HALAL WAYS OF INVESTING

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 HALAL WAYS OF INVESTING

Riba (interest) is a popular method of making money from investment however, Islamic rules prohibit Muslims from collecting Riba.

halal investing

This has been established in many Quranic verses, one of which  is Surah Al-Baqara which states:

Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: "Trading is only like Riba (usury)," whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the Fire - they will abide therein (Surah Al-Baqara, Verse 275).

O you who believe! Eat not Riba (usury) doubled and multiplied, but fear Allah that you may be successful (Surah Aal-e-Imran, Verse 13).

As opposed to investment plans that involve Riba, Halal investments give Muslims the opportunity to grow their wealth following the tenets of Islamic rules. 

What is a halal investment?

Halal means anything lawful according to the Sharia. Halal investments are investment plans that :

- do not involve collecting usury (interest)

- do not involve investing in companies that sell Haram products like alcohol, pork e.t.c

- do not involve uncertainties e.g. gambling

Types of halal investment

These include:

● Stocks: Stocks are company shares that are made available to the public. It is an investment plan that has been around for a long time and is a halal way of growing your wealth. When you buy shares, you have an ownership right to the company and you share the risk of business with the company.

This means that If the company grows, your stock also grows and you can sell off at a higher price after some time but if the company suffers a loss, your stocks also depreciate.

As a Muslim before buying stocks, you have to ensure that the company is not involved in sales of Haram products like alcohol and pork.

Apps like Islamicly can help in verifying companies before investing.



● Sukuk bond: Sukuk bonds are just like traditional loans but unlike traditional loans where investors receive principal (money lent) and a fixed percentage on the principal(interest), with sukuk bonds, the investor gets his/her money back with some agreed percentage of the profit over an agreed time only when the business makes a profit.

This is in line with Islamic financial rules which advocate for the equal sharing of risk and profit. Cowrywise is a company that has a sukuk bond plan.

● Real Estate: Real estate has been around for a long time now and it is a secure means of investment.

It can however be capital-intensive. A way to circumvent this is by joining resources together with a trusted group of people to buy a real estate property.

You can then share the profit gained on the property hk each other.

● Mutual trust funds: These are very similar to stocks. A mutual fund contains stocks from various companies. It allows you to invest in multiple stocks from just purchasing a mutual fund. For instance, a mutual fund can contain stocks from Apple, Amazon, and Google. So, when you buy that particular mutual fund, you get to have investments in these three companies in just one buy.

The only downside is that you have to do lots of research to ensure that all companies that have stocks in the mutual funds sell halal products; however, there are apps like the Goya app that help with this.

 

Conclusion

Halal investment is a growing part of the finance sector with both Muslims and Non-Muslim going into it. Companies in Nigeria that provide halal investment plans include: Cowrywise, ARM investment manager, Stanbic IBTC and Loutus Capital amongst many others.

 

As a Muslim growing your wealth in a halal way by investing is possible. You can try out any of these options and see how it goes.

Let us start building wealth!

See you next time.

 

Written by - Akanbi, Oluwatomisin Khadijat


References

Shazain, H. (2021) Halal investment - A beginner's guide, Qardus. . Available at: https://www.qardus.com/news/halal-investment-a-beginners-guide (Accessed: December 24, 2022).

 

Benson, A. (2022) What is halal investing?, NerdWallet.  Available at: https://www.nerdwallet.com/article/investing/halal-investing (Accessed: December 24, 2022).

Patel, M. (2021) Halal investment ideas for 2022., Islamic Finance Guru | IFG. Adam. Available at: https://www.islamicfinanceguru.com/home (Accessed: December 24, 2022).

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