My brothers and sisters, what is the difference between ‘expenditure’ and ‘investment’, given that in both cases there is a cash outflow? Expenditure happens when you acquire something which you may enjoy but which deteriorates, diminishes, or depreciates over time. Investment happens when you acquire something that grows and gives you a return over time. If you buy a Tesla car, it is an expenditure. If you buy Tesla shares, it is an investment. Elon Musk bought a 9.2% stake in Twitter for $ 2.9 billion. Why did he do it? What is the value of having the opportunity to call the shots on the most powerful communication channel today? A lot more than $ 2.9 billion, I can tell you. What will that do to his already massive wealth? What will it do to the only real purpose of acquiring wealth, i.e., acquiring power? Incidentally he didn’t buy a gold-plated Cadillac or customized A380.
Why am I talking about all this today? Because the topic of my Khutba is Maximize ROI – Return on Investment. That is what Ramadan is all about.
We are traders in the stock exchange, called ‘Life’. We use money given to us, to invest in stocks that give us the best deals. If we don’t trade, we lose. If we buy losing stocks, we lose. But if we buy stocks that give a high yield, we gain big time. We have time to trade until the bell rings to end the sale for the day. Then we give account.
Have you ever seen an ice seller in India or Africa? The benefit of living in countries that are poor in money but rich in life experiences is that you get to see things that you can’t see for a million dollars in America or Europe. One of those is the sight of an ice seller seen with the eyes of the heart – with wisdom and understanding. Let me describe that for you because that is what our life is. He operates in summer only because that is when people want ice the most. That is also when ice melts the fastest. Every morning he buys a big block of ice from the ice factory, places it on his pushcart on a bed of rice husk, covers it with a white cloth and hits the street. He has only one goal, to sell this ice as fast as he can. You may think that his asset is his block of ice. It isn’t. His asset is only as much of it as he can convert to cash. The rest melts away and drips onto the road. That is why he can’t rest until he sells his ice. This is the story of our lives. We are ice sellers. Our ice is our life, money, energy, effort, whatever. What we transfer to Allahﷻ remains. What we don’t will melt away. Our wealth is not what we have today but what we have that night. Our night is the day we die. Allahﷻ said:
مَا عِندَكُمْ يَنفَدُ وَمَا عِندَ ٱللَّهِ بَاقٍ وَلَنَجْزِيَنَّ ٱلَّذِينَ صَبَرُوٓا۟ أَجْرَهُم بِأَحْسَنِ مَا كَانُوا۟ يَعْمَلُونَ
Nahl 16: 96 Whatever is with you, will be exhausted, and whatever with Allah (of good deeds) will remain. And those who are patient, We will certainly pay them a reward in proportion to the best of what they used to do.
Our ice will melt away. Even if we have a whole glacier, it will be gone or left behind. Only what we transfer to Allahﷻ will remain. And He in His Boundless Generosity said, “And those who are patient, We will certainly pay them a reward in proportion to the best of what they used to do.” Doing good, patiently, consistently, quietly, guarding our Ikhlaas (sincerity), only to please Allahﷻ and then being amazed when He takes the best of what He enabled us to do and rewards us for all that we did, according to that ‘best’.
We judge investment opportunities on two parameters: multiplier and guarantor. This is called Risk-Return Ratio. The Risk-Return Ratio is a measure of return in terms of risk for a specific time period. What is a good risk to return ratio? In many cases,