RE: Breaking the Committee/ROSCA Cycle: Is Your Saving Strategy Killing Your Wealth?

I wrote a response and asked ChatGPT to clean it up so it was a little less confrontational :)

I personally find Sharia law to be somewhat constricting as I use a lot of interest bearing items. GIC ladders, High Interest Savings accounts, Preferred shares, ETF's and stock purchases. Most (if not all of them) would be haram under the no riba restriction.

So if this part doesn't carry my usual tone it absolutely carried the meaning:

(AI cleaned up version.. My original version follows :)
First, I really enjoyed the article. You’re absolutely right — money sitting idle loses purchasing power every year due to inflation.

One small clarification: if someone truly deposited 50,000 rupees per month for five years, that would total 3 million rupees. So I may be misunderstanding the committee structure described. If it’s like a ROSCA where everyone contributes monthly and receives the pool once during the cycle, then the math makes more sense.

Regarding Islamic banking: Sharia-compliant savings and investment accounts do generate returns through profit-sharing rather than fixed interest. However, those returns are not guaranteed and may or may not keep pace with inflation.

That’s where the challenge lies. Because Sharia prohibits guaranteed interest (riba), protecting purchasing power without accepting some risk becomes more complex. Investment accounts, small businesses, and Islamic mutual funds all carry real risk — which is permissible — but not everyone is comfortable with volatility.

Certificates of deposit in conventional systems would involve interest and therefore riba. So that option is limited as well.

It made me think more broadly about inflation itself. The real issue isn’t just earning interest — it’s preserving purchasing power. If 1 lakh today buys a basket of goods, next year it may not.

Out of curiosity, I explored whether commodity-backed tokens — essentially modern warehouse receipts — could serve as a Sharia-compliant way to store value. For example, imagine a token that represents a real loaf of bread or a kilo of grain that could be redeemed at any time. In theory, that protects purchasing power without involving riba.

But then I realized — that’s simply reinventing warehouse receipts using modern technology!

Thanks again for the thoughtful article. It’s an important discussion, especially in an inflationary environment.

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For for purists who say no AI content? Here is my original response in rough from the hip format :)

_{First, love the article. Dead money is just losing value each and every month. However, I'll make a few points. I'm not sure what the committee is but it sounds a lot like a Filipino 12 month scheme. The 12 month scheme everyone puts in a certain amount and then on their month they get their portion out. But if someone puts in 50,000 a month for 5 years and only gets 1.2 Million?
They got totally ripped off!}

_{Just thought number 1.
Why not put it into the bank in an Islamic bank savings account? I'm assuming that it is Sharia compliant which means no riba. That means you put in 1 million rupee and you get 1 million rupee. Essentially your money is dead money Why not investment banking accounts or small business? Good idea but again the whole idea of Sharia law is that it isn't compliant if there is no risk and investments can go UP or DOWN.<?sub>}

_{Investment banking account or small business both carry risk and if you need the money and can't accept the risk they aren't idea.}

_{Islamic mutual funds? I fully support them as investments but again accept that mutual funds go both up and down. If you can't risk your money then you look at that and go... hmm... there is a risk, what if it goes down?}

_{Certificates of deposit? I use them for sure, but if there is any interest then that would be riba and haram. Sharia law can come back to bite you on that one :) In Canada and without Sharia compliance? High interest savings account to protect against fiat money deflation? Absolutely. Term deposit to guarantee higher interest than high interest savings account? I absolutely use that in a GIC ladder. Mutual funds, stocks, preferred shares and the like? Way better growth over the decades as long as you can stomach the risk. But Sharia law means there is no interest which cramps the ability to protect against inflation without risk.}

_{Personally I was chatting with ChatGPT about an NFT based, Sharia compliant option to protect your spending power over the years by using an NFT to represent a real world good which could be picked up at any time. Imagine there was a "BREAD" coin which you could purchase today and pickup a loaf of bread at the local bakery. Properly done it could ensure that your money would never lose its purchasing power.}

_{That's the real problem with currency deflation. You can't buy in a year what you could buy today with the money you have. Cryptocurrency and NFT's could allow for a way to store today's value for tomorrow's need essentially giving you a return without riba. But then again I found out that's just recreating warehouse receipts from days long gone :)}

_{Reinventing the wheel by using modern technology to create something long gone hahaha. Thanks for the article and have a great day."}