the rental property is destroyed and the income stream dries up.

For a more comprehensive overview of key Islamic financial issues, and more details on the main prohibitions in Islamic Finance please refer to: https://alqalam.org.uk/wp-content/uploads/Introduction-to-Muamalat.pdf

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