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Investing in Shares and mutual funds

Last updated: 11th July 2006
Question ID: #2093
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Salaam alai kum,

Is Investing in Shares and mutual funds allowed in Islam.



Al-jawab billahi at-taufeeq (the answer with Allah's guidance)

Investing in shares are permissible.

Please see: http://www.muftisays.com/qa/question/4188/forexsharecommodities-trading-on-internet.html

Mutual funds: An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. (Investopedia)

Investing in mutual funds will not be permissible. The reason is that one is unaware what kind of companies the fund will invest into i.e. Haram companies. Also, the funds normally invest in bonds, which are prohibited.

Alternatively, one may invest in mutual funds based on Islamic principles, prior seeking consultation from their local scholar.

And Only Allah Ta'ala Knows Best.

Answer last updated on:
24th October 2012
Answered by:
Ulamaa ID 04
Location: London