Halal Gold Investment Ideas
Gold inundoubtedlyone of the best investment options for Muslims. However, there are at least several different ways which can be thought of before investing in gold.Let us discuss each of them so that we know the halal from the haram.
Only option #1 and #2 are permitted, so we will discuss them first.
1. Jewellery
Probably the most common and unintentional investment that people have been making since ages. Actually given the attachment of most women to gold, I think this is probably never an investment since it can never be sold. It can at max be converted from one ornament to another.
As an investment this is a very bad option. Jewelers in India adopt several unfair practices in selling jewellery all of which result in you losing out:
- When you're buying there can be some short measure in weight of gold. Most common way is presence of artificial diamonds and stones.
- Jeweler will take making charges which are huge 10-30% of the value. So even if your gold appreciates by 20%, you earn nothing.
- While selling also there will be some short charge and you will be at loss.
- In the name of Hallmark certified jewellery, you will be charged more than normal.
- Ordinarily too you might never get jewellery at market rate.
- You can be deceived as to whether its 22 carat or 20 carat.
However this is a halal mean so you should use it.
2. Pure Gold (coins/ biscuits)
Best way for investment purpose. No problems related to rates/ purity/ weight or any other charges. No issues in selling either since buying/ selling is at near market rate. And good thing is it can be purchased quite easily..
CoinBazaar.inis The Best & Legal way of Halal Investing in India for Investors amongst the Muslim Community who strictly follow these Guidelines. Also since Delivery is Physical and Immediate no other illegal element of Non-Halal Gold Investment is involved as explained in detail below.
Non-Halal Gold Investments
Now these two are the only legal ones. And these are probably the best too...even though hundreds of blogs and articles will say otherwise. Those newspaper articles and blogs are more of an advertisem*nt front for the gold investment companies to earn money.
Disadvantages:
- Tax deduction: All below schemes will deduct tax on profit earned at rate of 20%.
- All below will cut something like 2% to 5% owing to maintenance fees or administrative charge or something else. Some of it will be recurring.
- They are illegal according to Islamic rules.
Why they are not legal:It is because of one simple aspect that by Islamic law, we have to take the possession of goods once we have paid for it - gold in this case. While the whole point of these things is mostly not keeping physical gold. In most of below schemes there is no such arrangement. And even if the arrangement exists it is either namesake or after a long duration. Hence forbidden.
3. Gold ETF (Exchange Traded Funds)
They are a way to invest in gold storing them in electronic form with the ease of the stock market. Means they are financial products which invest entirely in physical gold. Investors having demat account can buy and sell them similar to any other stocks on the exchange.You cannot get physical gold for the stock even though the company is buying it. All major MF players will have one.
4. GoldMutual Fund
There are no pure Gold Mutual Funds in India, we only have the variants as mentioned in points #5 and #6.
5. Gold Saving Fund (Fund of Funds)
They are mutual funds that invest almost entirely in Gold ETF. They are worst off then gold ETF due to additional charges for managing it. Only thing is you can invest without demat.All major MF players will have one fund which will be linked to their own ETF.
6. International Commodities Sectoral Funds
They are mutual funds that invest overseas in gold and in shares of gold mining/ trading companies. Mostly they invest in gold related companies rather than in gold.
7. eGold
e-Gold was launched from the exchange NSEL Its very much like Gold ETF , where you can invest in Gold in online format. For investing in E-Gold you still need a demat account with one of the companies authorised by NSEL The difference from ETF is that you can also take physical delivery of gold with some terms and conditions. It is no longer available now since it was closed down due to some regulator issues.
8. Gold Futures(Commodities market)
This is an entirely betting market where you bet on the future price of a commodity right now. People may argue that futures are for hedging but that is theory...its 100% gambling.
9. Gold Investment/ Deposit Schemes
These are mostly started by jewelers in which you invest some fixed amount every month and after few years take physical delivery of the gold.
Some other financial companies also offer similar schemes.
10. GoldGovernment Bonds
These are similar to gold funds but better in the sense they are from a more secure institution plus these funds also give interest. So what you earn is the price of gold and the interest fixed by government. However, these are yet to be launched and details are awaited.
11. Gold Monetization Scheme
This is also a scheme soon to be launched by the government. It is exactly similar to Gold Deposit scheme with the difference that gold will be deposited with the banks and you will earn interest on it.
So all said and done , you need to take a wise decision & choose your Halal Investment Wisely.
FAQs
The answer is yes! Of course, it is halal. Back during the time of the prophet (PBUH) most trade was done using gold and silver coins or simply trading one item for another. Therefore, investing in Gold, Silver and other precious metals is halal.
Which type of investment is halal in Islam? ›
Islamic principles therefore prohibit investment in conventional bonds and other debt securities that generate interest income. Sukuk investments are halal because they seek to generate profit from the investment income of their underlying assets, instead of interest and principal payments.
What is the halal way to invest? ›
Halal investors can buy stocks as long as they're not from companies operating in prohibited industries or in a prohibited way. For example, buying stock in a liquor company such as Pernod Ricard would not be allowed, as alcohol is not permitted for Muslims.
