{"id":7424,"date":"2022-05-31T19:43:02","date_gmt":"2022-05-31T19:43:02","guid":{"rendered":"https:\/\/ifg.local\/articles\/halal-investing-101-guide-islamicfinanceguru\/"},"modified":"2024-02-08T16:45:37","modified_gmt":"2024-02-08T16:45:37","slug":"halal-investing-101-guide-islamicfinanceguru","status":"publish","type":"post","link":"https:\/\/www.islamicfinanceguru.com\/articles\/halal-investing-101-guide-islamicfinanceguru","title":{"rendered":"Halal Investing 101 Guide | IslamicFinanceGuru – IslamicFinanceGuru"},"content":{"rendered":"

Halal Investing 101 Guide<\/h1>\n

You know you need to get investing as otherwise inflation is eating away at your savings. Perhaps you\u2019ve already spent a number of years sat on cash and regret it.<\/p>\n

<\/p>\n

But in order to get investing you want to know how to:<\/p>\n

    \n
  1. What is \u201chalal\u201d investing?<\/li>\n
  2. What are the asset classes you can invest in?<\/li>\n
  3. How much should you invest?<\/li>\n
  4. Where can you find the best companies to invest with?<\/li>\n<\/ol>\n

    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.<\/p>\n

    What is \u201chalal\u201d investing?<\/h2>\n

    \u201cHalal\u201d investing simply means investing that complies with Islamic law (sometimes called sharia-compliant investing).<\/p>\n

    This means that such investments will:<\/p>\n

      \n
    1. Avoid interest (or \u201criba\u201d in Arabic). Riba comes in many forms \u2013 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.<\/li>\n
    2. Avoid \u201cgharar\u201d or uncertainty as well as \u201cmaysir\u201d 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.<\/li>\n
    3. Avoid other obviously haram areas such as companies that deal in gambling, alcohol, arms trade, and pork.<\/li>\n
    4. Avoid more technical aspects such as:\n
        \n
      1. not involving two transactions in one;<\/li>\n
      2. selling that which you don\u2019t yet own; or<\/li>\n
      3. deferring both payment and delivery of the goods.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

        There are subtleties here but usually it is clear-cut \u2013 so don\u2019t worry too much.<\/p>\n

        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<\/a>.<\/p>\n

        For particularly knotty problems, ask the muftis on our IFG Forum<\/a>.<\/p>\n

        What are the asset classes you can invest in?<\/h2>\n

        Here\u2019s a table summarising what asset classes are haram or halal<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
        Product<\/strong><\/td>\nHalal or Haram<\/strong><\/td>\nNotes<\/strong><\/td>\n<\/tr>\n
        Stocks and Shares<\/td>\nHalal<\/td>\nBut only those that meet sharia-screening requirements<\/td>\n<\/tr>\n
        Funds & Mutual funds<\/td>\nHalal<\/td>\nBut only those that meet sharia-screening requirements<\/td>\n<\/tr>\n
        Bonds<\/td>\nHaram<\/td>\n<\/td>\n<\/tr>\n
        Sukuk (Islamic bonds)<\/td>\nHalal<\/td>\n<\/td>\n<\/tr>\n
        Savings Accounts<\/td>\nHaram<\/td>\n<\/td>\n<\/tr>\n
        Islamic Savings Accounts<\/td>\nHalal<\/td>\nUsually only offered by Islamic banks\/home purchase providers<\/td>\n<\/tr>\n
        Gilts<\/td>\nHaram<\/td>\n<\/td>\n<\/tr>\n
        Forex<\/td>\nHaram<\/td>\nSee the detailed fatwa\u00a0here<\/a><\/td>\n<\/tr>\n
        Binary Options<\/td>\nHaram<\/td>\n<\/td>\n<\/tr>\n
        Property<\/td>\nHalal<\/td>\nBut not when you use haram loans to fund it<\/td>\n<\/tr>\n
        Crowdfunding<\/td>\nHalal<\/td>\nIt does depend on the product being crowdfunded but in principle the method of crowdfunding is perfectly fine<\/td>\n<\/tr>\n
        Exchange Traded Funds (ETFs)<\/td>\nHalal<\/td>\nBut only those that actually hold underlying stock \u2013 not those that synthetically create the same effect using derivative instruments.<\/td>\n<\/tr>\n
        Gold<\/td>\nHalal<\/td>\nBut only where you will either end up holding the gold directly or where you invest through a company that holds that gold for you.<\/td>\n<\/tr>\n
        Derivatives<\/td>\nHaram<\/td>\n<\/td>\n<\/tr>\n
        Forwards & futures<\/td>\nHaram<\/td>\nAccording to the majority anyway. However, some scholars view futures as permissible.<\/td>\n<\/tr>\n
        Options<\/td>\nHaram<\/td>\nBut there can be sharia-compliant alternatives (but not really in the USA)<\/td>\n<\/tr>\n
        Startup Investing (venture capital investing)<\/td>\nHalal<\/td>\nBut obviously not startups that are engaged in haram sectors<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        \u00a0<\/strong><\/p>\n

