Fatwa

Investing in stocks

Question

Assalamu Alaikum,

As per my understanding there are certain criteria that need to be met for stocks to be considered halal to invest in. Among the criteria, the three main, which I know of are,

• The income from sources considered impermissible in islam should be less than 5%.
• Interest bearing debt should be less than 30% of total assets (heard of other % as well)
• Cash should be less than 30% of total assets (heard of other % as well)

According to my knowledge the rulings related to these have been issued since it is hard to find companies that completely follow islamic concept of business in the stock market. For example, if I am doing a personal business I should make sure there is no any form of interest bearing loans. But in terms of purchasing stock the ruling related to 30% is given because interest is ubiquitous and hard to avoid (correct me if I am wrong). Additionally this number of 30% and the other percentage in the points I have mentioned above are not directly mentioned in the Quran or Sunnah. I have also heard different number of percentages related to above 3 points I have mentioned. My question is, if I have a primary source of income which is adequate(where I can also save a considerable amount) is it permissible for me to invest in stocks. The basis for this questions is because as I mentioned above my understanding is that the above numbers are derived due to unavoidable reasons. So if I have a primary income will it be still permissible for me to invest in stocks or will it be best to avoid.

Jazakallah Khair

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In the enquired situation, it is best to avoid.

And Allah Ta’āla Knows Best 

Mufti Bilal Pandor

Concurred by
Mufti Muhammad Patel

Darul Iftaa Mahmudiyyah
Lusaka, Zambia

www.daruliftaazambia.com