Stocks

Investment in individual stocks means that you choose the companies you buy pieces of yourself (with the help of advice from the internet, TV programs, Newspaper articles, word of mouth from friends, ...etc.)

This is different from Mutual Funds, where the Fund Manager controls which companies to buy, in return for a percentage of the total value of the fund.

Historically, the best investment vehicle are stocks, since they provide the highest rate of return on investment for the long run.

You can read an Islamic analysis of the Dow Jones (DJIA) companies. Check it out and let us know what you think.

You can also read an Islamic analysis of the USA Industry classification. In the USA, each publically trading company is classified within an industry. This will help you screen companies quickly and exclude those that engage in prohibited activities.

Due to the growth of demand for Islamic investment, and market indexes tracking the Islamic portion of the market, Dow Jones, the well known financial research company, has invented the Dow Jones Islamic Market Index complete with an Islamic Scholars Advisory Board with well known Scholars.

Before you buy a stock in a company you like, check the DJIM Companies list, which is sorted by the company name.

A common question that Muslim investors have these days is: "Is it Islamically acceptable to engage in stock market speculation?". This topic has been discussed at some length on the Islamic Finance Network web site, Speculation Forum.
Bear in mind that these are individual opinions by people like you and me, and not scholarly studies, although some very useful references to scholar's opinions are stated. So, use your judgement.

This is a Kuwait based company offering investment services and the like. They have a London based advisor, The International Investor Advisory Group - TIIAG, which publishes several Islamic Indexes, including the following:

• TII Global Islamic Index - (TIIG)
• TII Europe Islamic Index - (TIIE)
• TII Americas Islamic Index - (TIIA)
• TII Pacific Basin Islamic Index - (TIIPB)
• TII South Africa Islamic Index - (TIISA)
• TII European SmallCap Index
• TII USA SmallCap Index

On the Islam-Online web site, Dr. Yusuf Al Qaradawi has a fatwa on How to pay Zakat on Stocks?, in Arabic. He stated the same opinion on the televised program "Al Sahia Wa Al Hayat" on Al Jazira Satellite channel on Sunday 2 January 2000, making a distinction between "investing" and "trading", whereas the latter treats his stocks as liquid cash money, paying 2.5%, while investors pay only on their gains/appreciation, but at a rate of 10% (by analogy of gains from agricultural land with no human irrigation [rain]).

Here are other sources of information on paying Zakat on Stocks:

• Al-Islam Individual Zakat Program in English and Arabic.
• Qaradawi Fiqh Al Zakat book. Other answers by Al Qaradawi in Al Muntada, and yet another Fatwa on Al Muntada. All are in Arabic only.
• Dallah Albarakah Economic Fatwa on which stock price to consider on paying Zakat? The issuing price or the current market price? (in Arabic).
• Islamic Development Bank Research Papers are available for a nominal fee including Stocks, Banking, Finance, and a whole lot more. in Arabic.
• Calculation of Zakat for a sleeping partner on the Understanding Islam web site.

There are hundreds of internet sites where you can get stock information.
We take a look at some of the most popular ones here.

There are many free tools that will help you with your investing, starting from selecting and screening stocks, to monitoring your protfolio and watching the markets.
Here are some very useful tools that you can use...

Courtesy of Muslim-Investor