Roth IRA Investment Advice

Salam, this may be long but I needed to give background for my two simple questions.

To begin, I am from the United States. I am 22 years old and started my Roth IRA account with Fidelity; My investing strategy is passive as 3 - fund portfolio and simply contribute to the account monthly. Further, I would just like to track indexes/ETF and not have to worry about my portfolio regularly; perhaps do a simply check up annually, like how a 3 - fund portfolio is designed.

Here is the dilemma:

  1. I want to invest in Stock index funds such as Vanguard Total International Stock Index Fund ETF (VXUS) or the Vanguard 500 Index Fund ETF (VOO) due to the extremely low expense ratio. There is no halal index (at least what I know of, please correct me if i’m wrong), only the following ETF’s: Wahed FTSE ETF (HLAL) and the SP S&P 500 Sharia ETF (SPUS). Yet, the expense ratio of these are so much higher than that of Vanguard (and other similar indexes). The expense ratio is extremely unattractive, to ultimately achieve the same result and I do not have the time to hand pick each company and read about them etc. Further, look at the dividend rate between the SPUS and VOO, there is such a significant difference! I should note I am aware of Amana Developing World Fund (AMDWX), Amana Growth Fund (AMAGX), and Amana Income Fund (AMANX). These funds do significantly worse than other funds within the same category; common trend is above average expenses with average returns, as opposed to its competitors who have low expenses and high returns. Its simply wasting money and illogical to choose a fund that is more expensive and does worse.

So my question is, is it permissible for me to just buy the Vanguard (or similar) index, and at retirement, I can “purify” that money by donating a portion, or feeding the less fortunate, or something along these lines? It is not my fault that we live in a country where the companies may be involved in activities us Muslims consider haram; they are apart of the index, and I cannot buy the entire index except for a handful of companies. Moreover, no average individual has the free time to go through all the companies and filter them out.

  1. My same question above applies to international stock index funds. Once again, I cannot control what other companies do internationally, nor do I have the time to filer them.

  2. I know as Muslims we are not allowed to participate in bonds, so I may not buy any Bond Index Fund. As I get close to retirement, and change my portfolio over time to hold more “bonds”, should I just buy a Sukuk ETF as the “bond” replacement ?