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? 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.

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.

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Halal Stocks List

List of Halal Certified Stocks (source)

Symbol	Stock Name	Where To Buy
DD	DuPont de Nemours Inc	Wealth simple
PFE	Pfizer Inc.	Wealth simple
XOM	Exxon Mobil Corp.	Wealth simple
MRK	Merck & Co Inc	Wealth simple
MDT	Medtronic Plc	Wealth simple
APD	Air Products & Chemicals Inc.	Wealth simple
ABT	Abbott Laboratories	Wealth simple
RDS/B	Royal Dutch Shell Plc – ADR	Wealth simple
ADI	Analog Devices Inc.	Wealth simple
TJX	TJX Companies, Inc.	Wealth simple
PG	Procter & Gamble Co.	Wealth simple
SNN	Smith & Nephew plc	Wealth simple
TEL	TE Connectivity Ltd	Wealth simple
ASML	New York Shares	Wealth simple
INTC	Intel Corp.	Wealth simple
CHA	China Telecom Corporation	Wealth simple
INTU	Intuit Inc	Wealth simple
CHL	China Mobile Limited	Wealth simple
SAP	Sap SE	Wealth simple
LIN	Linde Plc	Wealth simple
SNY	Sanofi	Wealth simple
BHP	BHP Group Limited	Wealth simple
CVX	Chevron Corp.	Wealth simple
NSC	Norfolk Southern Corp.	Wealth simple
NVS	Novartis AG	Wealth simple
ADBE	Adobe Inc	Wealth simple
EMR	Emerson Electric Co.	Wealth simple
PLD	Prologis Inc	Wealth simple
JNJ	Johnson & Johnson	Wealth simple
ADP	Automatic Data Processing Inc.	Wealth simple
BP	BP plc	Wealthsimple
MDLZ	Mondelez International Inc. (Class A)	Wealth simple
CRM	Salesforce.Com Inc	Wealth simple
RDS/A	Royal Dutch Shell Plc – ADR (Class A)	Wealth simple
SLB	Schlumberger Ltd.	Wealth simple
JD	JD.com Inc	Wealth simple
ETN	Eaton Corporation plc	Wealth simple
BABA	Alibaba Group Holding Ltd	Wealth simple
CHU	China Unicom Hong Kong Ltd	Wealth simple
BBL	BHP Group Plc	Wealth simple
FTV	Fortive Corp	Wealth simple
DHR	Danaher Corp.	Wealth simple
TXN	Texas Instruments Inc.	Wealth simple
EXC	Exelon Corp.	Wealth simple
CEO	Cnooc Ltd.	Wealth simple
SNP	China Petroleum & Chemical Corp	Wealth simple
LLY	Lilly(Eli) & Co	Wealth simple
PTR	PetroChina Co. Ltd.	Wealth simple
RIO	Rio Tinto plc	Wealth simple
NKE	Nike, 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.

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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.

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Frequently Asked Question

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.