Halal Investing: What makes a stock Halal?

Are you interested in building Halal wealth in a powerful manner where your faith and finances align seamlessly? If so, then the stock market can potentially be a great option for you.

Embarking on the journey of investing can be thrilling, but for the Muslim community, it's crucial to align these investments with the principles of our faith. When selecting which stocks to invest in, we need to screen out the Haram (impermissible) shares and focus on the Halal (permissible) ones instead.

Criteria for Halal Stocks

When investing in a stock, there are important criteria which needs to be followed to ensure it aligns with the Islamic principles.

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) have set the international standards for Islamic stock investing as follows:

• Business Activity Screening: Companies must not have significant involvement (over 5% of total income) in activities deemed non-permissible, such as alcohol production, gambling, conventional financial services, and more.
• Financial Ratio Screening: A company is non-compliant (Haram) if its interest-bearing cash or debt is more than 30% of its 12-month average market capitalisation, ensuring the business isn't heavily reliant on interest-based finance.
• Dividend Purification: Profits derived from non-permissible sources must be cleansed through charity donations, performed anonymously to avoid any personal benefit.

By strictly following these steps, it ensures the stocks are Shariah-Compliant.

The Challenges of Halal Investing

Screening for Halal investments yourself can be tricky. It requires constant vigilance to ensure ongoing compliance with Shariah principles. The good news is… that’s where we come in.

We Make Halal Stock Investing Easy For You!

At Purewealth Services, we undergo a strict 3-Step Ethical Governance Process to ensure your investments and superannuation align with these globally recognised standards.

This can save you a heap of time and grants you the peace of mind knowing that your money is working harder for you in line with your faith; so you can focus on reaping the rewards of your Halal investments and have more time for what you love.

Ready to Explore Halal Investing?

Islamic investing is more than just a financial choice; it's a reflection of faith and ethical commitment. It offers a path to financial growth that aligns with the principles of Islam, providing peace of mind alongside potential profits.

Begin your Halal investing journey with confidence. At Purewealth Services, we specialise in guiding you towards your Halal wealth creation goals with ease. Discover how we can align your financial goals with your spiritual values. Book in a Free 20-Minute Introductory Call today to learn more.

General Advice Disclaimer This is general advice only and does not take into account your particular objectives, financial situation or needs. Before acting on any advice you should consider its appropriateness regarding your objectives, situation & needs.