Transcript for Presentation:Slide: Topic: Interest & Compound InterestPresentators: Rehan AhmedKashif HyderDisclaimer

Slide:In this presentation we will learnWhat is compound interest & how it worksHow much is compound interest actually worthWhat Islam says about compound interestSome Misconceptions & Correction to those misconceptionConclusion

Slide:I will start this presentation with an assumption. Lets assume you are walking down the street and some mysterious stranger offers you a proposition. He will give you either a million rupees, or a rupee that doubles every day for a month.So, what will be your choice 1 Million Rupees or 1 Rupee that doubles every day till 30 days!1 Million Rupees is a huge amount against a rupee so you should have taken 1 Million from the stranger.

Slide:But 1 Rupee is the best choice. B/c at the end of 30 days, you would have 536Million, which is a little more than one million rupees, isn’t it?

Slide:This can further be clarified with the help of squares, as much as we doubled our amount, the final figures till 30 days would be 536M.

Slide:Compound Interest is very powerful and its ultimately decides the difference between the wealthy and the not wealthy. The wealthy have figured out how to earn money at a very high rate of return for a long period of time.Now take a look at the figures on the screen. Lets assume 100 rupees returned an average of 10% per year & simple interest takes your 100 rupees and grows to 2,650 Rs. Not bad, until you see what compound interest does after 50 years, your 100 rupees now worth 19,611 Rs!.

Slide:Now take a look at the chart on the screen, it shows what you can expect from a 100 Rs investment over 50 years, compound interest vs simple interest.By assuming 100 Rs returned an average of 10% per year. Can you guess which line is which?If you guessed that compound interest is the blue line, you’re spot on. As you can see, the two lines are pretty close at the beginning of the chart, but before long compound interest starts to pull away faster than a Ferrari at a green light.

Slide:A traditional graph for those who want to see graph with plotted values.

Slide:When asked to name the greatest invention in human history, Albert Einstein replied simply, “Compound Interest”Lets talk about what Islam says regarding Compound Interest. Religion Islam is truly against with charging of Simple & Compound Interest and declared it as a great sin.

Slide:As mentioned in the Holy Book:O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful. Al-Quran (3: 130) As mentioned in Hadith:Abu Hurayrah narrated that the Prophet (P.B.U.H) said: “God would not allow four persons to enter paradise or to taste its blessings: he who drinks wine, he who takes riba, he who usurps an orphan’s property without right and he who is undutiful to his parents.”

Slide:Islam Prohibits from charging interest because it create hurdles for the economy, some major causes are:EmbezzlementBriberyMiserlinessCallousnessFinancial GreedBankruptcy

Slide:Majority have a misconception that only compound interest is prohibited and simple interest is permissible which is incorrect.Mentioning of Doubling & Redoubling is to terminate the shameful aspect of interest charging rather than limit its permissibility.Slide:Conclusion:So to conclude this presentation my opinion is Yes, interest charging is disastrous for economy and every one should abstain from it – Say no to simple & compounding interest.