Halal Investing 101 Guide | IslamicFinanceGuru

Halal Investing 101 Guide

You know you need to get investing as otherwise inflation is eating away at your savings. Perhaps you’ve already spent a number of years sat on cash and regret it.

But in order to get investing you want to know how to:

  1. What is “halal” investing?
  2. What are the asset classes you can invest in?
  3. How much should you invest?
  4. Where can you find the best companies to invest with?

This is the guide for you. It is written for beginners to leave you in a position to be ready to start making some key investing decisions quickly.

What is “halal” investing?

“Halal” investing simply means investing that complies with Islamic law (sometimes called sharia-compliant investing).

This means that such investments will:

  1. Avoid interest (or “riba” in Arabic). Riba comes in many forms – so a halal investment will not just avoid straight up interest, but it will also avoid its subtler forms as part of the structuring of the transaction.
  2. Avoid “gharar” or uncertainty as well as “maysir” or gambling/games of chance. So for example investments that involve an element of gambling (e.g. spread betting) or insurance-linked products, would be problematic.
  3. Avoid other obviously haram areas such as companies that deal in gambling, alcohol, arms trade, and pork.
  4. Avoid more technical aspects such as:
    1. not involving two transactions in one;
    2. selling that which you don’t yet own; or
    3. deferring both payment and delivery of the goods.


There are subtleties here but usually it is clear-cut – so don’t worry too much.

To find out how to navigate what is halal or haram from a practical perspective (e.g. what scholars to trust etc) , check out our article here.

For particularly knotty problems, ask the muftis on our IFG Forum.

What are the asset classes you can invest in?


Here’s a table summarising what asset classes are haram or halal

Product Halal or Haram Notes
Stocks and Shares Halal But only those that meet sharia-screening requirements
Funds & Mutual funds Halal But only those that meet sharia-screening requirements
Bonds Haram
Sukuk (Islamic bonds) Halal
Savings Accounts Haram
Islamic Savings Accounts Halal Usually only offered by Islamic banks/home purchase providers
Gilts Haram
Forex Haram See the detailed fatwa here
Binary Options Haram
Property Halal But not when you use haram loans to fund it
Crowdfunding Halal It does depend on the product being crowdfunded but in principle the method of crowdfunding is perfectly fine
Exchange Traded Funds (ETFs) Halal But only those that actually hold underlying stock – not those that synthetically create the same effect using derivative instruments.
Gold Halal But only where you will either end up holding the gold directly or where you invest through a company that holds that gold for you.
Derivatives Haram
Forwards & futures Haram According to the majority anyway. However, some scholars view futures as permissible.
Options Haram But there can be sharia-compliant alternatives (but not really in the USA)
Startup Investing (venture capital investing) Halal But obviously not startups that are engaged in haram sectors


To compare and find the best halal investments, check out our Halal Investment Platform. More on this below.

How much should you invest?

So now you have a list of asset classes – how do you actually allocate your savings across these asset classes?

Ultimately, if you are investing a few thousand pound, we recommend checking out our Halal Investing for Busy Professionals course. This will systematically take you through the relevant asset classes, explain how you should think about your investment objectives and give you some portfolio allocation examples.

As a really really rough rule of thumb you should be doing the following:

Asset Class Allocation of your portfolio
Stocks and Shares 30-50%
Property (or sukuk if you can get them) 30-50%
Alternative Assets (find out more here) 10-30%


So for example, a 40/40/20 allocation across those three groups could be a middle-of-the-road kind of approach.

But of course for each person there are a variety of individual factors which will shape what is most appropriate for you. For that, check out the course.

Where can you find the best companies to invest with?

Our Halal Investment Platform is, to our knowledge, the only and best comparison platform to compare halal investments on.

We have a rigorous onboarding process where we make sure the company is offering something sharia-compliant and is appropriately regulated and its core claims stack up.

This ensure that all the companies on there are halal, of a certain level of quality, and you get helpful notes entered alongside each company on our thoughts and guidance with respect to them.

And Finally: the biggest mistake investors make

The biggest mistake investors make is counter-intuitive. They start investing way too late.

There is a certain base level knowledge that you need before you dive into investing – that knowledge is whatever is necessary to give you a rough sense of the lie of the land and what kind of asset classes and investment companies you can go for. We’re not saying rush into investing at all.

But what we are saying is don’t sit on the fence for ages. This article has probably got you a decent way there in terms of that requisite knowledge.

With a bit of reading over a weekend you should get there.

Once you’re there – beginner investors hesitate and don’t invest. They prefer to gather more and more info and “see how the markets play out” etc.

Instead, a better way to learn is to commit small amounts of money into various asset classes and see how you get on. Actually investing (in a controlled-risk way) is the best way to learn to invest.

You’ll quickly find within 3-4 months that you are very comfortable with what you’re doing and then you’re off.

You just won’t achieve that sat on the side lines.

To get started on your journey check out the Halal Investment Platform.

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