Is gold trading halal in Islam? ›
Trading gold is permissible (halal) in Islam, and it can be traded both online and offline. However, the transaction must meet two requirements: It should be on a cash basis. The price must be paid to the seller immediately.
How gold is considered as investment? ›
Gold is often considered a good investment for diversification, as it may be less correlated with other assets such as stocks or bonds. This means that the price of gold may be less affected by movements in other asset classes, which can help to reduce overall portfolio risk.
Is gold an asset or investment? ›
Gold is a highly liquid asset, which is no one's liability, carries no credit risk, and is scarce, historically preserving its value over time.
What is the most halal investment? ›
Precious metals. Investing in metals such as gold and silver is also halal. These are also considered safe investments for Muslims, as speculation is not involved and they have a fixed value.
Which investment is without risk in Islam? ›
Sharia rules do not allow participating in contracts where there is excessive uncertainty or risks. Investing or partaking in any short-selling or uncertain contracts are forbidden in accordance with Islamic finance principles.
What are examples of Islamic investments? ›
Some of these include Mudharabah (profit sharing), Wadiah (safekeeping), Musharakah (joint venture), Murabahah (cost plus finance), Ijar (leasing), Hawala (an international fund transfer system), Takaful (Islamic insurance), and Sukuk (Islamic bonds).
Is it halal to invest in dollars? ›
As long as all parties to the transaction abide by the rules of Islamic finance and undertake all the relevant due diligence, then the trading of currencies is deemed to be halal.
Hence all profit-centric investments must be avoided. Some of the factors that make an investment company halal include the business the company is engaged in, the percentage of interest-related income, and trading practices. A mutual fund is halal if it is shariah compliant.
Which stocks are halal to invest in? ›
Top 12 Halal Stocks List
- Nvidia (NVDA) Nvidia Corporation focuses on personal computer (PC) graphics, graphics processing unit (GPU), and also on artificial intelligence (AI). ...
- AMD (AMD) ...
- Adobe (ADB) ...
- Johnson & Johnson (JNJ) ...
- Nike (NKE) ...
- Zoom Inc (ZM) ...
- Peloton Interactive (PTON) ...
- Lululemon (LULU)
Under Sharia law, gold is generally considered a “Ribawi item,” meaning Muslims can't trade it for future value, or for speculation. They can, however, use gold as a currency and own it as jewelry.
Is wearing gold ring haram in Islam? ›
As Muslims, we are all aware that men are prohibited to use a wedding or engagement ring that contains Gold.
Which strategy is best for gold trading? ›
See our list of 6 essential gold trading strategies below:
- Position trading.
- 2. News trading.
- Trend trading strategies.
- Day trading strategy.
- Price action trading.
- Expert advisors / Copy trading.
Gold is a great investment because it retains its value.
Gold is an excellent investment because it retains its value over time. This means that you can sell it later for the same price, or even more. Gold is also a very durable metal, which means that it won't lose it look as it ages.
Is a gold necklace an investment? ›
A Gold Chain Is a Great Investment
Many people buy jewelry and precious metals with the mindset that they will hold their value and can be sold in the future if hard times come by. This is definitely true for gold. Gold is an excellent investment and almost always increases in value over time.
How much of your investment should be in gold? ›
Typically, investors should allocate no more than around 5% to 10% of their portfolios to alternative assets like gold. However, it's always important to take your individual situation and goals into account.
Why gold is not an investment? ›
While the benefits of investing in gold include its use as a store of value and its status as a safe haven asset when there is volatility in the stock market, it's not right for everyone. Keep in mind that the price of gold does fluctuate, meaning it can quickly lose value and is a poor short-term investment.
Is gold a property or currency? ›
The gold and silver coins clearly are tangible property, in that they can be felt or touched. Also, because the coins have both intrinsic and marketable value in and of themselves, they cannot be considered intangible property, without more.
Cons of investing in gold
While gold can help add balance and security for some investors, there are also risks to watch out for. Potential performance lag over time: Gold might outpace other assets during specific periods, while not holding up as well to long-term price appreciation.
How much profit is halal in Islam? ›
Profit margin under Islamic law:
According to the first opinion, Islam has restricted the maximum limit of profit to one third. So earning profit above this limit would be unlawful.
Is Bitcoin halal in Islam? ›
What do Islamic scholars say about crypto? Many Islamic scholars seem to agree that, as it stands, cryptocurrency is haram, and should be avoided by Muslims.
Which is the best Islamic investment in the world? ›
Kuwait Finance House (KFH) is named Global Finance's World's Best Islamic Financial Institution. KFH has a market reach across the Middle East, Turkey, Asia and Europe. In 2022, KFH successfully acquired Ahli United Bank.
What does the Quran say about gold? ›
[6] The Qur'an itself (9:34) warns against the use of precious metals outside the frame of charity and righteous transactions: “And those who hoard gold and silver and spend it not in the way of God—give them tidings of a painful punishment”.
Which Islamic currency is backed by gold? ›
Dinar refers to gold coins used as a medium of exchange by the Muslims from the beginning of Khulafa Rashidun until the end of the Ottoman Khalifate.
