Where do I begin ?

[juliussneezer]

Hi everyone, I’m in my early 20s in the US and would like to start investing. I had a few questions and would love your guys help!

1. What platform should I use that is halal Wahed or Fidelity?
2. Would it be better to invest weekly and about how much should I put in there?
3. Do I just keep my money in there like a savings account or do I have to monitor things and choose to take them out when the market gets high or low (I barely know anything abt finance). Also, is there a possibility of me losing ALL my money?
4. I am wanting more long term like 10-15 years since I don’t need any spending money now and I’m also really new at this.

 

[realitywild777]

@juliussneezer Use Wealthsimple, it has a good user interface and easy to use and excellent support team.

Depends on what your goal is

Invest in ETF's, open a TFSA, see what TFSA's are, learn about the various accounts available, then look into halal ETF's such as HLAL, SPUS,SPRE,GLDM, SPSK, UMMA

I would recommend you see EverythingMoney Channel on youtube to learn the basics. Use YahooFinance to check prices, news of stocks and Etfs. Zacks.com to see holdings of ETF's.

ETF's are a collection of stocks basically. Each ETF is unique where it has its own ticker symbol, various companies and percentages. Example, SPUS is an ETF that has over 100 companies, 13% is apple, 12%microsoft etc. The percentages vary from time to time depending on the fund manager as markets change from time to time

 

[juliussneezer]

@realitywild777 Thank you for your response! Would an ETF be similar to an Index?

 

[that_tony_guy]

@juliussneezer Wealthsimple is a Canadian brokerage and TFSAs are Canadian accounts. Find the US equivalent.

ETFs are a collection of stocks that are passively managed. They track an index like the S&P 500, Dow Jones, etc.

 

[oneway123]

@juliussneezer Salam! This is just general information, not financial advice, hope it helps!

• Wahed does everything for you; you just invest money and choose a risk level. Fidelity, on the other hand, gives you much more control, you choose what stocks/ETFs you want to buy into. I have both, a Wahed one that automatically invests for me and a Fidelity account to manage my Roth IRA. (Shameless plug - if you do sign up for Wahed use code julcho2 for a free $10, I get $10 as well!)
• It is definitely better to invest weekly rather than monthly, you can look at the science of dollar cost averaging to understand why. The amount you want to invest depends on your income and your personal choice.
• From the information I got, it seems like you are a long-term investor (this is the safest and sure-proof way to accumulate wealth!) So you would just keep your money here and let your money make money for you!

If you do go the Fidelity route, Shariah-compliant ETFs like SPUS, HLAL, and UMMA are great! They often outperform the market.

Wishing you the best!

 

[juliussneezer]

@oneway123 Wasalam and thank you for your response! Is the roth ira in fidelity shariah compliant?

 

[oneway123]

@juliussneezer You're welcome!

Fidelity is just a brokerage. You can create a brokerage account (basically a savings account where you can invest!), this doesn't change the Shariah compliance. What you have INVESTED in the brokerage account is what matters.

We, as Muslims, don't want any non-compliant stocks, so we will choose to invest in compliant stocks and ETFs; great ones being SPUS, HLAL, and UMMA.

I recommend apps like Musaffa and Zoya to determine Shariah-compliance!

 

[oneway123]

@juliussneezer And to add, a Roth IRA is a retirement account that has great tax benefits. There are thousands of videos on YouTube that explain it, I suggest you check it out!

 

[juliussneezer]

@oneway123 Thank you for all of this information I really appreciate it! Do you know if a standard Roth IRA is compliant or would someone need to find an Islamic version?

 

[oneway123]

@juliussneezer Of course!

A standard brokerage account like Fidelity is compliant (it doesn't accumulate interest like regular savings accounts, granted you are not (automatically) invested in their market fund, SPAXX, you need to invest money to grow it). It will stay compliant, granted you don't own any non-compliant stocks/ETFs.

Also, while investing, you will often hear the term compound interest. Compound interest is NOT riba (usury), it is a mathematical formula.

 

[counselorwriterdad]

@juliussneezer Same here

 

[annodynamic]

@juliussneezer The platform doesn’t need to be halal, only the underlying investments eg stocks or funds.

Fidelity likely has more options for the long term investor, a range of stocks and different halal funds (but check this). Whereas Wahed invests in only 2/3 funds, although these are still diversified funds and so are able to do the job. Wahed also offers the ability to invest in Sukuk (Islamic bonds) and Gold in their lower risk options which is useful when you are coming up to retirement later down the line.

Fees are important, Waheds fees are likely to be higher than Fidelity, but there probably commission free brokers/platforms nowadays which allow you to invest in the same underlying halal fund with no trading costs. We can do some research on this if you would like.

Investing weekly or monthly is fine. The key is consistency. Obviously if you do have costs to trade then monthly would be better. How much depends on your personal circumstances. Start small and increase with confidence.

If you are investing for the long term, and don’t need the money in the short term, you do not need to take money out, it’s very hard even for professionals to predict when the market will fall or when a crash is coming. The average crash lasts a short time too, so staying invested and keeping your contributions consistent will allow you to achieve the average stock market returns over time (avg 9% a year). Of course near retirement you will need to monitor a bit more closely.

If you invest in a halal US index fund for example, the same one Wahed invests in, it’s practically impossible to lose all your money. Over the long term the market rises.

Please have a read of our newsletter, all the things we’ve quoted here, like, how long a crash lasts, avg stock returns, etc we write in more detailed articles. We are planning to do review the major platforms and funds too, but reach out to us if you need help before hand.

Check out our newsletter where we educate Muslims about investing in the stock market. Link here https://open.substack.com/pub/theislamicinvestor1?r=33y3eb&utm_medium=ios

We are also on social media so follow to help spread the word and help more people like you. Instagram https://www.instagram.com/theislamicinvestor1?igsh=dmYzNW5rODdkcmRi&utm_source=qr and X (Twitter) https://twitter.com/islamicinvestr