I need help seeing if my logic towards interest is correct and IF a company makes more halal income rather than haraam income is that still okay?


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As-salamu alaykum,

Long post ahead ;) if you don't have the time (or don't want to read it there is a TLDR at the bottom)

So..I've been going through post after post and I can't find the answer I'm looking for. I understand we all have our own opinions and tolerances. I'm going through my stocks as I reevaluate them. So, I was looking at a stock I own (STAG) and I am trying to see if others agree with my thinking or not and if I can get some guidance. I own way too many stocks to keep track of them so I am wanting to look at my investments again and please I am not asking about the cons of dividend investing or if I should invest in cryptocurrency but rather if my method of investing seems to be halal in the eyes of Allah (but....most investment advice is appreciated).

I was looking at the companies 10-k and the company is a RIET so they earn a majority of their money from rental income but it seems like they also earn interest (I'm assuming from a saving account). Fundamentally, they earn more money from their rental income than they do their interest income and they also pay interest but earn enough money to pay off those obligations so I think their dividends are halal (as long as that trend continues). (The following figures are in thousands as per their 10-k sheet) $117,247 from rental income and $165 from interest and other income (in thousands) but they pay ($15,928) in interest expense and their total expenses for running the company is $(87,883), (https://sec.report/Document/0001479094-20-000030/#i6937fc10a8254940bf2685307a411f9e_10) I am looking at 2020.

In my honest opinion, we shouldn't pay or earn interest a penny of interest and I agree with that statement but here is the issue. some people say once you invest in a stock you essentially agree to all their decisions so if they take a loan it's like you do as well but I disagree (I'm with the other side of this argument) as I can not control that choice. If I started a business then I'd agree with the previous statement as I have more control but when it comes to stocks All I can do is vote and voice my opinions on what they send me to vote on, such as who stays on the board of directors, and since I can't vote or control if they take a loan or earn from haraam sources I need to make sure once I am paid my dividend it didn't come from a haraam source. In terms of capital gain, I think I shouldn't need to purify it but I know I have to pay zakat on it though.


If you asked my 16-year-old self I'd say a penny of interest makes it all haraam but I don't know if I have become accustomed to interest touching us every day or if this is permissible but they way I see it their non-halal income from other and interest income (a.k.a Haraam income) is $165,000 and they paid $15,928,000 interest (a.k.a Haraam expense). The company is in negative $(15,763,000). We haven't looked at their expense or halal income yet because I want to break this down.

Here alone the company is in the wrong and if this was how their year looked any dividends received would be wrong since their income was haraam but also they took a haraam expense and paid interest and since their haraam income is less than the haraam expense they obviously paid my dividend with the loan but either way my dividend would be haraam. If that wasn't clear I am saying if Haraam's income is>haraam expense or vice versa it doesn't matter because it's haraam either way (again we haven't considered their halal expense and halal income, yet).

so let's look further...

Their halal expenses for running the company are $87,883,000 so we are looking at negative $(103,646,000).

Just this alone would be wrong (again) because of what was said previously (income is haraam and so is their expenses so either I get paid from interest earned or interest paid (loan is taken) by the company). I have the ability to not invest in this company so if I decided to invest in this company or not sell and purify my stock I think I'd be in the wrong as I have the knowledge of their wrongdoings even though I can't control the decisions they made. If they paid me a dividend (which would be crazy from a business standpoint) I'm getting money because they took a loan and/or earned interest to pay me so I'd sell the stock (bc that is a horrible return on my money) and I'd need to purify my money. I know this paragraph is redundant BUT I need to drive the point home of when I think WE ARE RESPONSIBLE and what I see as HARAAM.

Now, this is where I think the key comes that makes this halal. Their halal revenue is $117,247,000 so the net revenue (117,247,000-103,646,000) is $13,601,000. My understanding of in thousands (as per 10-k/10-Q) is this if I did the wrong amount of zeros the math is still (relatively) the same.

The profit is halal, in terms of the net, and with this amount, they then keep some for future use, and then I get paid from this amount if they decide to pay me a dividend. A benefit of dividends and still halal because they aren't guaranteed

In this long novel I am essentially asking is it okay to invest, profit. and receive dividends if the company pays and/or earns interest but makes almost all of their profit from a halal source and always ends up positive from that halal source of income before paying me or have I just started to overlook interest (astaghfirullah) and any amount of earned or paid interest is not purified by halal income?? I'm not sure if my math of (haraam income and/or expense + halal expense) is less than (companies halal income) == halal income for me.

If you read this whole long-winded post I really appreciate it but if you don't have the time to then here is a TLDR so I can still get an answer.

TLDR; IF a company earns interest or pays interest but that amount is less than their halal revenue are any dividends and capital gains on it halal?

Is it still halal if

halal income - haram income and/or interest = $0

but their halal expenses are greater, making net income in the negatives. e.g. they earned $100 BUT EARNED $20 from INTEREST and PAID $80 in INTEREST making NET INCOME $0 but paid $20 for labor so the company made -$20? this is a halal loss that we share?

