Halal Money Matters Podcast

Episode 01 – Why Invest?

CHRISTOPHER PATTON: Welcome to Halal Money Matters, presented by Saturna Capital. I’m Christopher Patton, Saturna’s Cultural Attaché, and I’m here with Monem Salam, Executive Vice President at Saturna. How are you, Monem?

MONEM SALAM: I’m doing really good. I’m really excited about this podcast.

CHRISTOPHER PATTON: I’m gonna take that a step further: who are you? Because I don’t know you very well.

MONEM SALAM: That’s good. So, my name is Monem Salam. I actually grew up in Houston, Texas.

CHRISTOPHER PATTON: Okay.

MONEM SALAM: Went to school in the University of Texas at Austin. Got my undergrad in Government and Economics. Got my MBA specializing in international finance. And I joined Saturna in 2002. Been here for about 17 years and loving every minute of it.

CHRISTOPHER PATTON: I have been at Saturna for less of a time, just about getting to five years, but we haven’t worked together much. Why is that?

MONEM SALAM: Well, for the past seven years I’ve been living in Malaysia.

CHRISTOPHER PATTON: Yeah.

MONEM SALAM: And so, way back in 2010, we started an office there and we really wanted to grow it, so I took the opportunity to take my family and go there and really try to grow that thing. So November of 2018, is when I returned with my family.

CHRISTOPHER PATTON: Do you feel like that was a rewarding experience?

MONEM SALAM: It was great. The travel was really good. The different cultures that we were having exposure to. And now, this is my first fasting month of Ramadan that I’m spending in the US after 7 years in Malaysia. And so, it’s different, but every country has its unique characteristics.

CHRISTOPHER PATTON: How is it different?

MONEM SALAM: Well, for one thing, Malaysia’s time differences throughout the year only fluctuate by 30 minutes, so it’s pretty much the same throughout the year, whereas here, right now… we’re opening our fast at 3 o’clock in the morning, and then at night, we’re breaking it at 8:40, so it’s quite a long day.

CHRISTOPHER PATTON: Yeah.

MONEM SALAM: But, other than that, I think, you know, here the community comes together a lot more. There are different aspects of it, which are really good. Maybe we’ll do a whole podcast about Malaysian Ramadan or something.

CHRISTOPHER PATTON: I think it’s fascinating. Well, like I said, I’ve been at Saturna for five years, doing primarily video production. I also do a little of promoting our company culture both in and outside of our company walls. So, what’s our goal here with this show? What would you say our mission is?

MONEM SALAM: Yeah, so I think that what I want to do is really educate our listeners about all the different aspects of Islamic finance.

CHRISTOPHER PATTON: Sure.

MONEM SALAM: We’re in the business of investments so we’ll start off there, talk general, get more specific, and as we get further on, I know people will have questions on other aspects of Islamic finance, whether it be mortgage or insurance or anything along those lines. So, I think I’d really like to be able to delve into it. And, you know, I get questions all the time from people. Some of them are very basic, others very, very detailed about their particular situation, so we’ll try to cover it all, from the general to the specific, and hopefully people benefit from it.

CHRISTOPHER PATTON: Yeah, and for this first episode, we talked about potential topics, and one that I liked was, “What is Sharia compliant investing, really?” And you kind of took it a step further, which I think was good, and said, “Why invest?” You know? Which I think is a great baseline for a lot of people.

MONEM SALAM: Yeah, it really is, and you know, a lot of times, there’s always an excuse for you not to make investments.

CHRISTOPHER PATTON: Sure.

MONEM SALAM: People wanna put it off and not do anything. And really, what I try to encourage people is to make savings part of your expenses. For example, as you pay your mortgage bill, you pay your other bills, just make one expense item for savings. And most people say you should keep about 6-9 months, most advisors say you should keep about 6-9 months in ready, available cash. But then, after that point, you are getting even, from your employer, constantly bombarded with, “Hey, have a 401(k).” What’s an IRA? What are all those things? I think it’s really important to do that. One thing I was taught very early on is that people don’t plan to fail, they fail to plan.

CHRISTOPHER PATTON: Sure.

MONEM SALAM: So, it’s really more a matter of knowing exactly what’s going to come up later on in your life and really planning for that and making sure you have enough savings there to cover it.

CHRISTOPHER PATTON: And I wasn’t exposed to a lot of these concepts before I started working here five years ago.

MONEM SALAM: We are, a lot of times as Americans, living paycheck to paycheck, and we’re one paycheck away from falling into serious debt trouble. And so, I think what the savings allows you to do is really to stay out of that trap. We’re always one step away from falling into debt and debt is something that’s a very serious topic in Islam. Not only the aspect of debt from an interest perspective, which is not allowed, but just the idea of debt itself. And so, for example, there’s multiple Hadith, or the sayings of the prophet Muhammad. One of them said that he never actually prayed the funeral prayer on someone who died in debt. There’ a lot of things like that, and so, really, staying out of debt, is something that’s very encouraged in Islam.

