spookydawg77
New member
So I'm a UK resident, I already have a Wahed account with an ISA which I opened this year, so in the hunt for a brokers I didn't really care about whether it supported ISAs. Wahed also ends up investing into a shariah compliant ETF which spreads its investment across 350 world wide companies using iShares MSCI World Islamic UCITS ETF in one (and you can see a full list of companies on that link) and 150 emerging markets using HSBC Islamic Global Equity Index Fund IC (GBP) (I'm on a aggressive plan) in another which is more than enough diversification for the passive investor. So I was going to use this as a primarily way to invest, the broker I chose was a side hustle to this.
One problem with Wahed, I'm very environmentally conscious and I've noticed that sharia compliant doesn't necessarily mean green. In the ETF's mentioned, they include companies like Shell and BP which I would rather cut out. So I got aspirations to slowly shift into my own managed and diversified portfolio, that's green as can be. Additionally I have a view that as a Muslim I shouldn't be investing in a company that is running against Muslim values/ummah or resides in a country that is governed by right wing Islamophobes. An example of this is the companies like Tata group who are known to be one of the largest donors of the BJP party in India, and recently hit some controversy with muslim-hindu relations. Tata group also features in the MSCI world Islamic index ... So the index is not perfect in my view. Thus began my search...
I found some cool sites that do a comparison between brokers called brokerchooser.com which was a great place to start and discover different brokers but the information like fees can be out off date. So I found getting information from the source is best.
I first started by signing up to trading 212, however they stick you in a waiting list. I've been waiting for a good 5 months now! So I moved on ...
I next tried Degiro, this was the second broker I tried and to be honest I found it a bit intimidating (theres too much going on in the UI). However I found its got a number of stock types available much more than most other platforms, including things like ETC's (interestingly some of these options require short exams to get started). One thing that really kills it tho is the lack of fractional shares. Dropping $1000 on a single tesla stock is not practical and I'm not sure you can keep a diversified portfolio if your adding small amounts on a regular basis unless you let your money sit there until you can splash out on an expensive stock. Penny stocks are available, but from what im reading their high risk. ISA's are also not available.
Next I tried lightyear, it's got a great app however the rage of stocks and stock types available is a very limited. Seeing a shariah compliant ETF is kind of my litmus test of selection and it failed it.
Next up was eTorro who are based in Isreal, if your part of the BDS movement then this is one is one to avoid. Feature wise tho they seem pretty good.
Next up is Freetrade, this scores fairly high for me and I've held an account with them for a while now. To gain access to more stock choices you do however need to get a pro account which gives you haram interest (3%) on your money. After emailing Freetrade I found that you can opt out of this. Free trade also offer an ISA too. In the end I didn't go with free trade due to their fee structure. You will find that later on I found something that works out a little cheaper. They make most of their money on individual trades. I may shift back to freetrade at a later date.
So the last option was Stake who only deal with US stock. This wasn't an issue for me as most of my stocks were going to be US based anyway. They offer both stocks and ETF's, and also interestingly offer access to a shariah compliant S&P 500 index. There's no ISA options with them. But what I liked was the fee structure, its 0 on trades. They make their money on currency conversions when withdrawing and depositing which in the long term works out cheaper.
Would I stay with stake long term? Possibly no, the other platforms are always improving and where one feature may be missing they might implement it in a year's time. When I'm able to open out another ISA I may make a switch to make my setup more tax efficient.
One disclaimer, I did add affiliate links in this post so we both get some stocks if you create an account. I created this post because I thought other Muslims might find it useful. I'm curious to know whether other people went through this journey too... Selecting a broker didn't seem like a stright forward process. Im wondering whether my approach is correct.
One problem with Wahed, I'm very environmentally conscious and I've noticed that sharia compliant doesn't necessarily mean green. In the ETF's mentioned, they include companies like Shell and BP which I would rather cut out. So I got aspirations to slowly shift into my own managed and diversified portfolio, that's green as can be. Additionally I have a view that as a Muslim I shouldn't be investing in a company that is running against Muslim values/ummah or resides in a country that is governed by right wing Islamophobes. An example of this is the companies like Tata group who are known to be one of the largest donors of the BJP party in India, and recently hit some controversy with muslim-hindu relations. Tata group also features in the MSCI world Islamic index ... So the index is not perfect in my view. Thus began my search...
I found some cool sites that do a comparison between brokers called brokerchooser.com which was a great place to start and discover different brokers but the information like fees can be out off date. So I found getting information from the source is best.
I first started by signing up to trading 212, however they stick you in a waiting list. I've been waiting for a good 5 months now! So I moved on ...
I next tried Degiro, this was the second broker I tried and to be honest I found it a bit intimidating (theres too much going on in the UI). However I found its got a number of stock types available much more than most other platforms, including things like ETC's (interestingly some of these options require short exams to get started). One thing that really kills it tho is the lack of fractional shares. Dropping $1000 on a single tesla stock is not practical and I'm not sure you can keep a diversified portfolio if your adding small amounts on a regular basis unless you let your money sit there until you can splash out on an expensive stock. Penny stocks are available, but from what im reading their high risk. ISA's are also not available.
Next I tried lightyear, it's got a great app however the rage of stocks and stock types available is a very limited. Seeing a shariah compliant ETF is kind of my litmus test of selection and it failed it.
Next up was eTorro who are based in Isreal, if your part of the BDS movement then this is one is one to avoid. Feature wise tho they seem pretty good.
Next up is Freetrade, this scores fairly high for me and I've held an account with them for a while now. To gain access to more stock choices you do however need to get a pro account which gives you haram interest (3%) on your money. After emailing Freetrade I found that you can opt out of this. Free trade also offer an ISA too. In the end I didn't go with free trade due to their fee structure. You will find that later on I found something that works out a little cheaper. They make most of their money on individual trades. I may shift back to freetrade at a later date.
So the last option was Stake who only deal with US stock. This wasn't an issue for me as most of my stocks were going to be US based anyway. They offer both stocks and ETF's, and also interestingly offer access to a shariah compliant S&P 500 index. There's no ISA options with them. But what I liked was the fee structure, its 0 on trades. They make their money on currency conversions when withdrawing and depositing which in the long term works out cheaper.
Would I stay with stake long term? Possibly no, the other platforms are always improving and where one feature may be missing they might implement it in a year's time. When I'm able to open out another ISA I may make a switch to make my setup more tax efficient.
One disclaimer, I did add affiliate links in this post so we both get some stocks if you create an account. I created this post because I thought other Muslims might find it useful. I'm curious to know whether other people went through this journey too... Selecting a broker didn't seem like a stright forward process. Im wondering whether my approach is correct.