Stocks/mutual funds/bonds/etc

I'm new here.:statisfie

I have some questions regarding the stock market. Hopefully there are some people here who have some experience in this area.

Basically, I want to know what the islamic standing is on investing in stocks, mutual funds, bonds, etc (the whole shebang). I've done some research on it, and have come to understanding that dealing with halal stocks is fine as long as the company doesn't deal with interest as it's main business. But a lot of companies put their money in banks which do accrue interest. So what to do in this case--where a halal company indirectly deals with interest.

And, what's the stand on investing in mutual funds, bonds, etc.

Thanks a billion. Looking forward to some answers, Insha'Allah.

very good question, I would like to know this also

flowers said:

I'm new here.:statisfie

I have some questions regarding the stock market. Hopefully there are some people here who have some experience in this area.

Basically, I want to know what the islamic standing is on investing in stocks, mutual funds, bonds, etc (the whole shebang). I've done some research on it, and have come to understanding that dealing with halal stocks is fine as long as the company doesn't deal with interest as it's main business. But a lot of companies put their money in banks which do accrue interest. So what to do in this case--where a halal company indirectly deals with interest.

And, what's the stand on investing in mutual funds, bonds, etc.

Thanks a billion. Looking forward to some answers, Insha'Allah.

Click to expand...

This is an area of great contention, and unfortunately there are not many scholars which specialize in financial fataawa (and the ones who do, it can be hard to find their opinions online). The problem is that almost all companies utilize bank loans in some way; even companies like Microsoft, which has huge stores of cash, use short term loans to finance payroll. As they say in business, always use Other People's Money.

Keep in mind that you are an investor in a company when you buy a stock (obviously bonds are haraam because you receive interest payments). If the company uses a loan from a bank, they are doing so because they are able to leverage their returns by borrowing money (debt is a very cheap source of capital). As an investor, you are benefiting from this leverage. Therefore, you are benefiting from the interest.

The problem is, some of your return on your investment is in some way related to the company's dealing in interest; you just don't know how much. This presents a problem with investing, as almost every company under the sun uses debt financing.

Now that is not a scholarly opinion, nor a ruling of any kind. I'm not saying whether it's haraam or halaal; I'm just giving some thoughts on the whole process. Personally I took my money out of stock market awhile back, and am looking to invest in gold and other tangible commodities.