Which investments are classified as riba?

format_quote Originally Posted by anonymous

There are a bunch of different methods of saving money for retirement these days but I'm lost as to what is riba and what isn't. One can increase their money through the stock market, CDs, money markets, basic savings accounts, and many other things. Some of these involve "interest" (receiving money, not paying it). I have heard a couple of short lectures on the subject and the lectures I've listened to use the topic of paying interest as their main examples such as in borrowing money from a bank, but they never got into detail about the other things I mentioned above.

I guess what I'd really like to know is how to invest my money in a way that is compatible with Islam.

Assalamu Alaikum,

Any type of interest whether taken or received is haram because either way the bank or company you are dealing with is involved in riba somehow. For you to receive interest means that interest was taken from someone else. The way savings accounts (which adds interest into your savings) work, for example, is by using your money/savings to loan out to other people, but it is loaned to them with interest. When the loaners pay it back, they are paying it with interest and a small percentage of it is added into your account (the bank takes the rest of the interest for themselves). So in essence, no one here is getting free money without riba being involved.

So in regards to halal investing, there is a company called Wahed Investors and one I just recently heard about called Amana Mutual Funds trust. You can read an article about them HERE(Wahed) and HERE (Amana).

Alternatively, you can also buy and sell gold or gold jewelry. When prices are lower, you buy and when they are higher you sell. Keep in mind that gold like this will require a zakah. You can also search for islamic businesses that follow islamic law (eg. don't take loan from banks, aren't involved in riba, etc.), and become a shareholder. If there's a business that may become successful, I'm sure that it will help it a lot to get the funding and you'd share in the profits. Or maybe you can invest it as a new venture for yourself (ie. start your own business).

I hope this helps give you some ideas and understanding inshallah.

JazakAllahu khairun sister, that helped me to understand the issue. Thank you for the resources as well. I will look into them.