I appreciate any and all responses. I hope I haven't made a mistake and if I have please do explain it as I need to make sure I fix my mistakes before it is too late. We are at a point of time where interest is in our lives even if we do not want it and we need to find a way to live in this world. Our money doesn't have anything to back it up. If you don't have a credit card or take a loan your credit score is low and if your credit score is low you sometimes miss out on good investments or can't rent a place or even work in certain sectors or jobs as those things are needed. I really do not want to deal with interest and as far as I can tell at the end of the day I am getting paid from the interest less pool but may Allah guide me and all of us, inshallah!
@kimutaikim Hi, I don't claim to be knowledgeable on the matter of islamic finance and banking but if I could help you in any way I can, I'd call that a plus.

You could check out the FTSE Shariah Index (the link underneath here) and see how they screen their stocks and what they look for in the companies. It's almost impossible for any non-islamicly run business to not earn interest on income what we can do as Muslim retail investors is choose companies that minimise that source of income.


You could also try other Shariah-compliant screening apps or services such as Zoya.
@helpingfamilies Thanks for you input. It looks like most scholars agree 1/3 of their income shouldn’t be from interest so I guess my logic is supported in that way. I appreciate the links and recommendations!
@kimutaikim Salaam,

I took a course from Bukhari institute that dealt with halal and Haram income.

I want to preface this by saying this is what they taught and Allah hu alim. I don't want to push any agenda here or force my opinions on others iA. This is just what I took away from the course.

The general rule of the stock market is that it is halal. However, things get tricky very quickly.
There are 3 types of businesses:
1. 100 percent halal businesses
2. Businesses based on Haram like strip clubs or whatever
3. Mixed businesses. Meaning that the business is halal like a milk farmer. BUT they take loans from banks and pay interest on those loans. Or they might have a savings account that earns done interest

According to Sheikh Samir Mustafa (from Saudi if I'm not mistaken)

Says the the 3rd type of business is still Haram. Now using this logic...that would make every single business listed on the stock markets Haram... I cannot name 1 single modern day public company that doesn't borrow money and has some debt.

Obviously in Islam, riba is one of those of not the most scariest thing for a practising Muslim. If it's 1 dollar or 1 cent, doesn't matter.

Another thing I've found in my research is these rules where Islamic institutions say that less than 33 percent or 5 percent of a businesses revenue can come from non permissible sources. When I ask some imaams they say this number is arbitrary.

When I watched DR. Zakir Naik's video. He mentioned he was invested in the stock market as well. He didn't mention what stocks but as you can appreciate from what I'm trying say here: this is a very complicated issue and imaams and scholars have varying views.

All I can pray is that Allah forgives our ignorance and reward the intentions... Amen.

And if you do come across any investment opportunities for Muslims please please please do share. It seems a very daunting world to live in as a Muslim trying to grow their wealth....
@brookeshien Walaikumasalam,

Thanks for your input. I definitely agree with you on any haram income can taint your halal income and your course does make sense. If I recall there was a Hadith on how in the future everyone will be touched by interest, even those who do not want it. I didn’t know Dr.Zakir invested, it would be nice if he shared so we can see his reasonings behind what is right and what is wrong. I definitely agree that at this point we have reached the grey areas of Islam and we need to think for ourselves what is easy yet doesn’t break the fundamentals of Islam. Islam is supposed to be an easy religion on the person so it’s obvious when you are receiving interest (eg a savings account) or paying interest (eg not paying credit cards on time) but when it comes to this I agree there options vary and things do not have a lot of evidence so you must think what is best by yourself. Honestly, the only investment (at this point) that seems to be halal is real estate pools in the UK. There are a few companies that basically give you a portion of the rent and once the property is sold any of the capital gain. I will try to find the name of the company but that seems to be the only way I can think of, other than starting your own business.
@kimutaikim That's what I'm thinking. But for real estate you need a good chunk of money to start off with. I would love to gather people to pool our resources together but it's very hard to find trustworthy people who don't get scared the first sign of trouble. If another Wave hits I would definitely see a lot of brothers and sisters want their money back immediately, which is not feasible to make money long term.

I did hear about Manzil halal mortgage fund. Again, if we only look at their mortgage fund and not their wahed investment ETF... They said annual return rate of 4 percent. But you take their mer fees and add it to the support platform fees and subtract it from 4%...you're left with around 1.9%. That rate of return looks really sucky. Especially with inflation hovering around 2-3 percent if I'm not mistaken.

I hear the UK's infrastructure for Muslim investment is a lot better than what we have here in North America. Perhaps pooling money to buy property is more feasible there.

At this point I'm praying for CEO level salary for my entry level job....
@brookeshien lol, I definitely agree, hard to find people who you can trust and I think you are right about the investment opportunities being better in the UK. Good luck with the salary!

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