Mutual Funds Could be a Good Start to Higher Education
By Saghir Aslam
Irvine , CA

 

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)

Most parents dream of sending their kids to college. They also have nightmares about how they’re going to pay for it.

Who can blame them? It costs about $20,000 a year to send a kid to a private college these days. The bad news is tuition and room and board are supposed to double by 2013, according to Ernst & Young.

What’s a parent to do? Find some great mutual funds that meet all of the Islamic rules of investing. Amana is one of those funds, to the best of my knowledge, that invests Islamically and Wisdomhouse is another. I am sure there are others but research needs to be done on them first.

Investing in equities is one of the best ways for you to create wealth. Low-yielding bonds and cash simply won’t generate the returns you’ll need to finance a four-year college education.

Over the past 20 years, for example, stocks in the S&P 500 have gained 17.8% a year. Intermediate government bonds and 30-day Treasury bills returned only 9.9% and 7.2% according to recent statistics.

We, as Muslims can not invest in fixed securities. So, two of the best investments are real estate and stocks. Evaluate the pros and cons of both investments and decide which will be right for you.

I have chosen to set up education funds for each member of my family. As I have indicated earlier, you can find a good mutual fund, invest in it or try to find a good growth company. In the high technology field some good examples are Lucent, Intel, Microsoft, Sun Microsystems. In the pharmaceuticals, select the top companies, which include Ely Lily, Warner Lambert, Pfizer, Abbot and others. For the sake of diversification, also choose some retail sectors. There are reits available as well.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr. Aslam does not have anything for sale.)

 

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Editor: Akhtar M. Faruqui
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