CHRISTOPHER PATTON: And that’s hard to do in American culture because debt is seen as something that everybody gets into freely, I would say.

MONEM SALAM: Yeah. I mean, I think one of the greatest inventions of the twentieth century was being able to convince people that debt is credit.

CHRISTOPHER PATTON: Sure. It’s a different word. So, it’s totally different.

MONEM SALAM: Exactly, because nobody likes to be in debt. You’re always gonna be subservient to the person who gave you the money. And the prophet Muhammad actually used to make a special prayer that said, “Oh God, protect me from sins and heavy debts,” and when somebody asked him, “Why do you make this prayer?” And he said, “When somebody is in debt, when he speaks, he tells a lie and when he makes a promise, he breaks it.” And how many times have you lent money to somebody yourself and every time you see the person they go, “Yeah I’m gonna pay you back tomorrow, I got it,” and it’s always in that mind frame. So, I didn’t want to talk about debt in this particular episode, we can probably do that later, but I think it’s a way to be able to prevent that, to be able to have that savings. With the education of our children, maybe eventually going for hajj, health care, all of these things, we’re basically one accident, one something, from either being completely in debt or being dependent on other people to take care of us. I think it’s very important to financially have some freedom. I think generally speaking, you know, as I mentioned, there’s a lot of things that you can do to be able to save money for things that are gonna come up in your life, and so, you know, if you’re a student… Actually, I’ll back up, the importance of teaching our children to save is very, very important. So what I try to do with my children, and I’m not perfect, and they don’t always do it, but whenever they get money, it’s like—1/3 you can spend on yourself, 1/3 you give to charity, and 1/3 you’re gonna save. And if they get into that habit, that’s really great. And then, when they do that, as they graduate, they’ll think twice about getting into student debt. They’ll look for scholarships or other alternatives to not fall into that student debt trap. And then, from there, you move on and there are certain things that are almost a guarantee in your life. I mean, most likely you are gonna get married. If you get married, you’re probably gonna have kids. And then eventually, it’s their education, your retirement, your parents are getting older. All of these things are happening every five years or so—sometimes sooner—and a lot of times these things aren’t happening in a vacuum.

CHRISTOPHER PATTON: Right.

MONEM SALAM: A lot of times, when your parents are old enough that they need to be taken care of, it’s probably the same time your kids are old enough to go to college, and now you’re seriously thinking about going for hajj. And the pilgrimage part of it, which is what hajj is, I remember probably not even fifteen years ago when I could go for hajj for like $2,500. And now, I’m looking at the packages here in the US, and it’s like $15,000.

CHRISTOPHER PATTON: Oh, my goodness.

MONEM SALAM: And so, the inflation of hajj is much more than the regular inflation here in the U.S.

CHRISTOPHER PATTON: Why do you think that is?

MONEM SALAM: Well first of all, it’s a captured market.

CHRISTOPHER PATTON: Yeah.

MONEM SALAM: You have to go. There’s only a certain number of hotels that are there. And they’re increasing the number of people that go every year. So, it’s a supply and demand issue. And I think that’s one of the reasons why, and the other reason is that they are increasing the number of services that they offer, maybe different packages and those type of things. I think for the average person, it’s definitely a thing that they won’t be able to take out of cash flow in any one given year. They have to be able to save for it. And there are vehicles to do that, and I think it’s important to think about those. And the great part is, the prophet said that you are actions are judged on your intentions. And so, if you basically just make the intention to go for hajj, and start saving for it, even if you never get there, that means you’ve gotten the reward of actually going.

CHRISTOPHER PATTON: Right.

MONEM SALAM: It’s beautiful, so it’s really great to really… even if it’s $25 a month you’re putting away. People should try to do that.

CHRISTOPHER PATTON: And a lot of the things you’re describing are things that are likely to happen or things that people know that they want, but I think, still, when it comes to saving and investing, there’s not a goal-based mindset. A lot of people I speak to don’t think about these things as something that they have control over. They think something will happen to me, and you react, as opposed to looking down the line and saying, “This is something I want. This is something that means something to me or my family, or a goal I have.” And you can kind of take control of that timeline yourself with your finances.

MONEM SALAM: You really can. Things happen in your life, and you think, “I’m so, so glad I saved.”

CHRISTOPHER PATTON: In schools in the United States, financial literacy is not excellent. I took an economics class in high school. I didn’t feel empowered to take control of those things until… really until I started working here and started seeing it firsthand what you can do. People have the power to do this.

