A Muslim's Guide to Becoming Financially Independent and Retiring Early (FIRE)

How do you spend your time? For most of us, this usually involves some combination of sleep, work, sustenance, education, prayer, exercise, and leisure. Balancing all of these activities is one of life’s great struggles. Work is perhaps the area we have the least control over, as the majority of us need to earn in order to provide. Work also takes a disproportionately large amount of our waking hours. In the West, people typically work 8 hour days. Assuming you sleep for another 8 hours, now that’s 50% of your total waking hours. This is fine if you enjoy the work you do. However, research tells us this is not the case for the majority. In fact, a Gallup survey in 2019 found that globally only 15% of full-time workers felt engaged at work.

This is a companion discussion topic for the original entry at https://blog.zoya.finance/a-muslims-guide-to-becoming-financially-independent-and-retiring-early-fire/

One thing you forget to add brother in

Therefore, if your investments appreciate by 7% each year minus 3% inflation, you are left with a 4% investment gain.

We need to remember our Zakah. There are several methods to pay Investment Zakah (How much Zakat should I pay on the stocks I own? · Halal Ninja), consult your local Zakah authority regarding this, but personally, I’m using 10% on Gains. While my country’s method is 2.5% out of Total Assets. In the end, it will be up to your “Niat” and due diligence regarding this matter.


just gonna tag the author @Adil here

Owh By the way, Just to highlight about my investment strategy. The only reason why I’m using 10% of gains is because I want to get dividends and grow my assets.

So my version of fire movement is somewhat similar but I focus only on several stocks alone. I don’t use leverage, options, futures and etc. Just plain by stock/securities/etf.

A boring and long strategy but a strategy nonetheless. I invest in SPUS for growth, to grow my wealth, if they spilt the shares, I’ll sell some of it to reinvest into either CSCO, KO, SPUS, HLAL, UMMA or SPRE, mainly SPRE and SPUS coz cheaper and it is somewhat of a growth stock for the moment. So why not take advantage on it.

But I’ll pay my Nisab on Gains once my total asset (total shares own x current price) has reached the minimum amount.

10% x (Stocks Sold (if any) + dividends)

Plus it’s easier to calculate since I only buy shares to get dividend, similar to how my grandfather bought a land for Rambutans, Durians, Mangos and etc. At least that is what I’m "qiyas"ing it to. Plus, it is advantageous to both me and my community as well.

Thanks for the reminder, you’re spot on as yes Zakat would definitely need to be factored in. I believe there is an article on the way addressing this point so watch out for that!

To briefly touch on the subject in the meantime, there are two key points I would add:

  1. Practically, most Muslims will have to have a larger withdrawal rate to cover their zakat obligations. To compensate, Muslims would need to accrue a larger pot or achieve a higher rate of return on their investments.
  2. We also need to factor in the differing zakat rates on different types of investments to get a better idea of what our zakat contribution is likely to be.
    For example, in the UK where I’m based, the National Zakat foundation holds that for investors that buy shares to achieve a dividend, zakat would only be liable on the underlying zakaatable assets of that company. Their research has found that a suitable proxy for the FTSE 100 was a zakaatable rate of 25% of the market value. So in practice, you would pay 2.5% on that 25%, which amounts to 0.625% of your overall investment.
    Zakat on shares and stocks - NZF

So as you can see there can be a lot of nuances involved and it is definitely a subject that is worth exploring in a lot more detail.

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Or use Zoya’s zakat calculator :wink:


Perfect. Thanks for sharing, it’s a great solution that simplifies the process and saves time!