halal investment

[mommajulesberry]

Aslam Alikom. I recently resigned from my job and have a 403B account with TIAA, which doesn't offer halal investment options. Now, I am seeking the best way to invest exclusively in halal ETFs/mutual funds. Should I think about opening a self-directed brokerage account with Fidelity or Charles Schwab and transferring the funds there? Or should I explore one of the Shariah-compliant platforms (please suggest if you have experience with any)? Additionally, what would be the recommended allocation (%) among HLAL, SPUS, SPTE, SPRE, and AMANA? Thank you, and JazakAllah khair

 

[that_tony_guy]

@mommajulesberry Wa alaikom assalam,

I can't give specific advice because much of it will depend on you personally and what your goals are and what you're comfortable with.

If you're comfortable with "DIY" investing, totally go the self-directed route.

Again, if you're comfortable and your brokerage of choice allows you, explore options beyond the ETFs listed. That'll give exposure to different industries and countries. HLAL, SPUS, and SPTE are all heavy in US technology, so you're investments will have a lot of overlap.

 

[mommajulesberry]

@that_tony_guy Thank you for your response. I'm not particularly confident with DIY investing, although it appears to be the most viable option for accessing all Halal investments. Could you please suggest alternative approaches? Additionally, I would appreciate recommendations on other ETFs. Your feedback is valued.

 

[that_tony_guy]

@mommajulesberry HSBC and iShares have a collection of Islamic ETFs. They are very similar to each other so make sure to do your research beforehand. But in general they can be broken down by:

• US market (ex. ISDU, IGDA)
• European markets (ex. HIEU)
• Emerging markets (ex. HIEM, UMMA, ISDW)
• Sukuk (ie. real estate, ex. SPRE)
• Gold (ex. IGLN)

A lot of them are sold on foreign (non-US) exchanges like the London Stock Exchange, so make sure your brokerage of choice can place foreign trades and beware of the cost (mine charges US$200 for each buy/sell on a foreign exchange). Also keep an eye on the currency it's trade in as many are also sold in British Pounds and I assume you'd want USD.

And just to be clear, I'm not a financial advisor, I'm not telling you to buy any of these. You seem like a smart brother so make sure you do your research and build a portfolio that suits you!

 

[liljohnnymac]

@mommajulesberry I can’t dictate exactly what you should do but I was in a similar situation and here is what I did:
1. I left my company that I had a 401k with fidelity
2. Opened a Charles Schwab Roth IRA account
3. Contacted fidelity to issue a check to give to CS.
4. Invested it in SPUS and HLAL

This is not investing advice as I’m not an expert. All knowledge belongs to Allah swt

 

[tito1990]

@liljohnnymac This ^

SPUS and HLAL have very similar holdings and their returns are pretty close. Just invest in either one of them.

But make sure to rollover the funds directly from your previous employer to CS, there is a time limit of 60 days if you decide to receive a check sent to you.

see: link

 

[counselorwriterdad]

@liljohnnymac What was wrong with fidelity since I recently opened a Roth IRA with them

 

[mommajulesberry]

@liljohnnymac Thank you for your response. However, with a Roth IRA, taxes will apply since the rollover amount will be treated as income. I prefer to maintain the tax-free advantage if possible.

 

[liljohnnymac]

@mommajulesberry Sorry I meant to say rollover IRA. Rollover IRA doesn’t incur any taxes or penalties when you roll from an existing 401k. I personally just don’t like fidelity interface it’s outdated and annoying to navigate. That’s why I went with CS