        To compare and find the best halal investments, check out our Halal Investment Platform<\/a>. More on this below.<\/p>\n

        How much should you invest?<\/h2>\n

        So now you have a list of asset classes \u2013 how do you actually allocate your savings across these asset classes?<\/p>\n

        Ultimately, if you are investing a few thousand pound, we recommend checking out our\u00a0Halal Investing for Busy Professionals<\/strong><\/a>\u00a0course. 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.<\/p>\n

        As a really really rough rule of thumb you should be doing the following:<\/p>\n\n\n\n\n\n\n
        Asset Class<\/strong><\/td>\nAllocation of your portfolio<\/strong><\/td>\n<\/tr>\n
        Stocks and Shares<\/td>\n30-50%<\/td>\n<\/tr>\n
        Property (or sukuk if you can get them)<\/td>\n30-50%<\/td>\n<\/tr>\n
        Alternative Assets (find out more\u00a0here<\/a>)<\/td>\n10-30%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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

        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<\/a>.<\/p>\n

        Where can you find the best companies to invest with?<\/h2>\n

        Our Halal Investment Platform is, to our knowledge, the only and best comparison platform to compare halal investments on.<\/p>\n

        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.<\/p>\n

        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.<\/p>\n

        And Finally: the biggest mistake investors make<\/h2>\n

        The biggest mistake investors make is counter-intuitive. They start investing way too late.<\/p>\n

        There is a certain base level knowledge that you need before you dive into investing \u2013 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\u2019re not saying rush into investing at all.<\/p>\n

        But what we are saying is don\u2019t sit on the fence for ages. This article has probably got you a decent way there in terms of that requisite knowledge.<\/p>\n

        With a bit of reading over a weekend you should get there.<\/p>\n

        Once you\u2019re there \u2013 beginner investors hesitate and don\u2019t invest. They prefer to gather more and more info and \u201csee how the markets play out\u201d etc.<\/p>\n

        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.<\/p>\n

        You\u2019ll quickly find within 3-4 months that you are very comfortable with what you\u2019re doing and then you\u2019re off.<\/p>\n

        You just won\u2019t achieve that sat on the side lines.<\/p>\n

        To get started on your journey check out our 5 Essentials to Halal Investing<\/a> course and Halal Investment Platform<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Halal Investing 101 Guide You know you need to get investing as otherwise inflation is eating away at your savings. Perhaps you\u2019ve already spent a number of years sat on cash and regret it.<\/p>\n","protected":false},"author":24,"featured_media":7425,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","wds_primary_category":13},"categories":[13,25],"tags":[33],"acf":[],"_links":{"self":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/7424"}],"collection":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/comments?post=7424"}],"version-history":[{"count":1,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/7424\/revisions"}],"predecessor-version":[{"id":11946,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/7424\/revisions\/11946"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media\/7425"}],"wp:attachment":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media?parent=7424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/categories?post=7424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/tags?post=7424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}