Is Investment In The Stock Market Halal Or Haram? Best Guide In 2023

Reviewed by: Shakira Ahmed
Fact Checked by: Shahina Islam

Is Investment In The Stock Market Halal or haram
Is Investment In The Stock Market Halal

Is Investment In The Stock Market Halal? Stock markets are the most profitable market If traded in it with analysis. Muslims always wonder if Is Investment In The Stock Market Halal and if it is halal how can they start investing in the stock market?

Investment in the stock market is halal for Muslims. those who want to make some money on it can invest in halal companies that manufacture and deal with halal products.

In this article, we will discuss whether is an investment in the stock market halal or not by considering all the facts. So let’s get started.

Is Investment In The Stock Market Halal? What Is The Halal Investment?

Halal investment is a method of investment in which compliance with Shariah laws is compulsory To keep it halal.

There are some conditions that investors have to fulfill at any cost, which are as follows:-

  1. Stocks of companies whose products are not permitted in Shariah are prohibited to own, purchase, sell, etc.
  2. Stocks of companies that abide by the rules of Shariah, such as Islamic banks and Islamic insurance companies are permissible.
  3. Stocks of companies whose products are permissible but the company indulges in non-allowed transactions- such as getting interest-based financing, depositing in banks for interest, and making contracts that include prohibited conditions. 

The nature of the business of the company should focus on religious values and social well-being. At the starting point, the main business of the company must be accepted (halal) according to Islamic principles. 

Merits Of Halal Investments In Stocks 

1. Islamic investments:- By making Investments in halal stocks you are doing it the Islamic way which is a social responsibility for every Muslim investor.

2. Riskless Investment:- By doing halal investments in the stock market there are no chances of risk being left in investments. 

3. Maintaining wealth in a halal way:- By investing in halal stocks the profit earned from it helps in building halal wealth.

When Investments In The Stock Market Are Considered Haram?

Is Investment In The Stock Market Halal: If Investment in the stock market is done in any company which is connected with the following prohibition under Shariah laws then the investment would be considered haram.

  1. Gambling
  2. Trading with non-deliverance of goods or service
  3. Transactions that contain bribe element
  4. Conventional banks
  5. Conventional leasing companies

If any of the above-prohibited elements are connected with a company whose investment in a share is done by any Muslim then it will be considered haram.

In Shariah laws gambling is prohibited and the stock market is not far from speculation in price fluctuation either by natural or artificial means. In this scenario, it will be prohibited to not invest in the stock market.

Are Muslims Investing In The Stock Market?

Yes, any Muslim can invest in stock markets, Shariah allows only common types of stocks to be traded. According to the Shariah law, the normal type of stock of any company can be traded as long as the main business of the company will be under Shariah rulings.

Things Muslim Investors Should Know Before Investments In Stocks

  1. There should be no interference of risk and uncertainty (gharar ) it is prohibited in Shariah laws to participate in the short selling of funds and stocks.
  2. Investment in Prohibited product manufacturing company stocks is haram.
  3. No investments should be made in any stocks which affected by speculation elements, it is highly prohibited.
  4. Riba-based investment is prohibited in Shariah laws and thus considered haram in Islam.

Fatwas On Investment In Share Market

According to Darul Ifta,

Darul Uloom Deoband, India

(Fatwa: 75/48=H/1429)

Investment in the stock market is lawful if within lawful limits, otherwise not. The conditions of being lawful are hereunder:

  1. The company in which you are investing does not deal only in haram items like interest-based transactions etc.
  2. All the assets of the company are not in the form of cash only, rather it owns some buildings, property, and goods.
  3. If the business of the company involves some haram part as well, then to avoid haram you and other Muslim shareholders should keep on diverting the attention of the company to it.
  4. As much haram (like interest) is received in your you should give it in charity to the poor and needy without an intention of reward just to get rid of the curse of haram.
  5. By purchasing shares one should aim at having a partnership, not only profiting by leveling differences. If these conditions are met dealing in shares will be allowable, otherwise not. Instead of looking at different views, look at the conditions and then proceed ahead.

