Investing

29 May 2019 Ref-No#: 1811

I would like to know ruling in Islam of invest in share / stock market

Answer

Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

There are a few conditions which have to be fulfilled in order for it to be permissible to invest in the stock market:

  1. The business should not contravene any law of Shariah,
  2. If the business is Halal, but the company invests access funds in interest accounts and thereby earn Haram, or takes a loan on interest, then the shareholder has to express his disapproval. Thereafter, if there are still dividends from Haram investments, that income should be given in charity without the intention of reward,
  3. The company has to own assets which are not liquid, to avoid trading money in exchange of money.

If any of the above is not fulfilled, it will not be permissible to invest in the Stock Market.

References

See “An Introduction to Islaamic finance” by Mufti Taqi (pg.207-208)