Halal Investment Methods In The UK

Investments are one of the top ideas for gaining an income. In the world of finance, Halal investment is a prominent term, also called Islamic investment. Here are some Halal investment methods in the UK, and all that you need to know about it that will help you start on your investment plans.

What Is Halal Investment?

To put it simply, Halal investments are methods of investing in anything, with rules that are approved and required by the Islamic law, or the Shariah, as it is commonly called among people. That way, you can stay assured that your investments are going down the ethically and religiously right path. When it comes to Halal investment methods, the term Musharakah naturally shows up.

What Is Musharakah?

In Islamic finance, Musharakah is an investment structure for a partnership where the partners have to gain from the profit as well as go through the loss fairly. As it is commonly known, Islamic law does not allow one to gain profit through interest from lending money, which is also known as Sood which is strictly prohibited in Islam. However, with Musharakah the investor can gain a profit based on the ratio that has already been decided and settled.

What Are Some Halal Investment Methods While You Are in the UK?

The opportunities in the United Kingdom are many, especially when it comes to opportunities for investment. However, you must be a little careful and carry out thorough research when it comes to Halal investment. Like any other part of the world, Halal investment methods while you are in the UK are no different. Here are a few ideas for Halal investment.

#1 Land or Property:

When it comes to investment ideas, specifically those ideas that are sure to gain you profit, investing in property is one of the leading ideas in the market. Luckily, property investment falls into the category of Halal investment too. You can invest in an area of land or into a property and then go on to rent it out. That way, you can keep earning a steady profit, or income. Beware, you are legally obligated to take care of any major repairs and other legalities.

#2 Business Starters:

In the world of all things related to finance, income, and investments, business starters have always been a popular idea. Though it might seem somewhat of a risk to invest your money into a business startup, it can gain you impressive profit if the right strategies are implemented to the business. If the business is run smartly, it will surely boom in terms of money and promise you a good profit too.

#3 Gold:

As everybody knows, the price of gold is a big deal. If you are in possession of any gold and the prices of gold happen to increase, it will be in your favour and earn you profit. Since there is no harm or anything unethical or Haraam in that, the Islamic finance law in compliance with the Shariah allows buying gold to be a proper, Halal investment.

#4 Stocks or Shares:

Buying stocks or shares is widely regarded as one of the most common ideas for investing into. When you invest in a company and buy a certain number of shares, you will get the same ratio of profit from what the company generates. This method also sits well with the Islamic law of investments and finance, so if you are looking for something reliable to invest in while keeping it Halal, go for this one. However, before you invest, make sure that the company you intend to invest in is not using any unethical resources.

#5 Small-Scale Businesses:

Though many of you might consider this one to be a big risk or even a silly decision, it really is not. In fact, it is quite smart, if you think about it. Though it is not at all a ‘sit back and relax’ kind of investment, it will surely pay off well if you invest not only your money into it but also excellent management skills. With any luck and smart management, if the small-scale business that you invested in goes big, then so will your profit.

#6 Loan Companies:

Several companies offer startup loans to companies without any Sood involved in it. They usually cater to small-scale, starter businesses so that they can build their way up in the market with a reliable backup, and return the money at a certain time. Since these companies also need a source to gain money that they can then lend to the businesses, it is also a good opportunity to invest in. Once the businesses are stable, you will gain your investment back.

#7 Hospitals:

As you probably already know, hospitals need a lot to stay steady and run in good quality. Considering that, investing in hospitals will be a good idea. Not only will you be making a smart investment that is guaranteed to give you satisfactory profit but you will also be helping in the betterment and treatment of people, which is something that Islam encourages and promotes. Besides, there is nothing unethical about helping people, so this investment method is also Halal.

Rules to Remember for Investment:

As it goes for every decision that you make, there are some rules that you should check out beforehand to make sure that you are doing the right thing. Once you have confirmed it that you are able to follow all the rules required for any task, for example, Halal investment as it is the topic in consideration right now, then you are all set and ready to go. Here are some rules for investing that you should go through before you go on to make the big step.

#1 Why Are You Investing?

That is the big question. If your reason to invest is valid and in compliance with Islamic law, you can go ahead and look for options. Make sure to check that there is nothing unethical or illegal involved in your reason if you want to keep it Halal.

#2 How Much Time Can You Put into It?

This is one important that everyone must consider before making the investment. Often, investment is not just giving money and then sitting back. You have to manage your share of the business, especially if the investment doesn’t generate a passive income.

#3 Stay Away from Unethical Businesses:

When it comes to Halal investment, there are certain factors that you must pay attention to, in order to make sure that any business that you are investing in is not involved in anything that the Islamic law would not allow.

#4 Slow and Steady Wins the Race:

Any kind of investment business requires you to follow this rule, especially investments. You cannot dump in all your money and expect to gain an amount of profit the very next day that will turn your life around. You must stay patient and work hard to ensure your business grows higher than your dreams.

#5 Avoid Interest:

In Islamic law or the Shariah, interest (or Sood) is strictly off-limits to keep your business and earnings Halal. Avoid investing in anything that requires you to give or take a loan with interest. Moreover, avoid adding interest if you lend money to anyone.

Investment Ideas That Do Not Fall Under the Halal Investment Category:

While Halal investments open up an impressive number of gates for you that lead to great opportunities, there are a few opportunities that you should steer clear of. That is because these ideas have unethical involvements that are prohibited in Islamic law.

#1 Banks:

Though banks may seem like the smartest idea to invest in, there are a few things about it that keep it from entering into the criteria of Halal. Many banks apply usury as their charges. Usury is an unreasonably or inexplicably high amount of interest that the bank adds to their services as fees, and interest is strictly prohibited in Islam.

#2 Alcohol:

As it is common knowledge, alcohol is strictly not allowed in Islam. Henceforth, investing in companies that create or sell alcohol is not something that falls under the category of Halal investment.

#3 Gambling:

Gambling is yet another way of earning money that is not rightfully yours. Islamic does not allow gambling, therefore, naturally, it does not have any space for investing in a gambling business either.

#4 Tobacco:

Though it remains a dispute among many whether tobacco is Haraam or not, it is still not something that falls under the category of Halal investment. The reason for that is that Tobacco is a great cause for many illnesses like lung cancer.

Remember, investments can go only pay off well if they are put into the right business and are worked hard upon. So, before you make the investment, make sure to conduct in-depth research of the business to ensure that you are making the right decision.