March 2025 has brought upon us the auspicious month of Ramadan 1446, where Muslims strive not only for spiritual development, but also for an opportunity to reflect on the importance of giving and managing one’s finances in a socially responsible manner.
With zakāh (giving of charity) being the third pillar of Islam, it is incumbent on every Muslim whose annual income has exceeded the required threshold to pay 2.5% of their wealth to the less fortunate. The importance of paying zakāh cannot be underestimated as it is a powerful socio-financial tool to redistribute wealth to the needy with the aim of alleviating poverty.
Your ability to maximise your zakāh contributions every year requires you to make sound investment choices. Therefore, investing your wealth in Shari’ah-compliant products can ensure that your assets increase over time through compounded returns, thereby increasing your zakaatable wealth. This allows you to increase your contributions to the less fortunate over time. In addition, by virtue of investing in a Shari’ah-compliant fund, the pooling of non-permissible income and the distribution of these funds to charitable endeavours play an empowering role in improving the living standards of the less fortunate, encouraging them to become future givers of zakāh.
The chart below is for illustrative purposes and shows how an amount of R100,000 invested in the 27four Shariah Active Equity Fund would have grown if invested since inception of the fund, with the comparative zakah contribution on the capital vs. if invested in the fund:
At 27four, We Live Investments
For investors looking to invest in a retirement annuity or tax-free savings account, we have a comprehensive fund offering that caters to every investment objective and risk profile. Our range of diversified, Regulation 28 conventional and Shari’ah compliant funds are ideal for long-term wealth creation.
The consistent application of our investment approach is designed to deliver superior risk-adjusted performance over the long term.