5 Frequently Asked Questions for the First-Time Halal Investors

5 FAQs for the First-Time Halal Investors

Everyone has financial goals, and investing is a great way to achieve them. However, some people might start it just now and get confused. Moreover, doing something with our money is daunting. Here are 5 frequently asked questions many first-time investors have which can be halal investing tips for every Muslim investor.

1. Why should I start halal investing?

Firstly, as first-time investors, we should understand why investment is important—investing means allocating our money into a business to earn profit. Of course, we expect that it will grow over time. If you save it in a piggy bank, inflation will erode your money’s value. But if we invest it in any instruments, our money’s value will follow the appreciated assets you invested. Thus, investment is a great tool to achieve our financial goals.

Secondly, Muslims must invest only in halal investments. We should not create wealth by violating Shariah principles. Prophet Muhammad PBUH said, “Seeking of a halal earning in the next Fardh (duty) after the Fardh (salah).” Let’s also remember this verse of Al Qur’an, “Whatever is good is lawful for you…” (Al Qur’an, 5:4).

2. How do I learn about halal investing?

We might not learn how to while in school or college, especially halal investing. However, the good news is we can find an abundance of materials as our learning sources. It could be books, educational websites, newsletters, social media, podcasts, and many others. We can learn about basic knowledge from those sources. To enter the next level, one can join an investor community or online forum about halal investing whereby anyone can ask the experts and interact with other Muslim investors.

For example, a platform like Musaffa can help you learn about halal investing. Musaffa academy provides excellent articles that will increase your financial literacy. Further, another feature, the Musaffa community, will allow you to ask about halal investing with the experts and other community members.

3. How do I know that a stock is halal?

Figure out whether or not a stock is halal needs accurate data and methods. Of course, we can learn how a stock is categorized as halal or not-halal. We even need to understand that as a Muslim investors. However, you can’t always analyze the company to know if a stock is halal or not. There are several platforms available for us to find halal stock lists. A halal stock screener, like Musaffa, will be an excellent choice. Type the stocks you want to find out its Shariah compliance, and the platform will come up with accurate information within seconds. It will help us save time and energy and ensure our investment is halal.

4. How much money do I need to start investing?

There are thousands of stocks we can find in the market. Some stocks might cost hundreds of dollars. But don’t worry, we can still find others with a price under $20. The prices of stocks are widely diverse. Besides, it constantly changes during the market opening. Investing is about managing your personal finance. It can always be done based on your financial situation.

5. What are some tips for beginners?

Everyone has different financial situations and goals. Before anything else, you should define your financial situation and goals first. Considering every aspect of your finances and how to start to invest will affect you. In this regard, it’s important to start your investing with available cash. Avoid using debts for your investing. Things to keep in mind is the investment risk. No one can guarantee that your invested money will always be a profit. Thus, you can start to invest with lower-risk investments.

It’s also important to decide your investment type in the first place. Are you going to become a day trader or a long-term investor? These two types of investors need different strategies to start. Another halal investing tip for you is ‘keeping informed’. Studying the market is a good idea. Read up on the things you are investing in and keep up with the market updates from reliable sources.

We believe the given answers above can be some halal investing tips for first-time investors Good luck with your investing!

To read more about Islamic Finance related topics, please click here and visit our academy.

Besides, feel free to sign up for our free stock screening services at musaffa.com.