السلام ورحمة الله وبركاته

[leyanis]

Hello people , i have a very simple question
Dealing in the stock market ,
First of all , yes I am a newbie so I am gnna start with a basic question , shares and stocks are two different things right ? ( According to my knowledge yes they are two separate things )
Secondly, m not gnna ask about the "type" of trading because I know about that already
I just wanna know , overall , is dealing in the stock market halal or haram?
I think there is a Hadith that says You cant sell what you dont see , so what about that?
And then theres the matter of leverage , is it haram or halal if so then why?
Of course the company who's stock/shares u are going to deal with must be mainly involved in haram practices.
I just wanna know about the halal and haram aspects.
This is not a debate , everyone has a different perspective so lets respect each other

 

[jtrevor99]

@leyanis Walaikumsalam wa rahamatullahi wa barakatuhu

• Stocks and shares are technically different but used pretty much interchangeably in most conversations
• There’s a difference of opinion but the vast majority say it’s halal.
• Leverage as the term is normally used generally involves riba so best to stay away until one gains more knowledge.

 

[leyanis]

@jtrevor99 Thank you , Is there a Fatwa I can look at ? , Like something rock solid after which my mind wont wander anywhere else

 

[rob_macneal]

@leyanis Look in to the criteria and how it’s considered halal I would say …

The 33% debt ratio is a bit of a joke.

Feel as though people are justifying investment with very weak points.

 

[princesst1]

@rob_macneal The debt ratio has be based on something so what should the limit?

Use Qur'aan and sunnah and usuli principles to prove your case.

https://amanahadvisors.com/making-sense-of-the-30-rule-in-islamic-finance/

 

[rob_macneal]

@princesst1 Why does it have to be based off something ?

It’s interest. Which is haram. These companies have been built on billions of pounds/dollars worth of loans which include interest.

How can you justify investing in them just because there’s a percentage figure pulled out of the prophet (PBUH) life without any relevant context.

 

[princesst1]

@rob_macneal You sound like an absolutist.The purpose of shari'ah is to solve problems, the modern financial world involves riba. That is a fact.

Since you think you have it all figured out. Explain how to the deal with the modern financial world without dealing with riba.

 

[lessthannothing]

@leyanis Wa alaikum us Salam. As someone who studied and taught corporate finance for a number of years, and has been closely associated with (but not working in) the financial industry for 10, here is what I can tell you:

1. Shares and stock are both “equity instruments”. This means that both of them represent a fraction of the ownership of the company, and are therefore the same.
2. Leverage in stock markets is VERY different to leverage in general use. In stock trading, it just means that your broker, if you satisfy their conditions of experience, risk apetite and funding, will allow you to purchase more shares than you can actually afford. Most brokers do not charge any interest whatsoever on providing this service, and there is no expectation of you paying them more than you owe. They earn a percentage of the size of the trade as fee, so interest is not what they’re after. Look into your brokers t&cs to understand this more.

With that said, as you’re a newbie to trading, I’d advise you to steer WELL clear of leverage. People have gone bankrupt biting off more than they could chew.

 

[leyanis]

@lessthannothing I understand, is there a fatwa i can look at ? Because i have finally managed to collect enough capital to start but my family is a little on the no-no side about it , a fatwa ought to clear there minds

 

[princesst1]

@lessthannothing Leverage is haram since you have to pay interest on the loan. Most retail investors do not use leverage they actually use margin.

All brokerages advertise leverage but in reality its margin.

 

[leyanis]

@princesst1 I understand, thanks

 

[princesst1]

@leyanis Investing is halaal. In fact you pay zakat on stocks. If buying and owning stocks were haram you wouldn't pay zakat on them

https://seekersguidance.org/tag/investing-in-stocks/