TU answers the question: Is Investing in Stocks Haram or Halal

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(Newswire.net — May 30, 2023) —

In Islam, it is forbidden to invest in company shares that deal with haram goods (such as pork, alcohol, and so forth). A Muslim must refrain from not just participating in something that has been deemed haram but also from encouraging it.

Muslims who want to invest should seek companies that do not engage in haram behaviors or goods. We’ll make an effort to highlight Traders Union’s response to the query, is investing in stocks haram or halal in this post.

Is investing in Stocks Haram?

According to Traders Union, investing in stocks is not always haram. In most circumstances, purchasing stocks is not prohibited by Islamic law. Most Islamic theologians have nothing against investing in equities and believe doing so is permissible. However, there are some circumstances in which Islamic law would prohibit stock investing.

What Stocks are Halal?

A halal industry aligns with Islamic law. Traders Union experts provided a list of stocks that Halal. They are; 

·      Shipping and Transportation

·      Manufacturing

·      Clothing and shoes

·      Medical and pharmaceutical equipment

·      Real estate

·      Tools

·      Furniture and home goods

Most Islamic theologians would view these as forbidden or haram. Some industries, however, are a little more complicated and only partially haram. For instance: A manufacturing company operating independently may follow halal principles but have an interest-bearing account supported by riba loans. This business would be seen as mixed, making it challenging to classify. In general, many Muslims would stay away from these mixed businesses just to be safe. 

It’s essential to avoid doing business with any organizations that engage in practices or acts that conflict with Islamic law.

What did the Islamic Authorities say? 

Islamic investment policies begin at the Shariah Board, a team of Islamic experts and scholars who identify investment items and assess their compliance with Islamic law. The board will typically disqualify investment goods that make a sizable portion of their revenue from selling pork, alcohol, pornography, military hardware, or gambling.

“The scopes of Islamic law permeate all areas of a human being’s life, which includes economics, finance, law, politics, government and its integral parts, and social, ethical, and religious aspects including values and social justice,” reads a research study on the relationship between Islam and investing, “Since Islam dictates every aspect of public and private interests for a believer, the guidelines about stock markets have already been in place.” Qualified jurists, like in other areas of Shariah, are responsible for extending these principles, developing suitable decisions based on them, and applying them to market-specific scenarios.

Although investing in the stock market is allowed in Islam in principle, the Shariah establishes specific rules and restrictions for it, distinguishing an Islamically compliant stock market from a conventional stock market.”

Shorting Stocks and Islam

Sharia law forbids the practice of short-selling stocks. This is because the short seller must borrow the stock rather than own it.

Halal Investment Guide

Follow these guidelines:

To avoid haram in trading, Traders Union advised that investors follow should guide; 

·      Always invest in companies that do not manufacture alcohol, promote gambling, or manufacture cigarettes.

·      Don’t treat trading as a serious bet. Use risk management guidelines and avoid using too much leverage.

·      Pay your taxes and follow the trade guidelines.


Muslim traders can invest in whatever they want outside of these restrictions. If a firm is partially haram, a Muslim investor can compensate for their support of the haram half of the company by donating income generated by that aspect of the company to charity.

Muslims are welcome to invest in the stock market. It is necessary to be informed of the specific companies in which you are investing.