While there are all kinds of investment options out there, some of them are prohibited by Islamic Law, so all devout Muslims have to be very careful when choosing their ways to earn some money. With all the novelties on the market, it can prove pretty difficult to determine truly halal, or permitted, investing opportunities. In this article, we explain how to tell the difference and give a couple of great examples of notably profitable investment options that still manage to stay halal.
Halal investing basics
Islamic Law establishes a strict code of conduct for all true Muslims to clearly define what’s forbidden and what’s allowed for them. In particular, there are limitations on investments: you can’t invest in any business related to alcohol or gambling, and you should avoid interest-bearing instruments. All these limitations make choosing a legal investment option harder since you should really pay close attention to how companies make their money. However, there are still several halal assets you can trade.
Halal trading assets
First of all, you can always invest in stocks of any company not involved in prohibited activities. While sometimes it requires that you analyze a company’s asset structure, investing in stocks is halal. Forex trading is also considered halal, but there’s an important detail: swaps are not allowed, so you should trade through a swap-free account. However, most Forex brokers have such accounts, and some of them are even called halal accounts to help you out.
The list of the best halal investment options should definitely include cryptocurrencies. While there are still debates on whether they should be considered halal, some tokens have already been recognized as Shariah-compliant instruments, so you can invest in them without any doubts. The rules are similar to Forex trading: all trades must be held on the same day to avoid earning any interest. ETF funds are also halal since buying them basically means investing in numerous stocks at once. Check out this article to learn more if you have been wanting to know the answer to the question how do etfs work?
Investing in precious metals is also allowed. Gold and silver are considered the most appropriate ones for investments, but some people believe only gold should be allowed, so make sure to double-check this according to your beliefs. Real estate is another safe investment option, but you should be really careful not to purchase anything involving interest. If you’re in doubt, ask an Islamic scholar about it to ensure you don’t do anything illegal.
