Sharia law has generally made investing difficult for Muslims in western countries. However, the Muslim population continues to grow globally, and the appetite for trading and investing in a Sharia-compliant manner is growing with it.
Halal investments require investors to possess in-depth knowledge of investment products and how they work. Only then can they judge if the investment upholds Sharia principles.
Investments and Sharia law
More and more brokers are considering compliance with Sharia law. For Muslims, one of the law’s most crucial aspects is ensuring all income sources are halal (legitimate). This is enshrined in the Quran.
What to look for in a broker
If you are looking for a broker in the course of undertaking due diligence, consider the following investment opportunity types.
We spoke to Prash Raval at Invezz – who wrote a full guide to The 10 Best Islamic Trading Accounts 2022 – told us: “halal compliant brokers is the best for any Muslim investor because halal-haram considerations do not overlap. It’s wise to avoid entities with a crossover between halal and haram.”
Halal-compliant brokers: they operate in a completely halal way. These have a clear audit trail and operate within Sharia law and regulations.
Brokers or companies with haram practices: these entities operate in banned niches, including alcohol, gambling, and pork production.
Mixed companies: they have a combination of halal practices and haram activities or practices.
Best halal brokers
More and more brokers are launching Islamic accounts with zero fees on swaps, which makes sure they are halal, as Sharia law forbids charging interest. Here are a few good halal brokers:
- eToro – zero commission fees, Islamic Forex Trading Broker
- Vantage – No commission on foreign exchange
- AvaTrade – One of the best forex brokers with MT4/MT5 Support
- Pepperstone – Great forex platform, Social Trading options
- Skilling – Best forex platform for Micro Lot Trading, no swap fees
- FXTM – Top forex broker for ECN trading, also no swap fees
- Forex.com – Top Islamic Forex Trading Account for Low Spreads
More brokers, more investors
As the number of halal brokers increases, so does the number of halal investors. Sharia finance law focuses on the concepts of ethics, social justice, and using finance to develop and strengthen communities. Anyone who is considering halal investment strategies should focus on mutually beneficial partnerships.
A change of focus
Sharia law establishes regulations and principles that Muslim investors have to comply with in order to make halal investments. According to Sharia principles, adherence to Islamic finance regulations helps form a fairer and more ethical society. This conflicts with the view that making a profit is the ultimate goal. Islamic finance focuses on ethics and justice in order to achieve a balance between property, family, religion, intellectual pursuits, etc.
Misconceptions about halal investments
Halal investments do not prohibit making money. Islamic finance only proposes mutual benefit and promotes ethical practices. One can make money in an ethical manner with the right investments. Investments in goods and services that are compliant with Sharia law reduce the risk for investors. They are one reason why Islamic banks survived the economic downturn in 2008.
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