Why buying Stocks is Not Haram in Islam
C.J Ahmed-20.05.2023
Stocks are total shares in a company and some companies sell their stocks to outsiders who can become owners of those shares. There is nothing haram in buying stocks because generally it does not involve riba.
Allah (swt) says in the Quran,
“But Allāh has permitted trade and has forbidden interest.” (2:275)
Purchasing was done even by the prophet (sal).
Narrated `Aisha:
The Prophet (sal) purchased food grains from a Jew on credit and mortgaged his iron armor to him. (Bukhari)
Narrated Ya'la ibn Umayyah:
The Messenger of Allah (sal) said to me: “When my messengers come to you, give them thirty coats of mail, and thirty camels. I asked: Messenger of Allah, is it a loan with a guarantee of its return, or a loan to be paid back? He replied : It is a loan to be paid back.”(Abu Dawud-Graded Sahih by Albani)
Some scholars argue investing in stocks is haram because it is like credit cards where you agree to pay interest.
2. The Interest (Riba) Argument against Credit Cards
This is one of the most trickiest and controversial issue on credit cards and the argument is that a person who is getting a credit card must sign the agreement that he will pay the interest if he fails to pay before the stipulated date and quote the following hadiths,
Abdullah ibn Mas’ud reported: The Prophet, peace and blessings be upon him, said, “Allah has cursed the one who consumes usury, its client, its witness, and its recorder. Usury and adultery do not become widespread among people but that they will become vulnerable to the punishment of Allah Almighty.”(Musnad Ahmed-GradedSahih by Zaid Shakir)
Ibn Mas'ud narrated:
"The Messenger of Allah (sal) cursed the one who consumed Riba, and the one who charged it, those who witnessed it, and the one who recorded it." (Tirmidhi-Graded Hasan Sahih by Imam Tirmidhi)
The bove hdiths mention that the person who takes interest, the one who charged interest and the one who witnessed it is cursed. The one who signs the agreement is not paying any interest but signing the agreement that if he/she delays the payment, they will have to pay an interest. The interest is charged every onth in a credit card if you delay payment for purchases which is known as Daily Periodic Rate (DPR). You can simply avoid the interest by paying the credit before the stipulated date. Now the question would arise, “ what is I due o some reson cannot make the payment in due date and is charged for interest.?” The answer for this is with a few pragmatic solutions ane one Is,
• To pay the interest using any interest you have especially that is paid by a bank in your bank account. For an eample, if you have savings account,the bank will pay you interest depending on vrious factor and you can pay that interest money to settle the credit crd interet.
• The other option will be to pay off the interest If you are capable becaue it is not your fult and it is not a sin evn if you paid the interest becue you intention was good. You are actually forced to pay interest and it is not a sin to do so.
Ibn Abbas reported: The Prophet, peace and blessings be upon him, said, “Verily, Allah has overlooked for my nation their honest mistakes, forgetfulness, and what they are forced into doing.” (Sunan Ibn Majah-Graded Sahih by Albani)
Allah(swt) judges the action’s based on the intentions.
Umar Ibn Al-Khattab (rali) narrated that he heard the prophet (sal) say,
"Verily actions are by intentions, and for every person is what he intended” (Bukhari and Muslim)
It is not haram to invest or buy stocks.
Stocks are total shares in a company and some companies sell their stocks to outsiders who can become owners of those shares. There is nothing haram in buying stocks because generally it does not involve riba.
Allah (swt) says in the Quran,
“But Allāh has permitted trade and has forbidden interest.” (2:275)
Purchasing was done even by the prophet (sal).
Narrated `Aisha:
The Prophet (sal) purchased food grains from a Jew on credit and mortgaged his iron armor to him. (Bukhari)
Narrated Ya'la ibn Umayyah:
The Messenger of Allah (sal) said to me: “When my messengers come to you, give them thirty coats of mail, and thirty camels. I asked: Messenger of Allah, is it a loan with a guarantee of its return, or a loan to be paid back? He replied : It is a loan to be paid back.”(Abu Dawud-Graded Sahih by Albani)
Some scholars argue investing in stocks is haram because it is like credit cards where you agree to pay interest.
2. The Interest (Riba) Argument against Credit Cards
This is one of the most trickiest and controversial issue on credit cards and the argument is that a person who is getting a credit card must sign the agreement that he will pay the interest if he fails to pay before the stipulated date and quote the following hadiths,
Abdullah ibn Mas’ud reported: The Prophet, peace and blessings be upon him, said, “Allah has cursed the one who consumes usury, its client, its witness, and its recorder. Usury and adultery do not become widespread among people but that they will become vulnerable to the punishment of Allah Almighty.”(Musnad Ahmed-GradedSahih by Zaid Shakir)
Ibn Mas'ud narrated:
"The Messenger of Allah (sal) cursed the one who consumed Riba, and the one who charged it, those who witnessed it, and the one who recorded it." (Tirmidhi-Graded Hasan Sahih by Imam Tirmidhi)
The bove hdiths mention that the person who takes interest, the one who charged interest and the one who witnessed it is cursed. The one who signs the agreement is not paying any interest but signing the agreement that if he/she delays the payment, they will have to pay an interest. The interest is charged every onth in a credit card if you delay payment for purchases which is known as Daily Periodic Rate (DPR). You can simply avoid the interest by paying the credit before the stipulated date. Now the question would arise, “ what is I due o some reson cannot make the payment in due date and is charged for interest.?” The answer for this is with a few pragmatic solutions ane one Is,
• To pay the interest using any interest you have especially that is paid by a bank in your bank account. For an eample, if you have savings account,the bank will pay you interest depending on vrious factor and you can pay that interest money to settle the credit crd interet.
• The other option will be to pay off the interest If you are capable becaue it is not your fult and it is not a sin evn if you paid the interest becue you intention was good. You are actually forced to pay interest and it is not a sin to do so.
Ibn Abbas reported: The Prophet, peace and blessings be upon him, said, “Verily, Allah has overlooked for my nation their honest mistakes, forgetfulness, and what they are forced into doing.” (Sunan Ibn Majah-Graded Sahih by Albani)
Allah(swt) judges the action’s based on the intentions.
Umar Ibn Al-Khattab (rali) narrated that he heard the prophet (sal) say,
"Verily actions are by intentions, and for every person is what he intended” (Bukhari and Muslim)
It is not haram to invest or buy stocks.