Investing is essential for everyone with money. The thought comes to mind when you have money lying around and need to put it to use. Muslims invest, too, but we have to think about our Faith. Thus, we have halal Investing.
Halal investing is simple. It’s how you invest your funds according to Islamic beliefs and rulings. Unfortunately, many Muslims don’t understand the need for Halal investing. In this article, we’ll explore what Halal investing is all about.
Halal isn’t restricted to only food and money. Our lifestyle should be shrouded within halal. The Lord has urged us to embrace the Halal lifestyle and deviate from Haram. Investing in the halal way is a good way of living the halal lifestyle.
When it comes to investing, there are several principles people follow. Many choose based on the Return on Investment(ROI) they desire. However, Muslims take a step further to ensure that the investment option is halal.
Halal investing concepts to adhere to.
1. Avoid obvious Haram investment options.
Some investment options are glaring that they’re Haram. For example, investing in sinful stock isn’t halal. Sinful stocks are stocks from companies related to immoral dealings, e.g., porn, gambling, etc. Although you might be tempted since the ROI is usually catchy in good and bad times. But refrain yourself and remember your Faith.
2. Avoid Interest
Interest is a concept that has become normal nowadays. However, it’s forbidden for Muslims. It’s also called Riba. After vetting the asset and industry, the next is the investment structure. Does it contain Interest? Then, move away from it. Besides, conventional Bonds are a good example. They come in several forms, and some of them are interest-bound.
Also, Riba can come in situations where there’s an unjustified excessive increase in capital, either in trade or in loans.
3. Avoid Uncertainty
Uncertainty is called gharar, and Muslim investors must be careful of it in each investment option. Scholars have said that investing in modern derivatives like futures is prohibited because of the huge amount of gharar in them.
4. Avoid Gambling
Gambling can also be related to investment. It means the ease of obtaining something without earning it in Islam. Thereby, it’s called Maysir.
Why Your Investments Must Be Halal
Firstly, it’s obligatory. Allah SWT has urged us to stay away from the things He forbids. So, investing in Haram options will displease your Lord and hinder your hopes of Jannah.
Halal investments will add Barakah in your endeavors. It’s called blessings, bringing unquantifiable increases in several aspects of your life. Barakah isn’t something we can afford to neglect in this world. So, invest only in halal assets.
3. Economic Growth
Islam urges us to work and trade, thereby recognizing our society’s need for economic growth. When Muslims invest in halal assets, it contributes to the flow of capital in the economy, bringing about employment and fostering innovation. It benefits the investors and society at large.
4. Increase the Muslims’ rank in the community.
Investing in halal assets allows Muslims to contribute to a more responsible and religious economic system. Muslims can support sustainable businesses by investing in halal options and improving the quality of living of the people around them.
It’ll also increase the need for Halal investment options, onboarding more Muslims toward the right path and contributing to a responsible economic system.
5. Promotes Trade
The halal investment will promote trade over Interest. Trade helps facilitate the flow of capital, creates new business roles, and fosters innovation. The risks and rewards are also shared equally, reducing the need for Interest. Trading will also encourage individuals to innovate their services to be a better competition in the market.
6. Simplicity and Transparency
Halal investment assets are more complex than conventional options. They’re mostly Sharia-compliant and involve little or no uncertainty. Islamic financial institutions offering these assets are usually supervised by a Sharia board, ensuring the products comply with Islamic principles.
7. Economic Activity in Financial Markets
Muslims investing in halal investment assets use their funds to support economic transactions. The contract signed shows what the funds are used for. So, the investments lead to real economic activities in the financial markets.
8. Long term investment
Halal investment encourages slow and well thought decisions. Investors in conventional markets want quick returns. But Muslim investors choose financial companies that reduce risk and Interest and are Sharia compliant. Most times, they’re long-term.
9. Reduction in adverse effects of harmful products
Sharia law forbids supporting harmful industries and companies. So, Muslims should avoid investment options related to these Haram activities. Islamic financial institutions create investment options that enable Muslims to invest properly without indulging in sinful activities.
10. Economic stability
Halal investment options help individuals to achieve greater economic stability. The Islamic fundamental principles serve as a positive example of a financial reform. It also promotes a system of responsibility that people yearn from various financial institutions.
Investment has become a norm in today’s society. Everyone wants to save for the rainy days and put funds to good use. However, as Muslims, we can’t go into any investment options without understanding what the investment companies do. Also, our investment options must follow Islamic rulings to obey Allah (SWT) and stay on the right path.
Still, some Muslims don’t understand the significance of Halal investment options. Hence, we’ve highlighted them in the article above. You can go through it and check our Halal investment options.