Fatwa ID: 04483

Answered by: Maulana Muqtaur Rahman

Question

Assalamualaikum mufti sahib. I have a couple of questions regarding buying and selling stocks. Is it permissible to invest in stocks? Is it permissible to do quick buy and sell off stocks or does it have to be a long-term investment? By Quick buy and sell I mean – buy in the morning and sell in a couple of hours. Can we buy stocks of a financial firm?

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم

In the name of Allah, the Most Gracious, the Most Merciful

Answer:

There is a difference of opinion in regards to whether investing in stocks is permissible or not. According to Mufti Taqi Usmani it would be permissible to buy and sell stocks provided the following conditions are met:

1)   The company is not involved in unlawful trading.

2)   The company's assets should, not be in liquid form but have acquired some fixed assets as well.

3)   When the profits are distributed out then whatever percent has been received from interest should be given out as sadaqah.

[Fiqhi-Maqalat,v.1p.151]

In relation to the quick buying and selling of stocks, it is similar to the normal form of buying and selling for profit. Therefore, it will be permissible so long as the company meets the conditions mentioned above.

[Surah Baqarah v.275]

Only Allah knows best

Written by Maulana Muqtaur Rahman

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham