Halal Investment

Question

I want to know what is your opinion about halaal investment.

1. Is investment in usual banks Halaal?

2. Where investment is Halaal?

3. What about insurance and saving accounts in banks?

Please consider inflation and other logical ideas presented by those who consider this halaal.


Answer

1. In principle any investment that involves riba (fixed rate of increase of money, related to time, on a lent amount) is haram. If the investment does not involve such riba then it is not haram per se.

2. I think I have answered this one above.

3. Bank interests are usually fixed rate increase of money, as such they are haram. Any such interest that is paid on bank accounts should be taken out from your financial system. In the case of insurance, again this depends. Most of the financial insurances that I know (except a type of life insurance) do not involve riba simply because they are not paying you money based on a fixed rate of increase over time, so in that sense they are not haram.

As for inflation, you are allowed to deduct its effect (i.e. the reduced buying power of your saved money) from the interest, before removing the rest of the interest from your financial system.

If there are any logical ideas that argue for riba to be halal then please let us know and we will review them.

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