- Short answer: Owning stocks is permissible with conditions — provided the company’s core business is halal, financial ratios meet Shariah standards, and any impermissible income is purified. Islam draws a line between direct participation in haram and unavoidable indirect interaction in a global economy.
Is Stock Investment Permissible?
Yes – with conditions.
Stocks are permissible if:
- Impermissible income (e.g., interest) is purified through charity.
- The company’s core business is ḥalal (e.g., not alcohol, gambling, interest-based banking).
- Its financial ratios comply with Shariah standards (e.g., debt ≤33% of assets).
Evidence
From Quran
- Investing in haram businesses constitutes cooperation in sin. (Surah al Maidah 5:2)
Islamic Finance Scholars
Major bodies (e.g., AAOIFI, Islamic Fiqh Academy) mandate:
- Debt-to-asset ratio ≤ 33%
- Interest-based income ≤ 5%
- Accounts receivable ≤ 45% (AAOIFI Sharīʿah Standard 21)
Bottom Line
Owning stocks is not haram in itself. The ruling depends on the company’s nature, its financial dealings, and your intention.
| Halal if… | Haram if… |
|---|---|
| Companies pass Shariaah screening. | The business itself is haram. |
| They are not doing prohibited business. | The company is heavily based on riba (interest). |
| The long term vision of the company does not harm people. | The investor’s intention is wrong. |
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