How Do You Know If A Company Is Halal?

Is Investment In The Stock Market Halal: The question of whether investing in the stock market is halal is an important one for many Muslim investors. As with most things in life, there is no one-size-fits-all answer.

Ultimately, it is up to the individual investor to determine whether or not a particular stock is suitable for their own portfolio.

When it comes to investing in the stock market, there are several factors to consider when determining if a company is halal. The most important factor is whether or not the company’s activities are permissible under Islamic law.

This includes examining the company’s business practices, such as its involvement in industries that are prohibited, such as finance, gambling, alcohol, and pork.

When researching a company, it is important to read through the company’s financial filings to see what products and services they offer. Additionally, investors should look into the company’s corporate governance and its ethical policies.

Is Investment In The Stock Market Halal
Is Investment In The Stock Market Halal

This will help provide insight into the company’s decision-making processes and ensure that the company is acting in accordance with Islamic law.

It is also important to look into the company’s financial performance and any potential risks associated with the stock. This includes analyzing the company’s past performance and any current trends in the industry.

Additionally, investors should pay close attention to the company’s liquidity, debt levels, and other financial ratios.

Finally, investors should consider investing in halal-compliant stocks, such as those listed on the Dow Jones Islamic Index. These stocks are screened to ensure that they meet the criteria of Islamic law.

Additionally, investors may also want to consider investing in alternative investments, such as commodities, real estate, gold, and even cryptocurrencies, such as bitcoin.

Read Also:-

Is Investment Banking Haram Or Halal? Best Guide 2023

Is It Haram To Work In A Bank? Know The Facts In 2023

Halal Stocks List

List of Halal Certified Stocks (source)

SymbolStock NameWhere To Buy
DDDuPont de Nemours IncWealth
simple
PFEPfizer Inc.Wealth
simple
XOMExxon Mobil Corp.Wealth
simple
MRKMerck & Co IncWealth
simple
MDTMedtronic PlcWealth
simple
APDAir Products & Chemicals Inc.Wealth
simple
ABTAbbott LaboratoriesWealth
simple
RDS/BRoyal Dutch Shell Plc – ADRWealth
simple
ADIAnalog Devices Inc.Wealth
simple
TJXTJX Companies, Inc.Wealth
simple
PGProcter & Gamble Co.Wealth
simple
SNNSmith & Nephew plcWealth
simple
TELTE Connectivity LtdWealth
simple
ASMLNew York SharesWealth
simple
INTCIntel Corp.Wealth
simple
CHAChina Telecom CorporationWealth
simple
INTUIntuit IncWealth
simple
CHLChina Mobile LimitedWealth
simple
SAPSap SEWealth
simple
LINLinde PlcWealth
simple
SNYSanofiWealth
simple
BHPBHP Group LimitedWealth
simple
CVXChevron Corp.Wealth
simple
NSCNorfolk Southern Corp.Wealth
simple
NVSNovartis AGWealth
simple
ADBEAdobe IncWealth
simple
EMREmerson Electric Co.Wealth
simple
PLDPrologis IncWealth
simple
JNJJohnson & JohnsonWealth
simple
ADPAutomatic Data Processing Inc.Wealth
simple
BPBP plcWealthsimple
MDLZMondelez International Inc.
(Class A)
Wealth
simple
CRMSalesforce.Com IncWealth
simple
RDS/ARoyal Dutch Shell Plc – ADR
(Class A)
Wealth
simple
SLBSchlumberger Ltd.Wealth
simple
JDJD.com IncWealth
simple
ETNEaton Corporation plcWealth
simple
BABAAlibaba Group Holding LtdWealth
simple
CHUChina Unicom Hong Kong LtdWealth
simple
BBLBHP Group PlcWealth
simple
FTVFortive CorpWealth
simple
DHRDanaher Corp.Wealth
simple
TXNTexas Instruments Inc.Wealth
simple
EXCExelon Corp.Wealth
simple
CEOCnooc Ltd.Wealth
simple
SNPChina Petroleum & Chemical CorpWealth
simple
LLYLilly(Eli) & CoWealth
simple
PTRPetroChina Co. Ltd.Wealth
simple
RIORio Tinto plcWealth
simple
NKENike, Inc. (Class B)Wealth
simple

Steps To Finding Halal Stocks

Investing in the stock market can be a great way to increase your wealth and financial security, but for Muslims, it can often be difficult to determine which stocks are Halal and which are not.

