I have been reading on investing in stocks for some time, but have been very reluctant to as I was concerned with the haram and halal of everything. After doing some researching, I felt more comfortable, but struggled with finding out which stocks would be halal to invest in and which wouldn’t.
That is when I stumbled upon this forum. I would like to thank IFG as I haven’t found a place like this and it’s a great place for information, but I did want to ask those on here for advice on getting started, whether it be to read or look into articles or take courses.
I have 3 primary objectives, 1) Save for retirement. 2) Save up for money that I will need in 20 or so years (I’m 25). 3) Gain a little bit of passive income/short term growth.
Based on the reading I’ve done, for the first objective, the best course of action would be through a 401(k) through my employer (if they offer a match).
If the above is not a valid option, I was thinking of opening a Roth IRA, maxing it out every year and investing in something like the Amana Growth Fund. From my understanding, if I needed this money in 20 years, I would be able to pull out the money I have put in, but not earnings. Is that correct? If so, I imagine this covers my first two objectives.
For the third objective, I would open a taxable account at a brokerage and invest in stocks for a short term gain. The main difficulty here is finding out which stocks are halal/haram, but I plan on taking a course or doing more reading to find out the difference.
I would very much appreciate any advice on my thoughts and to know if I’m well off the mark. Any readings or courses are also appreciated. Jzak’Allah in advance.
Its quite tax efficient in the UK to save it in a pension scheme plus employers generally do a matching - so see if that is the case in US too - i am sure there would be something similar.
As a rule of thumb, equity/stocks outperform all the asset classes on long run so maybe seriously consider investing in a diversified equity fund.
I would suggest to take caution on stock picking especially for a short-term horizon - the most of the experienced traders also get the timing wrong - you are 25, do you really need a second stream of income? Just trying to say that Equity is very volatile in nature and can be dangerous for shorter trading - if you do decide to go in it just do it for a very small percentage of your savings. A simple hack to find the halal stocks would be to find a shariah compliant fund and look at its holdings. You would need to keep an eye on a continuous basis in case it loses its shariah status - another good reason to just stick with the shariah compliant fund rather than stock picking.