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Invest…but tie your camel first!

21 Feb 2022

Hi, I'm Areeb, the Founder & CEO of Kestrl: The Muslim Money App. We like to take inspiration from messages in the Quran and hadith about how to live our lives and navigate personal finances. Here are 5 ways you should be 'tying your camel' before you start investing.

There is a very well-known hadith narrated in Al-Tirmidi (vol.4, Ch.60, Hadith 2,517) where a man asked the Prophet Muhammad (ﷺ) whether or not he should simply leave his camel untied, and trust in God that it would remain where he left it.

To this the Prophet (ﷺ) replied,

The point of the narration is to show that we should indeed maintain ‘Tawakkul’ or complete faith in God, however we must first take all necessary precautions ourselves, before leaving what is truly unknown and out of our control in the hands of Allah.

I love this principle because it is hugely applicable to personal finances and the way we invest. Many of us want to launch straight into investing because it’s exciting, but we haven’t taken the precautions to make sure we’re not taking unnecessary risks with money we can’t afford to lose. Here are 5 ways you should be tying your camel, before you invest.

1. Create a Budget

Before you can even think of investing, you need to make sure you have more money coming in than you have going out.

You can do this by splitting your monthly expenses into Essentials (things you can’t live without like bills, rent, groceries) and Non-essentials (things like eating-out, travel and streaming services- No Netflix is not essential I’m afraid). Once you’ve done this it will be easy to see:

  • i. How much of your income you can and should be saving every month
  • ii. Where potential savings can be recognised (maybe cutting down on takeaways for example).

At Kestrl we can do this for you automatically with our budgeting tool.

Simply plug your existing bank into our app and we’ll immediately split your expenditures into Essentials and Non-essentials to work out how much of your salary you should be saving each month. Try it for your self here

2. Pay-off your debts (especially those high in interest)

Whether you’re a Muslim or not, investing whilst having to pay interest every month on outstanding debt can be pretty counter intuitive.

Paying down your debts and removing the need to pay monthly interest on things like credit card bills, puts you in a much more financially stable position, can help improve your credit score and clear the way to focussing on potential investment returns.

Note there are some debts (like student loans) where you may not pay interest or have to make a repayment before you reach a certain level in your salary/career. In this case you may want to consider the next steps in the financial journey…

Our budgeting and savings tools can help you to get on top of and pay-off your outstanding debts. For more severe cases of debt, there are many free services and charities ready to help which you can check out here

3. Build an Emergency Fund

Statistically we are all likely to lose our jobs at least once in our careers, and when/if that time comes, we need to be prepared! An Emergency fund or Rainy Day fund, is a pot of money that should cover a number of months of your Essential Expenditures until you’re able to find a new source of income.

Some say it should be for 3 months, others 6 and some 9 or 12, it’s really up to you and what you’re most comfortable with. Again, this is something Kestrl can help you to do with our upcoming Kestrl Savings Eggs product, allowing you to save towards your goals without having to think about it. Sign up to the waitlist here.

4. Save for the Short-term

These are generally things that you want to achieve in the next 5 years like buying a new car, getting married or putting a deposit down on a house. The reason we differentiate between these and longer-term goals, is because you are generally better off saving towards things that you’re trying to achieve in the near future, as opposed to investing towards them.

The reason for this is that Investments are inherently risky, and you are just as likely to lose money as you are to make it in the short-term due to fluctuations in the market, or a whole host of other factors out of your control.

This is something we’re really passionate about at Kestrl, and using our upcoming Kestrl Eggs product, you will be able to visualise your goals on a timeline, and save towards them automatically every month in discrete ringfenced pots or ‘Eggs’ of money.

So why is it safer to invest towards longer term goals?

5. Invest for the Long-term

Whether it’s saving up for a child's education, or simply planning for retirement, long-term goals are typically seen as more appropriate for investment purposes.

But if investments can go up as well as down, why take the risk with things so important?

The reason is that whilst investments may fluctuate significantly in the short-term, in the long-term things tend to move ‘upwards and to the right’, particularly if you are investing into a fund that tracks the market.

Let’s use the recent pandemic as an example, and take a look at the S&P 500, a good tracker of how the US markets are doing:

Between February and March 2020, the Markets fell significantly right after the announcement of National lockdowns. If someone had invested in late 2019 with the short-term goal of buying a new car 6 months later this would look devasting.

BUT if we wait a little longer, we can see that by July/August of 2020 the Markets had completely recovered, and by early 2022 they had increased 1.5x. If we look at how the markets have performed over the last 30 years, it tells the same story.

If you’re looking for halal/Shariah compliant investment options, you can check out a range of services on the Kestrl app’s Investment marketplace including Property, Gold, Investment Savings Accounts and even book a free chat with a Financial Advisor.

If you’re interested in investing into individual stocks then check out Kestrl PLUS, our Shariah stock screening tool in our app. Find out more here.


Thanks for checking out this blog post! Download Kestrl: The Muslim Money App to start achieving your financial goals without compromise today!

Don’t forget to check out Kestrl PLUS, our shariah stock screening tool and access your free trial here.

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