MONEM SALAM: It’s so true. I remember in high school; I was in home economics or something. The teacher sat us down and said, “This is how you write a check. Here you put the date. This is what you do,” but it was never really about, “What are you writing the check for?” You can write it for your expenses. That’s what we were taught. But really, it’s also a matter of making it available for emergency things. I remember starting with a $50 a month investment in college. I slowly saved up and in the late 1990’s, something happened where I let somebody borrow money and they never gave it back and I needed the money and if I didn’t have that savings, I would have ended up in a crisis situation. So, I learned from that, not to do that again, always have savings set aside. What’s the one thing you’ve learned at Saturna that you’d like to share with the audience?

CHRISTOPHER PATTON: I think the importance of saving for retirement, because… Even not having an aspiration to buy a boat or go travel. To me, I thought that’s why people save—because they want some huge thing and I’m happy without that, so I think it will be okay. That kind of thinking. I’ve lived cheaply my whole life. But, you know, getting in and realizing that just meeting your current standard of living you’ll need to have a certain amount. Medical expenses are going to be more. Things that maybe sound like they should be obvious but aren’t directly stated in a lot of schools in terms of these things.

MONEM SALAM: You know, it’s really funny… the traditional model of retirement is at 59 or 60 you get a handshake and a gold watch and you’re off into the sunset and you’re gonna die in a few years or something like that. My grandparents lived until they were almost in their 90s. And if you retire and do nothing at 60, we have to reframe it. It’s really not about doing nothing—it’s doing the things you want to do with the savings that you’re able to do it. Maybe if you love to work, maybe you do that. If you love charity, you do that. And you do those things later in life. You spend time with your grandchildren. Whatever it is you wanna do, this is a supplemental thing to help you be able to do what you want to do. And I think that’s really important to mention to people.

CHRISTOPHER PATTON: Even just maintaining purchasing power of the money you save…

MONEM SALAM: Just keeping up with inflation and cost of living is really important.

CHRISTOPHER PATTON: … realizing, “Oh those Pringles cans of full of nickels I buried in the yard are not gonna buy as many candy bars in forty years.” So, we talked a little bit about goals you might have or see for yourself and investing to meet those but there are faith-based reasons that you would have as well, right?

MONEM SALAM: Yeah, the biggest one that comes up, we talked about a little earlier, is saving for hajj. That’s one of them. The other one, it’s a matter of… there is an encouragement in Islam to save money, and part of that saving is that you have to basically purify that savings as well, so you get into issues of Zakat, which is the purifying of your wealth. And that’s a very, very important aspect of Islamic finance, really being able to use charitable donations for causes that people want to be able to spend money on. So, I think those are the couple of reasons why… I know now it’s become, in the US, it’s become very popular to make religious excursions. People are organizing trips to Turkey or Palestine to go visit Dome of the Rock, or those type of things. And not only the hajj aspect of it, but a lot of people try to go to the lesser pilgrimage, which is called Umrah. And even that one is not cheap, so that’s gonna cost you money, too. Maybe you go for Hajj and you’re done early on in your life, or you’re blessed enough that your parents paid for Hajj, but there might be other things that you want to do, and I think a lot of times, it could even be travel just in general. I think, in America, we’re a little bit insulated, and so a lot of people don’t travel, but I know being able to visit Muslim countries, and others as well, it really broadens your horizon about what the world is really like. Those things, again, require savings. Home ownership is another one. You might be living in an area where owning a home is cost prohibitive. It’s just too expensive even to come up with a down payment. But that doesn’t mean you shouldn’t try to start saving toward that goal. And what are the vehicles that you can use to do that? Forget about the aspect of... how do you find a halal mortgage? It’s more a matter of, how do you come up with the 20% down payment. And then, from there, looking at education and retirement—the government has a lot of incentives for you to do that, so they don’t have to take that burden on themselves. And so, they give a lot of tax incentives, and even on education there are 529s, Coverdells. All of these things are there and take really educating yourself about that. And you know, the beauty about these podcasts is gonna be that you might not have children now, but five years from now when you do, you’ll be able to go back to one of these episodes that we’re doing and listen to it again and maybe get some benefit out of it.

CHRISTOPHER PATTON: So, we’ve talked about the “Why?” and so it seems like a natural place to leave it here would be to establish that our next episode is going to be about the, “How?”

MONEM SALAM: Exactly. And I think starting the How starts with, from, “Why invest?” to… now that you have an investment, what do you do with it? It’s gonna be, “What makes an investment halal?” And I think that’s probably a good podcast to do next time; it’ll take us the next step toward really looking at what savings we can do and what investments we can make.

CHRISTOPHER PATTON: Alright, well, I guess I’ll see you back here for that one then?

MONEM SALAM: Sounds good, looking forward to it.