Why You Need to Invest (Islamically)
Keeping your savings in a conventional bank account — earning interest — is itself problematic in Islam. Not investing your wealth means it slowly erodes to inflation. Islam encourages productive use of wealth through trade, equity, and ethical business.
The good news: building a halal portfolio has never been easier. Here's exactly how to do it.
Step 1: Understand the Islamic Finance Principles
Before investing, understand the three core prohibitions:
- No Riba (Interest) — No bonds, savings accounts, or interest-paying instruments
- No Maysir (Gambling) — No options speculation, highly leveraged trading, or casinos
- No Gharar (Excessive Uncertainty) — No complex derivatives or highly speculative instruments
And the sector exclusions: alcohol, pork, weapons, adult entertainment, gambling, conventional banking/insurance.
Step 2: Build Your Financial Foundation First
Before investing, ensure:
- ✅ Emergency fund: 3-6 months of expenses in a halal savings account (no interest)
- ✅ No high-interest debt: Pay off credit cards first (though avoid them altogether)
- ✅ Zakat planning: Know that profitable investments may be subject to zakat at 2.5%
Step 3: Choose a Halal Brokerage or Platform
You have two options:
Option A: Use a Dedicated Halal Platform
Wahed Invest is the world's first fully halal digital investment platform. They manage everything for you — Sharia board supervised, automatic rebalancing, globally available.
Best for: beginners who want a hands-off approach.
Option B: Self-Direct Through a Standard Broker
Use Fidelity, TD Ameritrade, or Charles Schwab to buy halal ETFs (HLAL, SPUS, GLD) yourself. Use Zoya app to screen individual stocks.
Best for: experienced investors who want control and lower fees.
Step 4: Build Your Asset Allocation
A simple halal portfolio for different risk profiles:
Conservative (Low Risk)
- 40% — HLAL or SPUS (halal US equities)
- 30% — Sukuk (Islamic bonds)
- 20% — GLD or IAU (physical gold)
- 10% — Cash / Islamic savings
Moderate (Balanced)
- 55% — HLAL or SPUS
- 15% — International halal equities
- 20% — GLD / IAU
- 10% — Sukuk
Aggressive (Growth)
- 60% — HLAL or SPUS
- 25% — Individual halal stocks (AAPL, MSFT, NVDA, etc.)
- 15% — GLD / IAU
Step 5: Screen Individual Stocks (If Self-Directing)
If you buy individual stocks, use these criteria:
- Business screen: Is the primary business halal?
- Debt ratio: Total debt / market cap < 33%
- Interest income: < 5% of total revenue
- Haram revenue: < 5% from haram sources
Use our free halal checker or Zoya app for quick screening.
Step 6: Purify Your Dividends
Even halal companies may earn a small amount of interest income. The Sharia purification process involves donating a small percentage of your dividends (typically 1-5%) to charity.
How to calculate: (Company's non-halal income / total income) × your dividend received = amount to donate.
Zoya app calculates this automatically for you.
Step 7: Pay Your Zakat
If your total wealth (including investments) exceeds the nisab threshold (roughly 85 grams of gold) and has been held for one lunar year, you owe 2.5% zakat on it.
For stocks: calculate zakat on the current market value (not the purchase price).
Step 8: Stay the Course
The biggest mistake Muslim investors make is checking their portfolio daily and panic-selling during downturns. Islam encourages patience (sabr) and long-term thinking. Markets go through cycles — stay invested.
Rebalance your portfolio once or twice a year. Add new money consistently (dollar-cost averaging). Don't try to time the market.
Sample Starter Portfolio ($5,000)
- $3,000 → HLAL or SPUS (halal US equities ETF)
- $1,000 → GLD (gold ETF)
- $1,000 → Cash reserve
Simple, halal, diversified. Add to it every month and watch it grow over time, inshallah.
Key Resources
- Halal Stock Checker — Free instant screening
- Best Halal Platforms — Where to open an account
- Wahed Invest — Easiest halal robo-advisor
- Zoya App — Stock screening on the go