Is investing in stocks halal?

The short answer

Buying shares in a company is, in principle, becoming a part-owner of a business, which is a form of partnership and trade that Islam allows. A share is halal when the company's main business is halal and its involvement with interest is limited or absent. Short selling, interest-based margin and gambling-like derivatives are not permitted according to most scholars.

Evidence 1 2 3 4 5 6 7 8

Explanation

A share gives its holder an ownership interest under the company's terms; it is not automatically a loan. Allah distinguishes permitted trade from interest 1. The Prophet ﷺ taught buyers and sellers to speak truthfully and disclose defects for blessing in their transaction 2. Scholars apply these general principles to modern shares; no verse or hadith names stocks or ETFs.

The question is what you own. Scholars apply a few principles from the texts:

  • The business must be halal. The Prophet ﷺ declared the trade in alcohol, dead animals, pork and idols unlawful 3, and we are told not to "cooperate in sin and aggression" 4. So shares in breweries, casinos, conventional banks, pornography and similar firms are excluded.
  • Riba must be avoided. Taking or paying interest is cursed 5. Most companies hold some interest-bearing debt or cash, which is why screening methods set limits and require "purifying" any small interest income by giving it away.
  • No selling what you do not own. "Do not sell what you do not possess" 6 is why most scholars reject conventional short selling.
  • No excessive uncertainty. The Prophet ﷺ forbade transactions involving gharar (uncertainty) 7, which is why many scholars reject conventional options and similar speculative contracts.

Practical steps: use a reputable Shariah-screening tool or an Islamic (Shariah-compliant) fund or ETF; avoid margin accounts that charge interest; and purify the percentage of dividends the screener reports as non-compliant. Frequent trading of halal shares is permitted by many scholars, but trading that becomes pure gambling on price movements should be avoided. When unsure, remember the Prophet's advice to stay clear of doubtful matters to protect your religion 8. Screeners differ, and no list here approves or forbids any particular company; for your own portfolio, ask a qualified scholar who understands investing.

The evidence

  1. 1
    Quran Al-Baqara · 2:275

    Allah has permitted trade and forbidden interest.

    ٱلَّذِينَ يَأۡكُلُونَ ٱلرِّبَوٰاْ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِي يَتَخَبَّطُهُ ٱلشَّيۡطَٰنُ مِنَ ٱلۡمَسِّۚ ذَٰلِكَ بِأَنَّهُمۡ قَالُوٓاْ إِنَّمَا ٱلۡبَيۡعُ مِثۡلُ ٱلرِّبَوٰاْۗ وَأَحَلَّ ٱللَّهُ ٱلۡبَيۡعَ وَحَرَّمَ ٱلرِّبَوٰاْۚ فَمَن جَآءَهُۥ مَوۡعِظَةࣱ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمۡرُهُۥٓ إِلَى ٱللَّهِۖ وَمَنۡ عَادَ فَأُوْلَٰٓئِكَ أَصۡحَٰبُ ٱلنَّارِۖ هُمۡ فِيهَا خَٰلِدُونَ ۝٢٧٥

    Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein

  2. 2
    Hadith Sahih al-Bukhari 2079
    Sahih Bukhari

    The buyer and seller should tell the truth and disclose defects for blessing in their transaction.

    Narrated Hakim bin Hizam:Allah's Messenger (ﷺ) said, "The seller and the buyer have the right to keep or return goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities (of the goods), then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost

    العربية

    حَدَّثَنَا سُلَيْمَانُ بْنُ حَرْبٍ، حَدَّثَنَا شُعْبَةُ، عَنْ قَتَادَةَ، عَنْ صَالِحٍ أَبِي الْخَلِيلِ، عَنْ عَبْدِ اللَّهِ بْنِ الْحَارِثِ، رَفَعَهُ إِلَى حَكِيمِ بْنِ حِزَامٍ ـ رضى الله عنه ـ قَالَ قَالَ رَسُولُ اللَّهِ صلى الله عليه وسلم ‏ "‏ الْبَيِّعَانِ بِالْخِيَارِ مَا لَمْ يَتَفَرَّقَا ـ أَوْ قَالَ حَتَّى يَتَفَرَّقَا ـ فَإِنْ صَدَقَا وَبَيَّنَا بُورِكَ لَهُمَا فِي بَيْعِهِمَا، وَإِنْ كَتَمَا وَكَذَبَا مُحِقَتْ بَرَكَةُ بَيْعِهِمَا ‏"‏‏.‏

  3. 3
    Hadith Sahih al-Bukhari 2236
    Sahih Bukhari

    Trading in alcohol, dead animals, pigs and idols is unlawful.

