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Halal Investing 101: A Guide to Profitable and Ethical Investments

Did you know that 50% of Africa’s population is Muslim?


Yet there are very few investment options available for our Muslim brothers and sisters. Ndovu is addressing this gap by bringing Halal investments to you.

Let’s learn what it means to invest in a halal manner with our very own Ro Nyangeri.


Ro is passionate about Shariah-compliant investing. He holds a Masters Degree (with Distinction) in Islamic Banking and Finance and was one of the first holders

worldwide of the Chartered Institute for Securities & Investment’s renown Islamic Finance Qualification.


What Is Halal Investing?


The term “halal” refers to what is permissible or lawful under Islamic law. In the context of investing, it involves investing in companies and assets that comply with Islamic finance principles.


Halal investing has gained increasing popularity in recent years, as more Muslim investors seek investment opportunities that align with their religious values and beliefs.


What Are The Key Principles Of Halal Investing?


1. Prohibition of Riba (Interest)

Islamic law prohibits the charging or paying of interest, as it is seen as exploitative. Therefore, halal investing avoids investments in companies that deal with interest-based products, such as conventional banking and insurance.


2. Prohibition of Gharar (Uncertainty)

Islamic law also prohibits investments that involve excessive risk or uncertainty. This includes investments in speculative businesses, such as gambling and derivatives trading.


3. Prohibition of Haram (Forbidden) Industries

Halal investing avoids investments in companies that deal with industries that are considered haram (forbidden), such as alcohol, tobacco and weapons.


4. Emphasis on Ethical and Socially Responsible Investing

Halal investing places a strong emphasis on investing in businesses that have a positive impact on society, such as those that promote sustainable development, support local communities and uphold human rights.


What Are The Types Of Halal Investments?

Investing in Sharia-compliant assets is neither difficult nor impossible. It only requires some research and commitment to identify the appropriate investments. While this can be done by making use of halal screening resources, there are some widely accepted investments including:


  1. Stocks- As long as the stocks are not from companies that deal in prohibited industries or are considered excessively risky, stocks are regarded as an  acceptable investment.

 

  1. Gold – Gold is considered a safe and traditional means of investment that is Sharia compliant. Gold often appreciates in value, is easy to obtain and invest in, and is not deemed to be in breach of any Islamic finance laws.

 

  1. Sukuk – Sukuk are an alternative to traditional bonds as they are not debt based and do not bear any interest. They are often referred to as Islamic bonds and are normally asset based. Sukuks are able to generate income for halal investors without breaching the Sharia rules.

 

  1. Property – Investing in property is considered halal as long as any income  received does not have an element of riba.

 

  1. Exchange traded Funds (ETFs) – ETFs that hold an underlying halal stock are permitted but not those that mimic the effects of derivatives due to the presence of uncertainty.

Benefits Of Halal Investments

While halal investment products are fairly new to the finance niche and can sometimes be challenging to identify, they possess a wide range of benefits which include:

  1. Social Responsibility-  A socially responsible approach to finance and investment means that assets are deployed to benefit society. This leads to enhanced protection of human rights, just distribution of wealth, and conscious ethical investments that minimize environmental degradation.

  2. Less Exposure to Risk – Halal investment products are less susceptible to massive shocks in the market due to the de-linkage from riba. This reduces the investors’ economic vulnerability.

  3. Growing wealth in an ethical way- Halal investments ensure Muslims can engage and involve themselves with globally permitted opportunities while maintaining their ethical and moral bounds.

How Do You Get Started With Halal Investing At Ndovu?

At ndovu, we are making the Halaal Fund accessible to all.  The Halaal fund is a Shariah-compliant investment that is approved by scholars in the UK, US and Malaysia..


The Halaal fund has returned c. 41% since July 2019, which is better than the broader market (S&P 500) which returned c. 35%. This means that if you had $1,000 in July 2019, today it would be worth $1,041 (this is just a simple illustration).


With Ndovu, you can easily access Halal Funds from the comfort of your home.  Whether you are a Muslim investor looking to invest in a way that reflects your faith, or a non-Muslim investor interested in socially responsible investing, through Ndovu, you can build a personalized portfolio and an investment plan that works just for you and that can help grow your wealth in accordance with Islamic finance principles.


Get started by accessing Ndovu’s Halal Fund which opens up the world of Shariah- compliant investing to you!

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