The halal investment market is growing rapidly since it provides responsible and ethical investment options. Halal investing involves investment options that follow Islamic principles. It’s unique and shaped by Islamic scholars who offer guidance on debt, risk, interest, gharar, etc. This article will provide you with the best halal investments for 2024.
It covers cryptocurrencies, ETFs, stocks, real Estate, etc. If you’re an experienced investor or a newbie stepping into halal investment diversification, this article is your guide to financial freedom — keeping your religious belief intact.
Prepare as we explore the year’s most lucrative and halal investment options.
Exchange-traded (ETF) funds
ETF funds are one of the best halal investments for 2024. The funds focus on creating Islamic portfolios that abide by the Islamic Finance principles. The principles include avoiding haram industries like tobacco, interest-funded transactions, alcohol, gambling, etc.
ETFs pool money from several investors to invest in various assets like mutual funds. Moreover, ETFs are traded on the stock exchange, leading to more flexibility in day trading at market price fluctuations.
ETFs allow Muslim investors to diversify their funds across different assets and adhere to the guidelines. Individuals investing in halal ETFs will support the companies that align their objectives and promote responsible practices.
Halal-compliant ETFs also undergo strict screening to ensure they follow Islamic principles. The compliance and securities of the assets are also scrutinized during the screening. Hence, ETFs are popular among Muslim investors seeking sustainable investment while maintaining their religious beliefs.
Natural precious metals
Metals like gold and silver are another best investment option for 2024. They have been considered perfect investment options for centuries. Since they’re not based on uncertainty and have a significant existence, they meet the Islamic requirements of low uncertainty and are considered halal.
Although gold is accepted as a halal investment, other metals need more clarification. Silver is also permissible since it holds intrinsic value and has been used as currency.
Other metals like Bronze, Sapphire, diamond, etc., might not be Shariah compliant — mainly if traded for speculation. Investing in these metals can offer protection against sudden inflation and currency devaluation in epileptic economic times. These investments provide portfolio diversification and stability since they’re not subjected to the fluctuations of interest-based transactions.
Sukuk Funds are Islamic bonds that allow Muslims to invest money according to Islamic principles. Investing in these bonds supports ethical and responsible practices as the bonds support projects that are Islam-inclined.
Consequently, it’s essential to research the Sukuk bonds to ensure they meet the criteria of Islamic Finance. Sukuk bonds prohibit interest, unlike the modern day bonds, which are loans involving interest payments. Sukuk are asset-based investments rather than being debt-based.
Research is essential when investing in real Estate as it is one of the best halal investments in 2024. There’s plenty of interest involved in Real Estate — for instance, mortgages when banks ask for them. Real Estate is more appealing because it allows investors to have a property that can be rented out. The rent income can be used to pay off the mortgage and help to build equity.
However, some Real Estate Investment Trusts (REITs) don’t involve mortgages and are halal. Properties used for impermissible activities like alcohol production, tobacco product manufacturing, gambling, etc., are Haram investments. Also, some scholars believe that property bought on credit is Haram while those bought on lease are halal.
Also, buy-to-let properties can be gotten via Islamic mortgages with a 25% down payment. Real Estate is an excellent option if you’re looking for an investment that provides long-term growth potential and returns.
Halal investments can include stocks of companies that follow Islamic principles. Muslims can invest in these stocks if they’re not involved in haram activities, pork products, gambling, porn, etc. Notably, industries like technology and pharmaceuticals may have gray areas when checking their halal investment compliance. A thorough research is essential to ensure that particular sticks meet the Shari’a requirements.
Halal Investment is long-term and motivates investors to diversify their portfolios for stability and sustainability. Here’s how to ensure that the stocks of a particular company are halal compliant.
The company’s transactions should be examined for high leverage, income from interest, and other impermissible activities. Also, the screening should involve the company’s assets and securities.
- Business activities: The company’s income and revenue must be halal.
- Purification: Some scholars encourage a purification activity involving the investor donating a portion of the income from non-halal sources to charity.
- Shari’a-compliant funds: if individual stocks are challenging, investors can try Shariah-compliant mutual funds or ETFs that pool money from investors to purchase halal stocks.
Cryptocurrencies are part of the best halal investments for 2024. They’re d centralized with the use of Blockchain technology. The volatile nature of these assets questions their halal status as Islam discourages investment, leading to uncertainty.
Cryptocurrencies considered halal must check a few factors. The coins or tokens must not be involved in Haram activities like illegal trade. Also, it should include something other than interest, making a few staking and lending activities problematic.
A few scholars see cryptocurrencies as commodities, and the trading should adhere to Islamic principles and avoid speculation. Some cryptocurrency protocols focus on being ethical, transparent, and compliant with Islamic principles by implementing features like transparency and decentralized governance.
However, some cryptocurrencies are Shari’a compliant, and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) approved them Almansour, Abdullah, and Steven Ongena. “Bank Loan Announcements and Religious Investors: Empirical Evidence from Saudi Arabia.” Journal of Empirical Finance, 2018, https://doi.org/10.1016/j.jempfin.2018.02.002.
The rules are the same for the Islamic forex market – the trades must be held on the same day, and no interest should be involved.
As explored in the article, several halal investment options exist for Muslim investors seeking to align their financial activities with Islam. We’ve highlighted the best halal investments in 2024 – from Sukuk, real Estate, cryptocurrencies, metals, etc.
Each investment comes with risks and rewards, so choose the best that works for your financial goals and considerations.