Let’s talk about stock investing in a way everyone can understand: food.

Stock Investing, when done well, is like a well-cooked meal. But when done badly it can give you more than a sore belly.

In this article, we’ll go through the best way to prepare and cook a healthy portfolio. The contents include:

1. A short story
2. High-quality ingredients (AKA stocks)
3. Halal ingredients
4. A range and balanced ingredients
5. Spices
6. Slow cook it
7. Join our masterclass with our master chefs.

1. A short story

Is it really an online recipe without a long and unnecessary story no one asked for? Luckily for you, we’ll keep it short.

Our motto at IFG is helping Muslims (and non-Muslims) make smart financial decisions. To achieve this, we hold many courses and release numerous recipes (aka articles).

This recipe is designed for those cooks that are wanting to invest in the stock market. Yes, it will take time to master. But, if you follow the basic steps in this article, there’s no reason why you can’t get your finger in the pie and make some money.

You can read more about that and our master chefs here.

Let’s start this recipe with the most important part – the ingredients.

2. High-quality ingredients (AKA stocks)

Ultimately ingredients need to be high quality (the individual stocks). There are two ways to do this:

1. Learn how to pick them by reading our articles and joining our courses.
2. Rely on someone else who is good at picking them – the top funds in the world. Check out our IFG Fund Replicator.

3. Halal ingredients = Halal portfolio

A haram meal (stock portfolio)? No thank you.

It’s like gelatine in your favourite sweet. Cadbury Trifle may taste good, but Pork Gelatine makes it a no-no.

The gelatine here is a haram stock. A healthy profit-making portfolio is no good if an ingredient is a haram.

You can’t make money off the stock market from companies that are not shariah compliant. Apps like Zoya or Islamicly can help with this, however, they’re always just a starting point. You need to check yourself.

You can learn how to find halal stocks which are halal by:

1. reading some of our stock screening articles, such as this one on Apple.
2. Our halal stock screener course.
3. Our IFG Fund Replicator also sharia screens the full list we share with you.

4. A range and balance of ingredients

A stock portfolio needs to be created. What we mean by this by having a combination of ingredients. It’s no fun just eating garam masala on its own.

What we mean here is by making a portfolio that is to be balanced and diversified in many ways.

You want a range of ingredients that gives exposures to risk, type, geographical and industry.  

• Regarding risk, you want some high risk, high return investments in there. Although they are risky, they are rewarding and should typically make up only a small part of your portfolio (10-30%).
• Be sure to include different types. For property development investing, Godwin Capital, Top Yielders, and IntroCrowd are great options.
• Looking at geographical variants? Sukuks are one example. A Sukuk is an Islamic bond. The top holdings of Sukuk funds are in foreign countries such as Malaysia, Saudi Arabia and Pakistan. Wahed Invest has Sukuk available in all of their portfolio types asides from the very aggressive option. Their very conservative portfolio is 92.50% Sukuk. You can access Wahed Invest here.

Just like food needs, texture, depth, flavouring, salt etc, so does your portfolio. Putting in too much and constantly making changes ends up spoiling food – same with a portfolio – let it slow cook.

5. Spices

You want a little bit of spice/kick to it. Otherwise too bland. That’s where the AIM (Alternative Investments Market) index comes in.

We have a general article on the AIM here and a list of the pros and cons here.

In summary, The AIM Index is full of young, small and growing companies and is home to famous brands such as Boohoo and ASOS that have seen huge growth over the past decade.

6. Slow cook it

You need to know who you are cooking for and what time you have – that guides the recipe you opt for and the flavours.

The same applies in a portfolio – you temper your risk depending on goals, and how long you have.

Take Day trading. This is the fast food of the stock market. It’s for those who are skilled enough to make a profit in a day. However, day trading is hard – it’s not a get-rich-quick scheme. It requires a lot of education and practice.

If you don’t want to day trade and prefer a slow rosed lamb shoulder, we’d recommend:

1. Using funds or robo-advisory platforms to take the headache out of investing and let them just do it for you. You can compare all the halal investment funds on our comparison page here (just filter for “stocks & shares”).
2. If you’re keen to get more hands-on (I know we personally often are) then learn how to screen stocks in a halal way, invest for the long-term, and pick high-quality and revenue-generating businesses. This type of investing doesn’t require as much data, isn’t as reliant on timing and fast internet connections and full-time professional focus. This is the type of investing we usually do. Here’s an article about how Ibrahim made 108% over the last 4 years.

7. Join our masterclass

Prefer to get one-on-one help from our master chefs?

Luckily for you, we have plenty of classes here.

This includes our Halal Investing for Busy Professionals online course. It will help you get going on your investment journey step-by-step in an afternoon.

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