Fortunately, there are a few simple steps you can take to ensure that your investments in the stock market are in accordance with Islamic principles.

First, it is important to recognize that not all stocks are created equal when it comes to Halal investments. You will want to research and familiarize yourself with Islamic finance and banking principles in order to determine which stocks are permissible in Islam.

Additionally, many Islamic banks and investment firms offer guidance on Halal investments and can help you make informed decisions.

Secondly, you should take the time to understand the different types of stocks and their associated risks. Stocks can range from blue-chip companies that are considered safe investments to more speculative investments such as penny stocks or cryptocurrencies.

You will want to research and understand the different types of stocks and their associated risks in order to make the best decision for you and your investments.*Is Investment In The Stock Market Halal

Thirdly, you should research the companies you are considering investing in. This includes researching their financial statements and performance, their management team, and their business operations.

This will help you to make an informed decision on whether or not the company is a good fit for your Halal investment portfolio.

Finally, you should consider the potential tax implications of your investment. Certain types of investments may be subject to capital gains taxes or other forms of taxation.

Make sure you understand the tax implications of your investments before making any commitments.

Read Also:-

Are Roth IRA And 401K Investing Halal Or Haram? – Best Guide

Is It Haram To Invest In Bitcoin

Investing in the stock market can be an attractive option for many Muslims, but it is important to understand the religious implications of such investments before diving in.

The primary concern for Muslims is whether or not investing in the stock market is considered halal (permissible) or haram (forbidden).

In the Islamic faith, all economic transactions must comply with Sharia law, which is derived from the Quran and Sunnah (the words and actions of the Prophet Muhammad).

This means that all investments must adhere to Sharia-compliant laws, which include avoiding activities that are deemed to be unethical or exploitative.

When it comes to stock market investments, one of the key considerations is whether the company in which you are investing is engaged in activities that are deemed to be impermissible under Sharia law.

For example, companies that are involved in activities such as gambling, alcohol production, and certain types of financial services may be considered haram, and therefore investing in them would be forbidden.

In addition to considering the activities of the company you are investing in, it is also important to consider the type of stock you are investing in. For example, stocks that are considered to be “preferred” are usually considered to be more halal than those that are considered to be “common” stocks. Preferred stocks tend to have a higher dividend and are generally more stable than common stocks, which makes them less risky investments.

Finally, it is important to remember that investing in any form of asset carries a degree of risk. As such, it is important to be aware of the potential risks associated with stock market investments and to make sure that you are comfortable with the level of risk before making any investments.

For more information on “Is Investment In The Stock Market Halal” do watch the video given below:-

Is Investment In The Stock Market Halal

Frequently Asked Question

Q1: Is Share Market Haram In Islam?

No, it is not completely haram if some company meets all the laws of Islam then investing in that company’s stocks is halal.

Q2: What Type Of Investments Is Haram?

The investments in prohibited products like alcohol, pornography, etc. And riba-based Investments are haram in Islam.

Q3: What Stocks Are Haram?

Alcohols, tourism, pornography, Pork, etc. stocks are haram.

Conclusion

Lastly for our Muslim Investors, who are confused about whether an “Is Investment In The Stock Market Halal Or Haram.” So, There are many types of stocks available in the stock market, If any Muslim wants to invest in it he/she invest in it at any time but after doing some research on stocks, whether he/she wants to purchase is halal or not, because if an individual wanted to do investments in Islamic way. 

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