Is Stock Market money Halal? – Prohibited & Allowed Companies
Do you want to invest some money in the stock markets? But, if you a Muslim investor, you could probably be wondering if investing money in the stock market is halal or haram?
Well, the word haram and halal are associated with the Quran. The Quran divides everything into two parts: either haram or a halal. Most of the people think that they are only related to food items, but in actual, it covers our most of the aspects of their life.
The word halal and haram are usual terms used in the Quran to define lawful or allowed and unlawful or forbidden thins.
These lines are mentioned in Hadith :
On the question of Abu Huraira, The Messenger of Allah said:
If someone accumulates wealth through haram means and then gives one portion of it to charity, then there is no regard for him, and the burden of sin increases.
Therefore, for a Muslim, it is very crucial for ensuring whether their source of income is halal or not.
Is stock market money halal?
Investing in the stock market is halal according to Quran if the Company works following Shariah principles.
Stock market money is only haram when:
- The company does deals with any product or service which is haram according to Islam.
- The company doesn’t deal with any product or service which are used as a tool to harm an Islamic State.
- Islam prohibits any trading of unlawful stocks.
What is halal investing?
Halal investing is an investment that is by Shariah principles.
Shariah principles aim to build a balanced ecosystem in which each individual is aware of its social responsibility and maintain peaceful and righteous relation between themselves.
The main objective of the Shariah principle is to protect five important aspects of human life:
– And, Property
How to check if a stock is halal or not?
Before starting to buy a stock of a company, you should do a bit of research of it and ensure whether its deals with any kind of product or service which is haram according to Islam.
According to Islam, a stock of a company is only halal if it:
- Shares its profit
- Don’t gain excess revenue; generally is excess of 95% of its revenue.
- Doesn’t involve gambling, casinos, or betting.
- Do you buy or sell any haram products such as alcohol, tobacco, or any intoxicant products?
- Promotes illegal activities
- Manufactures any kind of weapons
- Promotes pornography
- Involves in any kind of trading of haram thins.
What are some prohibited companies?
The stocks of companies that are considered as haram are:
- Conventional financial service
- Insurance company
- A company dealing with the sale of alcohol, pork, tobacco, or any haram thins.
- Film or Music industry
- Business promoting gambling, betting, or casino activities.
- Weapon factory
- Riba-based banks
- Tourism company
Which companies are allowed companies?
One person can buy shares of companies that deal with transportation, shipping, manufacturing clothes, furniture, medical tools and equipment, real estate, or many more.