Towards Saving and Investing in a Halal Manner: A Few Steps – Shaykh Taha Abdul-Basser
Al-hamdu lillah wa s-salatu wa s-salam ‘ala sayyidina Muhammad wa ‘ala alihi wa man walahu
Question: I want to invest and save money in a shari’a compliant way, but I really don’t know where to start. Can you point me in the correct direction?
My field is the shari’a compliance (permissibility, shari’a-wise) of financial products, services and transactions. I am not a financial advisor and so will not advise you on which products are best for your financial profile. Financial advisers and planners with expertise in shari’a compliant (halal) wealth management are few. Where I mention a specific product it is by way of example, not endorsement.
Step 1- Remove your savings from non-shari’a compliant (haram) financial institutions such as banks and credit unions.
Step 2- Remove your invested funds from non-shari’a compliant financial investment vehicles such as money market accounts, conventional mutual funds and bonds.
Step 3- Divert any accrued interest from the vehicles referred to in steps 1 and 2 to general charitable channels (such as the maintenance of orphans).
Step 4- If you wish to deposit your savings with a bank (or another bank-like entity that offers deposit services), then do so with a shari’a compliant (halal) institution that confroms to accepted standards, the most important of which is that the institution has an independent shari’a review panel composed of 3+ members, at least two of which are fuqaha’ known for their expertise in the field.
Step 5- If you wish to invest, then do so in a shari’a compliant (halal) investment vehicle that confroms to accepted standards, the most important of which is that the vehicle has an independent shari’a review panel composed of 3+ members, at least two of which are fuqaha’ known for their expertise in the field.
Success is with Allah.
Wa s salam,
The Needy Slave of Allah