Assalamu alaikum all,
I'm fairly new to investing and would like your thoughts. I've been doing a lot of research about the criteria for making stocks shariah compliant, and while I don’t want to say scholars that have studied and come up with these criteria are wrong, it just doesn’t sit right with me personally. Riba is such a huge sin that I would prefer to be completely clear of it.
To that end, I’m contemplating investing in only debt-free companies, using screeners like Simply Wall St to keep up to date with debt levels but still using Islamicly/Zoya to verify shariah compliance as anything earning more than 5% revenue from Riba would not be compliant. I could then purify dividends & cap gains to the proportion of interest earned by the company.
E.g. I invest in a company that has zero debt and earns 1% of its revenue from interest earning assets/accounts. I continually purify 1% of the dividends earned and purify 1% of the cap gain when I eventually sell the stock.
My question is does this sound like a sound and/or practical idea? My worry is that even if I’m purifying dividend and cap gain earnings, the company/stock price is still profiting from the interest earned which would affect my eventual cap gains. Or would the purification cover it? Is there really any way to know how much of that eventual cap gain would be from Riba?
I'm fairly new to investing and would like your thoughts. I've been doing a lot of research about the criteria for making stocks shariah compliant, and while I don’t want to say scholars that have studied and come up with these criteria are wrong, it just doesn’t sit right with me personally. Riba is such a huge sin that I would prefer to be completely clear of it.
To that end, I’m contemplating investing in only debt-free companies, using screeners like Simply Wall St to keep up to date with debt levels but still using Islamicly/Zoya to verify shariah compliance as anything earning more than 5% revenue from Riba would not be compliant. I could then purify dividends & cap gains to the proportion of interest earned by the company.
E.g. I invest in a company that has zero debt and earns 1% of its revenue from interest earning assets/accounts. I continually purify 1% of the dividends earned and purify 1% of the cap gain when I eventually sell the stock.
My question is does this sound like a sound and/or practical idea? My worry is that even if I’m purifying dividend and cap gain earnings, the company/stock price is still profiting from the interest earned which would affect my eventual cap gains. Or would the purification cover it? Is there really any way to know how much of that eventual cap gain would be from Riba?