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As Canada’s Muslim population grows, halal investment products are becoming more common. Find out what halal investing is in the MoneySense Glossary.
Halal investing is a type of faith-based investing that complies with Shariah, or Islamic law. Muslims believe that investing must benefit society, not just the individual investor. Earning interest is prohibited because it’s considered unfair. If the rate is low, the lender is disadvantaged; if the rate is high, the borrower suffers. As a result, Muslims typically do not invest in bonds and guaranteed investment certificates (GICs). Instead, they might invest in sukuk, an investment that pays profits instead of interest, or in real estate, land or commodities like gold.
Mutual funds and exchange-traded funds (ETFS), which are made up of a basket of different investments, can be problematic because many Muslims prefer to avoid investing in companies that support gambling or sell alcohol, drugs, pork or weapons.
About 5% of Canadians are Muslims, and as this number grows, halal investment products are becoming more common.
Example: “Hamza was delighted when his workplace retirement plan launched halal ETFs. Now he could invest without compromising his religious beliefs.”
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