18 yr old want to invest long term

[newcovenantheart]

Asalum alaykum, So im 18 yr's old and I been giving a decent amount by my father to learn investing and such. I've already opened and ibkr account. im not really sure if this question has been asked here before, but if I want to invest for the long term and such. is a Roth IRA a separate account? or is it a type of stock? and does it also fall under haram/halal? another thing is I don't seem to understand how dividends work. is it like fully offered by some/all companies. and like what are general recommendations or steps to starting a retirement account or what type of stocks to invest in long term. any help would be appreciated thx.

 

[resjudicata]

@newcovenantheart So here’s the short of it.

Roth and 401ks are REALLY long term, like can’t touch that money until you’re 59.5 (exactly 59 and a half or you pay really high penalties).

As such, I personally stay away.

There are plenty of halal, shariah compliant, ETFs that perform very well, better than the market right now even. An ETF is basically a bag of many stocks, which is what I recommend you invest in.

Think of it this way, you can invest in a single company like Microsoft. That’s a bit risky though but high reward. Microsoft could do very very well, or do very very poorly and all your money is in that stock.

ETFs will take multiple stocks, often hundreds, and give you one price to average out those that do poorly. For example, SPUS is based on S&P 500. S&P 500 is basically the top 500 companies in the U.S. rolled into one ETF and is a market standard. SPUS is the shariah compliant version of S&P 500 as it removes the haram businesses.

There are a few halal ETFs. I used SPUS and SPTE. SPTE is a shariah compliant ETF of global tech companies, it’s more risky than SPUS but again, higher reward higher risk.

There are many more halal investments like SPWO which if I recall is a developing world industrial index, SPRE which is a real estate ETF, HLAL which is a ETF similar to SPUS I believe, UMMA another ETF, and SPSK.

So to list them out what we have today in the U.S. include (in order of what I like to invest in)

• SPUS
• SPTE

I don’t invest in the following, in decreasing order of my preference

• HLAL
• SPWO
• UMMA
• SPRE
• SPSK

 

[newcovenantheart]

@resjudicata thank you soooo much

 

[moshilcha]

@resjudicata Why does no one talk about IGDA?

 

[paulacs]

@newcovenantheart Imagine Roth IRA being like a box to hold shares in different companies. It’s not a stock. Inside that box, when you make profit it’s tax free, so the money in there can grow and be reinvested free of tax.

Not all companies pay dividends. Dividends are a share of the companies profits distributed to its shareholders. If you find a company that has a dividend yield of 5%, that means for every $100 you currently buy of shares in that company, you will receive $5 as a dividend every year.

 

[newcovenantheart]

@paulacs thanks a lot! but one thing tho how does one invest in a Roth ira like does it have types like ETFS (diff companies n stuff) and are dividends part of Roth IRAs.

 

[annodynamic]

@newcovenantheart Have a read of our ‘back to basics’ articles in our newsletter where we help Muslims invest in the stock market. Consider subscribing to follow how we are investing too.
Any further questions feel free to reach out.

Part 1 https://open.substack.com/pub/theis...s-our-rules-for-stock?r=33y3eb&utm_medium=ios

Part 2 https://open.substack.com/pub/theis...s-rules-for-investing?r=33y3eb&utm_medium=ios

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[newcovenantheart]

@annodynamic thank you so much ill have a read