The Best 5 Halal Investment Ideas for Muslim Investors

Halal Investment Ideas are probably among Muslim investors’ most discussed topics. Muslim investors adhere to their Islamic ideals when it comes to financial transactions. It has encouraged the establishment of a niche market for halal investments and shariah-compliant items. It is critical to ensure that their revenues are Halal. People frequently inquire about halal investment opportunities. As a result, we’re putting together a list of potential investment opportunities for 2021. Even if you’re an experienced investor, you might discover something intriguing here that you hadn’t considered before.

What is Halal Investment?

Halal investment, also known as shariah-compliant investment, entails investing by Islamic law principles. Shariah compliance requirements are extensive and debated among theological and practitioner circles.

However, there are three key ideas on which everyone agrees.

  • Avoiding Riba

Riba refers to profiting from loans or deposits, even if the interest charged is not higher than market rates. The general premise is that charging interest is equivalent to usury and results in inequitable resource exploitation.

Creditors with collateral and cash flow, for example, benefit from “unearned income,” whereas debtors must put in more effort to profit from these loans, resulting in inequitable profit distribution.

  • Avoiding Gharar

Gharar refers to excessively speculative transactions or transactions that go against the principles of corporate certainty and transparency.

Futures, options, and forwards, among other derivative financial products, are outlawed. Maysir, in a similar spirit, refers to acquiring wealth through chance rather than work.

  • Avoid Haram Industries

Haram is the opposite of halal, and it refers to items that are forbidden by Islamic law. Military equipment, pig products, alcoholic beverages, gambling, and certain sections of the entertainment industry, such as adult entertainment, are examples of haram industries.

Halal Investment Ideas

  • Stocks

Stocks are one best halal investment ideas and the best choices for Muslims to consider. However, Muslims should pay close attention to whether or not a stock is halal. A stock is halal if it complies with the principles of Shariah laws. Among these principles are the company does not receive (interest) and its business does not carry out on commodities prohibited by Shariah. You can learn more about halal stock in this article here.

Figuring out the Shariah compliance of a stock is not an easy job. You must follow a particular method and go deep into the financial analysis. Using a halal stock screener like Musaffa will help you at best. The platform will provide you with various relevant information.

  • Property

REIT or property investment provides you with a steady source of income and a physical asset. The concept is to purchase a home and rent it out to renters. Property returns are typically approximately 6% per year, but they can be as high as 10% or higher.

Having to deal with tenant issues is one of the drawbacks of owning a buy-to-let property. You’re legally accountable for certain repairs. However, the property is a fantastic option for someone who doesn’t want to take on too much risk but wants to put their money to work in something other than a savings account.

  • Cash

Cash investment is a short-term obligation, usually not more than 90 days. It offers you low returns compared to other kinds of investments. It also has a very low-risk level. Halal cash investment may appear to be too similar to traditional banking. However, when you invest in Islamic banking, this is not the case. Islamic banking ensures that all terms and conditions of real Islam apply. In contrast to traditional banking, Islamic banking is a practice of banks and financial institutions that follow Islamic Shariah. However, you must be familiar with HALAL banking techniques to avoid misunderstanding or having doubts about the process and return on your investment.

  • Gold

Considered a traditional and physical store of safety regarding the overall economy, Muslims are highly fascinated by their investments made in gold.

Sukuks are a type of fixed-income security. As a result, you’re opting for consistent profits rather than rapid increases.

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

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