I have a few questions that I’ve had in mind for a few weeks now.
Q1: I purchased the ‘Screening Stocks’ course, very nice course masha’Allah. In the course, it was mentioned that the 5 screening criterion provided is a mixture between Mufti Taqi’s standard and AAOIFI’s standards. I would like to ask - where does the course differ in taking AAOIFI’s views over Mufti Taqi’s and vice-versa?
Q2: I have read that I must also purify my earnings after selling the stock, I don’t think this was something mentioned in the course. Are there any details as how to calculate the purification amount and do this?
Q3: I signed up to Trading 212 and I saw that Trading 212 lends out my securities to accrue interest on their end (essentially how they make money). There is no way to opt out of this. Does this make Trading 212 impermissible as a platform?
Q4: I also signed up to Degiro as they had a ‘custody’ account option where they do not lend out my securities. However, I read that any uninvested cash balance in my Degiro account is automatically invested on their end into Money Market Funds - these can have positive or negative interest rates (negative currently). Degiro compensates up to 2500 of any losses. Does this also make Degiro impermissible? I had an idea to always keep my cash balance near 0 and only transfer money when I would like to invest - but there is a bank transfer delay, so it seems like it will be hard to time it that well.
Amazing work with the website, courses and all the services you guys provide. May Allah (swt) reward you all.
I also have this question Q4 above; what to do with the fact that Degiro invests uninvested cash in Money Market Funds? We don’t do this ourselves, Degiro does, so I wonder if we are responsible for that? I can imagine that banks do this all the time with our money.
Yes, exactly. Banks also gain interest from our cash balance in our accounts. So in my eyes, whether I keep that money in my bank or transfer to Degiro, they are gaining interest either way?
But I would like to clarify with one of the Mufti’s here.
I just found this article of IFG that says the following about our question:
DEGIRO does not have an ISA account option, unfortunately. They have more of a European focus in their offerings. DEGIRO is not a bank but an investment firm based in Amsterdam.
In the Netherlands, investment firms are not allowed to hold the money of clients. So they have set up to hold it in a Money Market Fund, to realise a return that is equal to the market interest rate with as low risk as possible.
The main objective of a Money Market Fund is to minimise risk. You must ensure you purify any interest earned and make sure you don’t tick the box where they allow your shares to be loaned for short-selling.
So if I understand correctly, we should choose the custody account where they do not lend our shares and if any interest is earned via the MMF, this should be purified. Hope this helps:)
Yes, I am using the ‘custody’ account so they cannot lend out my positions for short-selling. It’s mine.
The balance is my concern.
My uninvested cash is subject to the roughly -0.5% interest rate whether through MMFs or through their new cash account that is linked to a German bank (also roughly -0.5% interest rate).
Degiro state that they compensate any losses due to this up to 2500 EUR. My question is, is it still permissible? My money is being subject to a negative interest rate, yet it is being compensated for the by broker - does that mean that I am not involved in Riba? I don’t have enough knowledge to make that judgement call.