Two-Step Strategy To Retiring Early in a Halal Way

We talk to a lot of people at IslamicFinanceGuru and one thing we hear a lot is people do not want to be working all their lives if they can help it. They want to retire early.

The purpose behind this article is to set out two effective ways that you can do just that.

But before we dive into those strategies, please note that as a high-level first priority when it comes to your money, you should:

  1. Have cleared your debt; and
  2. Have a 6-month saving pot to fall back on in times of difficulty.

With that said, let’s dive in.

There are two major ways to grow your money and retire early

  1. Frugality and Saving
  2. Investments and Equity

Let’s consider each of these in turn.

Frugality and saving

A person who earns a million and spends it is not rich. That person serves only as a conduit for money which comes and goes through him. But when a person begins to spend below his means, he saves for the future.

You don’t need to buy everything you see out there. Try to differentiate what you need from what you want. Needs are things you can’t do without such as food, rent, transportation etc. while wants are things you can do without like eating out regularly, the latest gadget you ordered, or the expensive make-up set you probably don’t need.

Save up and equip yourself for opportunities to make your money grow. Your future self will thank you for it.

Here are some practical ways to save money:

  • Create a budget: When you receive your salary, don’t go on a spending spree. Sit down and write down everything you might need till the next salary. Write the amount of each item by the side. Differentiate your needs from your wants. From your wants, decide to forego one or two things that won’t hurt you too much. E.g. skipping a weekend meal out or a visit to the cinema. Strike those out of your list and keep the money in your bank account.
  • Shop the lower shelf: Supermarkets put the most expensive option at the top shelf as it is at eye level and they put the “value” or “budget” items right at the bottom where you have to stoop down to buy it. For your monthly shop this month, make the conscious effort to just shop one shelf below what you usually do. You’ll likely knock around 10-15% off your receipt straight away.
  • One in One out: Whenever you buy something new – get rid of something old by selling it on eBay or Gumtree or Facebook Marketplace. This will not only save you space, it will offset the cost of that purchase with however much you make from your second-hand sale. Doing this also has the benefit of getting into the mindset that a) you don’t need multiple versions of one thing; and b) there is a real cost to buying everything.
  • Cancel subscriptions you don’t use: When was the last time you went to the gym? Seven, six months ago? Do you have to subscribe to Disney+ and Hulu after you already have Netflix? When you go through your subscriptions make sure you are using those services. Cancel subscriptions you don’t use or services that are already provided by other subscriptions.
  • Save automatically: Saving may not come easy for everyone and some people struggle with saving more than others. It is easier when you don’t even get to lay your hands on the money. You can get your bank, accountant or even an app to remove a percentage from your salary and send it to your savings account every month. So when your salary is paid, a certain percentage is sent to another account which you can’t withdraw from until a certain time (which you agreed). This removes the friction of saving and also saves you time and effort. But don’t also be unrealistic and save so much that you really struggle – because long-term all that will do is make it less likely you continue sticking to your saving plan.
  • Get yourself an Islamic Will. On average you’ll save around £9,700 in lost assets and costs by having an will. As a Muslim you need one anyway as otherwise your inheritance won’t be distributed Islamically in England & Wales. And if you have total assets above £325,000, you could end up paying thousands in inheritance tax without a will. We have a detailed guide to Islamic wills in the UK here.

Investments and Equity

“You can’t retire early by just saving.”

You must have heard variants of this before – and it is true. Let us say you save $1000 per week for 20 years that would be 1040 weeks and you would have said a little above a million in twenty years.

Given the most people can’t afford to save $1000 a month, they will likely end up saving far less.

So what do we do?

We invest.

Investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. Investments do not have to be about yourself alone, it could be for your children too. Ibrahim recently did an article about how your children’s Eidi could pay for their university fees.

Here are some investment ideas to get you started

  • Stocks & Shares: you can do this DIY, through a roboadvisor, or via a fund manager. To compare your options, see our Halal Investment Comparison engine.
  • Property: DIY it with an Islamic mortgage or go through someone like Yielders. You can compare Islamic mortgages here.
  • Angel Investing: Once you have a bit more cash and can afford to take some risks, you can invest in startups. We run an angel syndicate that does exactly this. You can check it out here.
  • Having a side hustle:  A side hustle here refers to a scalable business and or a business that does not require your constant input. You can even buy your own small business that is already up-and-running. See Mohsin’s podcast episode on how he did it.

Of these, angel investing and having a side hustle are the two investment options that are high-risk and high-reward. But because of that they’re also the options most likely to deliver you a return which dramatically brings forward your retirement age. Ibrahim recently did a Youtube video showing how the 1% invest their money.


While most people don’t want to work till their old age, we often don’t get started taking those steps so that becomes possible.

To get there you need to take two steps. First, you earn the money and save it. Second, you grow the money and get it working for you.

Muhammad Tahir is a writer with special interests in personal and Islamic finance. When he is not cheating engineering with writing, you’d find him eating. He enjoys playing tennis.


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