Fatwa ID: 08156
Answered by: Aalimah Khadija Tarwala
Question:
Asalamualaikum, I really appreciate the online query service of Darul Iftaa Birmingham.
I have a monthly paid job in Kashmir, India and it’s my city of residence. I have been thinking of starting a monthly SIP (Systematic Investment Plan) which can yield me profit after 10–15 years. I want to know if it’s halal or not.
Jazakallah Khair.
Thank you,
Wiraad
Answer:
In the name of Allah, the Most Gracious, the Most Merciful
Wa alaikum asalaam,
Investing in a Systematic Investment Plan (SIP) depends entirely on the nature of the underlying investments. The core Islamic concern is the presence of riba (interest), which is strictly prohibited in Islam.
In Islamic finance, any transaction that guarantees a return on capital with added profit or loss tied to interest or speculative gains is considered impermissible. Additionally, if the SIP involves companies or industries dealing with haram elements, such as alcohol, gambling, or conventional banks, it would also be classified as haram.
However, if the SIP is structured according to Shariah principles—meaning it avoids interest, follows ethical business practices, and invests in halal sectors—then it may be permissible.
Therefore, it is essential to:
Review the portfolio contents of the SIP.
Ensure it is a Shariah-compliant fund.
Avoid any investment yielding guaranteed returns based on interest.
Supporting References:
“The gold for gold, equal for equal, hand to hand. Any excess is riba…”
أحمد بن حفص قال: أخبرنا محمد بن الحسن قال: حدثنا أبو حنيفة عن عطية العوفي عن أبي سعيد الخدري عن رسول الله صلى الله عليه وسلم أنه قال:
“الذهب بالذهب مثل بمثل يد بيد، والفضل ربا…”
كتاب الأصل لمحمد بن الحسن، ج 2، ص 370 – دار ابن حزم، بيروت
“In ribawi transactions, one cannot guarantee a return of principal with an excess, as that leads to riba.”
أما في الربويات لا يمكنه تضمين النقصان مع استرداد الأصل؛ لأنه يؤدي إلى الربا.
البناية شرح الهداية، ج11، دار الكتب العلمية، بيروت
Only Allah knows best.
Written by Aalimah Khadija Tarwala
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