    Narrated Jabir bin `Abdullah:I heard Allah's Messenger (ﷺ), in the year of the Conquest of Mecca, saying, "Allah and His Apostle made illegal the trade of alcohol, dead animals, pigs and idols." The people asked, "O Allah's Messenger (ﷺ)! What about the fat of dead animals, for it was used for greasing the boats and the hides; and people use it for lights?" He said, "No, it is illegal." Allah's Messenger (ﷺ) further said, "May Allah curse the Jews, for Allah made the fat (of animals) illegal for them, yet they melted the fat and sold it and ate its price

    العربية

    حَدَّثَنَا قُتَيْبَةُ، حَدَّثَنَا اللَّيْثُ، عَنْ يَزِيدَ بْنِ أَبِي حَبِيبٍ، عَنْ عَطَاءِ بْنِ أَبِي رَبَاحٍ، عَنْ جَابِرِ بْنِ عَبْدِ اللَّهِ ـ رضى الله عنهما ـ أَنَّهُ سَمِعَ رَسُولَ اللَّهِ صلى الله عليه وسلم يَقُولُ عَامَ الْفَتْحِ، وَهُوَ بِمَكَّةَ ‏"‏ إِنَّ اللَّهَ وَرَسُولَهُ حَرَّمَ بَيْعَ الْخَمْرِ وَالْمَيْتَةِ وَالْخِنْزِيرِ وَالأَصْنَامِ ‏"‏‏.‏ فَقِيلَ يَا رَسُولَ اللَّهِ، أَرَأَيْتَ شُحُومَ الْمَيْتَةِ فَإِنَّهَا يُطْلَى بِهَا السُّفُنُ، وَيُدْهَنُ بِهَا الْجُلُودُ، وَيَسْتَصْبِحُ بِهَا النَّاسُ‏.‏ فَقَالَ ‏"‏ لاَ، هُوَ حَرَامٌ ‏"‏‏.‏ ثُمَّ قَالَ رَسُولُ اللَّهِ صلى الله عليه وسلم عِنْدَ ذَلِكَ ‏"‏ قَاتَلَ اللَّهُ الْيَهُودَ، إِنَّ اللَّهَ لَمَّا حَرَّمَ شُحُومَهَا جَمَلُوهُ ثُمَّ بَاعُوهُ فَأَكَلُوا ثَمَنَهُ ‏"‏‏.‏ قَالَ أَبُو عَاصِمٍ حَدَّثَنَا عَبْدُ الْحَمِيدِ، حَدَّثَنَا يَزِيدُ، كَتَبَ إِلَىَّ عَطَاءٌ سَمِعْتُ جَابِرًا ـ رضى الله عنه ـ عَنِ النَّبِيِّ صلى الله عليه وسلم‏.‏

  4. 4
    Quran Al-Maaida · 5:2

    Cooperate in righteousness and piety, not in sin and aggression.

    يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُواْ لَا تُحِلُّواْ شَعَٰٓئِرَ ٱللَّهِ وَلَا ٱلشَّهۡرَ ٱلۡحَرَامَ وَلَا ٱلۡهَدۡيَ وَلَا ٱلۡقَلَٰٓئِدَ وَلَآ ءَآمِّينَ ٱلۡبَيۡتَ ٱلۡحَرَامَ يَبۡتَغُونَ فَضۡلࣰ ا مِّن رَّبِّهِمۡ وَرِضۡوَٰنࣰ اۚ وَإِذَا حَلَلۡتُمۡ فَٱصۡطَادُواْۚ وَلَا يَجۡرِمَنَّكُمۡ شَنَـَٔانُ قَوۡمٍ أَن صَدُّوكُمۡ عَنِ ٱلۡمَسۡجِدِ ٱلۡحَرَامِ أَن تَعۡتَدُواْۘ وَتَعَاوَنُواْ عَلَى ٱلۡبِرِّ وَٱلتَّقۡوَىٰۖ وَلَا تَعَاوَنُواْ عَلَى ٱلۡإِثۡمِ وَٱلۡعُدۡوَٰنِۚ وَٱتَّقُواْ ٱللَّهَۖ إِنَّ ٱللَّهَ شَدِيدُ ٱلۡعِقَابِ ۝٢

    O you who have believed, do not violate the rites of Allah or [the sanctity of] the sacred month or [neglect the marking of] the sacrificial animals and garlanding [them] or [violate the safety of] those coming to the Sacred House seeking bounty from their Lord and [His] approval. But when you come out of ihram, then [you may] hunt. And do not let the hatred of a people for having obstructed you from al-Masjid al-Haram lead you to transgress. And cooperate in righteousness and piety, but do not cooperate in sin and aggression. And fear Allah; indeed, Allah is severe in penalty

  5. 5
    Hadith Sahih Muslim 1598
    Sahih Muslim

    The taker, the payer, the scribe and the witnesses of interest are cursed.

    Jabir said that Allah's Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said:They are all equal

    العربية

    حَدَّثَنَا مُحَمَّدُ بْنُ الصَّبَّاحِ، وَزُهَيْرُ بْنُ حَرْبٍ، وَعُثْمَانُ بْنُ أَبِي شَيْبَةَ، قَالُوا حَدَّثَنَا هُشَيْمٌ، أَخْبَرَنَا أَبُو الزُّبَيْرِ، عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ ‏.‏

  6. 6
    Hadith Sunan Abi Dawud 3503
    Sahih graded by Al-Albani

    Do not sell what you do not possess.

