Is Share Investing Halal or Haram?

Summary

This video script discusses the potential of halal stock investing for Muslims, highlighting the FTSE 100's 26% growth despite market volatility. It emphasizes the current economic climate, where governments are injecting funds into the economy, likely benefiting the stock market. The script outlines five key steps to identify halal stocks, including ensuring the business is not haram, the company has a low debt-to-asset ratio, and less than 5% of revenue comes from haram sources. It also suggests using robo-advisors, stock screening apps, or doing thorough research. The speaker offers resources, like a halal stock screening course, to help Muslims invest ethically.

Takeaways

• 📈 The FTSE 100 has increased by 26% over the last decade, suggesting potential for halal stock investing.
• 🌐 Governments are injecting vast sums into the economy, which could lead to growth in assets like stocks and property.
• 🚫 Many Muslims avoid stock investing due to misconceptions about it being similar to gambling or involving haram activities.
• ✅ The majority of scholars consider stock investing halal, provided certain criteria are met.
• 🤖 Using a robo-advisor or Islamic fund manager is one way to invest in halal stocks without doing the screening yourself.
• 📱 There are apps available for初步 screening of stocks for their halal compliance, though they may not be fully reliable yet.
• 🔍 Investors should conduct their own due diligence to ensure the stocks they choose meet halal standards.
• 🚫 The first step in halal stock screening is to ensure the company's business is not haram, such as alcohol, tobacco, or firearms.
• 💼 Ethical considerations are important, including checking for issues like slave labor or environmental harm.
• 💵 A company should not have an impermissible level of debt; a threshold of 33% debt to total assets is often used.
• 🔗 Companies should not derive more than 5% of their revenue from haram sources, such as the sale of alcohol or pork.
• 🏦 It's important to ensure the company has illiquid assets and is not just a shell company holding cash.

Q & A

How has the Footsie 100 performed over the last decade despite various market conditions?

Despite various market conditions, including the recent coronavirus pandemic, the Footsie 100 has still increased overall by 26% over the last decade.

Why is now considered a good time for Muslims to explore stock investing in a halal way?

Now is considered a good time for Muslims to explore halal stock investing because governments around the world are pumping hundreds of billions into the economy, which historically has led to increased investment in assets like stocks and property.

What are the common misconceptions about stock investing being Haram among Muslims?

Common misconceptions include the belief that stock investing is too similar to gambling, involves too many haram companies, and is associated with interest-bearing loans which are not permissible in Islam.

What does the majority of scholars say about the permissibility of stocks and shares in Islam?

The majority of scholars have said that stocks and shares are halal, but investors need to follow specific criteria to ensure they are only investing in halal stocks.

What are the three options Muslims have for investing in halal stocks without doing the screening themselves?

Muslims can invest through a robo-advisor, an Islamic fund manager, or use apps like Zara Islamically and other stock screening apps to find halal stocks.

What are the five steps to ensure a stock is halal according to the video?

The five steps are: 1) Ensuring the business is not haram, 2) Checking the company is ethical, 3) Ensuring the company has a tolerable level of debt (less than 33% debt to total assets ratio), 4) Making sure the company has no more than 5% of its revenues from haram sources, and 5) Ensuring the company has some illiquid assets.

What is the significance of the 33% debt to total assets ratio in halal investing?

The 33% debt to total assets ratio is significant because it represents a tolerable level of Haram debt that scholars have determined as permissible for a company to be considered halal for investment.

Why is it important to ensure a company has illiquid assets when considering halal investment?

It is important to ensure a company has illiquid assets to avoid investing in a shell company that only holds cash, as this would not be in line with Islamic principles which require money for money transactions to be equal.

What resources does Islamic Finance Gurus provide to help Muslims invest in halal stocks?

Islamic Finance Gurus provides resources such as a halal stock screening course, a halal stock list based on the Footsie 100, and an investment comparison engine to help Muslims invest in halal stocks.

How can Muslims ensure they are investing in halal stocks if they want to do the screening themselves?

Muslims can ensure they are investing in halal stocks by following the steps outlined in the halal stock screening course provided by Islamic Finance Gurus, which includes a checklist and practical steps for screening stocks.