Halal Investing - Investing in Accordance With the Sharia Law
Halal defines what is permissible under Islamic Law known as "Shariah". Halal Investments are financial products which are deemed adherent to Shariah. Interest is strictly forbidden in Islam. Holy Quran states: O ye who believe! Devour not interest, doubled and multiplied; but fear Allâh; that ye may (really) prosper.1
According to the Quran 'Those who eat Ribâ (interest) will not stand (on the Day of Resurrection) except like the standing of a person touched by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (interest)," whereas Allâh has permitted trading and forbidden Ribâ (interest). So whoever receives an admonition from his Lord and stops eating Ribâ (interest) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (interest)], such are the dwellers of the Fire - they will abide therein)2.
Now the question is what are the other means of investments in which interest must not be involved or which are termed as halal investments? This refers to investing funds or doing transactions that are compliant with the Islamic Sharia law. This investment is different from the other common forms of investment due to its prohibition of investment in debt laden companies that may cause high risk to the investor.
The main benefit of halal investment is that it encourages people to invest in a socially responsible manner. They are advised to avoid investing in industries that promote alcohol, smoking, pornography and so forth. It is also Haram, that is, against the Islamic law, to invest in companies that derive their profits mainly from interest or interest (lending money for profit), Casinos and gambling, pork, hedging in silver and gold, ordinary insurance and financial services that generate their income from interest.
It is the utmost duty of every Muslim to find a Shari'ah based investment that adheres to rules and regulations described in the Quran and Hadith. Allied Asset Advisors follows a methodology developed over the past 20 years for adhering to Islamic Principles.
1Al.Qur'an - Al-Baqarah, 275-281
2Al.Qur'an - Al-Imran, 130