Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

Date: May 7, 2025

For Generation Z Muslims – those born between 1997 and 2012 – the promise of financial independence feels increasingly out of reach. Some of their challenges include:

·   rising rents

·   stagnant wages

·   growing concerns about mental health and economic stability

Gen Z is entering adulthood in a world filled with uncertainty. Yet amid this turbulence, a growing number of young Muslims are seeking a path to financial security that aligns with their ethical and spiritual beliefs.

Halal investing refers to investing in a manner that adheres to Islamic ethical standards. It offers a framework that balances modern financial tools with timeless Islamic principles, ensuring investments are financially sound and spiritually aligned.

According to a World Economic Forum survey, nearly a third of Gen Z had already started investing by early adulthood – more than any previous generation at the same age. But how do they invest without compromising on their values?

This article explores:

1. The economic challenges Gen Z faces in 2025
2. A simple breakdown of what makes investing halal
3. Gen Z’s favourite investment options—what’s trending
4. Why halal investing suits this generation’s needs
5. A practical checklist to start halal investing responsibly

1. Gen Z’s Financial Reality in 2025

For many members of Gen Z, adult life is defined not by opportunity but by economic anxiety. In 2025, a third of 18–27-year-olds in the UK still live with their parents. Average rents for those aged 16–24 consume nearly half of their income. Globally, the situation isn’t much better.

Unstable job markets, weak wage growth, and rising housing costs have delayed major life milestones like buying a home or starting a family. Across OECD nations, Gen Z is facing what some experts call a “lost generation” moment, with nearly one million in the UK alone not in education, employment, or training (NEET).

While financial independence feels increasingly difficult, Gen Z is more digitally savvy than any previous cohort. Mobile-first investing platforms, AI-based assistants, and abundant online content have made investing more accessible than ever. But ease of access also brings risk. Regulators have flagged concerns over high levels of crypto investment among young adults and the influence of unregulated “finfluencers” who often promote risky strategies.

In this context, halal investing offers not just a compliant framework, but also a stabilising one.

2. What Makes Investing Halal?

At its core, halal investing refers to putting money into ventures that are permissible under Islamic law (Shariah). Some of the essential principles include:

• Avoid Riba (Interest): Investments in interest-based institutions, such as conventional banks or bonds, are prohibited.
• Avoid Haram Sectors: Such as companies involved in alcohol, gambling, and adult entertainment are excluded.
• Screening for Compliance: Islamic scholars apply financial ratios—like debt-to-equity or income from non-compliant sources—to evaluate companies.
• Global Standards: These ratios are often based on AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), a key body that sets benchmarks for Shariah compliance.

Modern halal investment platforms like Musaffa allow users to screen and monitor these criteria easily—without needing a degree in Islamic finance.

3. Halal Investment Trends Popular with Gen Z

Thanks to fintech innovation, there are more halal investing options than ever before—many of which appeal directly to Gen Z’s values and lifestyle.

✅ Halal ETFs (Exchange-Traded Funds)

These funds track a Shariah-compliant index and offer diversification with low fees—ideal for beginners.

✅ Sukuk (Islamic Bonds)

Structured without interest, sukuk are Islamic financial certificates similar to bonds but designed to comply with Shariah. Instead of earning interest, sukuk holders earn returns through shared ownership in a tangible asset or project. Unlike conventional bonds that charge interest, sukuk are structured so that investors earn profit – not interest – from ventures, making them halal.

✅ Digital Gold

Gold is a traditionally halal asset. Digital platforms now allow fractional ownership, making it accessible for young investors.

✅ ESG and Ethical Funds

Some ESG (Environmental, Social, Governance) funds may align with Islamic ethics. Some halal ETFs may even overlap with ESG criteria.

⚠️ Cryptocurrency and NFTs

While crypto is popular – 35% of Gen Z investors hold digital assets – Shariah rulings vary. Gen Z Muslims should approach with careful research and, ideally, Shariah-informed guidance.

4. Why Halal Investing Aligns with Gen Z’s Needs

Despite the bleak economic headlines, Gen Z is financially curious, ethically motivated, and digitally empowered. Halal investing complements these traits in several key ways:

• Ethical Clarity in a Complex Market – With so many grey areas in global investing, Shariah screens provide clear guardrails.
• Values-Based Empowerment –  Halal investing gives Gen Z the chance to build wealth while actively living their values.
• Tools Built for a Digital Generation –  Mobile apps and halal robo-advisors are meeting Gen Z where they are—on their phones—with user-friendly solutions.

Above all, halal investing offers a way to engage with modern finance without compromising spiritual integrity.

5. Getting Started: A Halal Investing Checklist for Gen Z

You don’t need thousands of dollars or years of financial experience to begin. Here’s a practical, step-by-step guide:

1. Build an Emergency Fund
   Save at least 3–6 months of basic living expenses in a halal savings account or money market fund before investing.

2. Define Your Goals
   Are you saving for short-term needs like building an emergency fund or planning a trip? Or for long-term goals like buying a home, starting a business, or retiring? Your investment strategy should reflect your timeline and risk comfort.

3. Understand Halal Screening Basics
   Familiarise yourself with riba and sector exclusions. Use tools such as Musaffa to automate this process.

4. Start Simple
   Consider opening a halal ETF or investing in digital gold. Avoid speculative assets early on.

5. Review and Rebalance
   Set a reminder to revisit your investments every 3–6 months. Ensure your portfolio stays aligned with your goals and Shariah principles.

6. Be Wary of Hype
   Crypto, “finfluencers,” and risky investments are everywhere online. Halal investing is about consistency – not chasing quick wins.

Conclusion

Gen Z Muslims are entering adulthood at a time of global financial stress – but also with more digital tools, financial access, and Islamic investing options than ever before. Halal investing is more than a set of restrictions—it’s a strategy for building wealth with purpose.

By staying informed, starting small, and using Shariah-compliant tools like Musaffa, Gen Z can invest confidently and ethically – securing not just their future wealth, but their peace of mind.

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