    Narrated Hakim ibn Hizam: Hakim asked (the Prophet): Messenger of Allah, a man comes to me and wants me to sell him something which is not in my possession. Should I buy it for him from the market? He replied: Do not sell what you do not possess

    العربية

    حَدَّثَنَا مُسَدَّدٌ، حَدَّثَنَا أَبُو عَوَانَةَ، عَنْ أَبِي بِشْرٍ، عَنْ يُوسُفَ بْنِ مَاهَكَ، عَنْ حَكِيمِ بْنِ حِزَامٍ، قَالَ يَا رَسُولَ اللَّهِ يَأْتِينِي الرَّجُلُ فَيُرِيدُ مِنِّي الْبَيْعَ لَيْسَ عِنْدِي أَفَأَبْتَاعُهُ لَهُ مِنَ السُّوقِ فَقَالَ ‏ "‏ لاَ تَبِعْ مَا لَيْسَ عِنْدَكَ ‏"‏ ‏.‏

  7. 7
    Hadith Sahih Muslim 1513
    Sahih Muslim

    Transactions involving uncertainty (gharar) are forbidden.

    Abu Huraira (Allah be pleased with him) reported that Allah's Messenger (ﷺ) forbade a transaction determined by throwing stones, and the type which involves some uncertainty

    العربية

    وَحَدَّثَنَا أَبُو بَكْرِ بْنُ أَبِي شَيْبَةَ، حَدَّثَنَا عَبْدُ اللَّهِ بْنُ إِدْرِيسَ، وَيَحْيَى بْنُ سَعِيدٍ، وَأَبُو أُسَامَةَ عَنْ عُبَيْدِ اللَّهِ، ح وَحَدَّثَنِي زُهَيْرُ بْنُ حَرْبٍ، - وَاللَّفْظُ لَهُ - حَدَّثَنَا يَحْيَى بْنُ سَعِيدٍ، عَنْ عُبَيْدِ اللَّهِ، حَدَّثَنِي أَبُو الزِّنَادِ، عَنِ الأَعْرَجِ، عَنْ أَبِي هُرَيْرَةَ، قَالَ نَهَى رَسُولُ اللَّهِ صلى الله عليه وسلم عَنْ بَيْعِ الْحَصَاةِ وَعَنْ بَيْعِ الْغَرَرِ ‏.‏

  8. 8
    Hadith Sahih al-Bukhari 52
    Sahih Bukhari

    Whoever avoids doubtful matters protects his religion and honour.

    Narrated An-Nu'man bin Bashir: I heard Allah's Messenger (ﷺ) saying, 'Both legal and illegal things are evident but in between them there are doubtful (suspicious) things and most of the people have no knowledge about them. So whoever saves himself from these suspicious things saves his religion and his honor. And whoever indulges in these suspicious things is like a shepherd who grazes (his animals) near the Hima (private pasture) of someone else and at any moment he is liable to get in it. (O people!) Beware! Every king has a Hima and the Hima of Allah on the earth is His illegal (forbidden) things. Beware! There is a piece of flesh in the body if it becomes good (reformed) the whole body becomes good but if it gets spoilt the whole body gets spoilt and that is the heart

    العربية

    حَدَّثَنَا أَبُو نُعَيْمٍ، حَدَّثَنَا زَكَرِيَّاءُ، عَنْ عَامِرٍ، قَالَ سَمِعْتُ النُّعْمَانَ بْنَ بَشِيرٍ، يَقُولُ سَمِعْتُ رَسُولَ اللَّهِ صلى الله عليه وسلم يَقُولُ ‏ "‏ الْحَلاَلُ بَيِّنٌ وَالْحَرَامُ بَيِّنٌ، وَبَيْنَهُمَا مُشَبَّهَاتٌ لاَ يَعْلَمُهَا كَثِيرٌ مِنَ النَّاسِ، فَمَنِ اتَّقَى الْمُشَبَّهَاتِ اسْتَبْرَأَ لِدِيِنِهِ وَعِرْضِهِ، وَمَنْ وَقَعَ فِي الشُّبُهَاتِ كَرَاعٍ يَرْعَى حَوْلَ الْحِمَى، يُوشِكُ أَنْ يُوَاقِعَهُ‏.‏ أَلاَ وَإِنَّ لِكُلِّ مَلِكٍ حِمًى، أَلاَ إِنَّ حِمَى اللَّهِ فِي أَرْضِهِ مَحَارِمُهُ، أَلاَ وَإِنَّ فِي الْجَسَدِ مُضْغَةً إِذَا صَلَحَتْ صَلَحَ الْجَسَدُ كُلُّهُ، وَإِذَا فَسَدَتْ فَسَدَ الْجَسَدُ كُلُّهُ‏.‏ أَلاَ وَهِيَ الْقَلْبُ ‏"‏‏.‏

This answer was compiled with the help of AI, using only the verified texts shown here. Every reference links to its source. If you find a mistake, please report it. Updated 2026-09-24

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