I wanted to ask primarily about how to purify investments in ETFs and Mutual Funds. I understand there is a difference of opinion on purifying capital gains, however I’d like to purify them. I only have investments in 2 holdings:
Dividend purification is easy enough. They have the haram income ratios available and just multiply it by the dividend distributions. I’m not sure how to purify capital gains with ETFs and Mutual Funds, since I think they buy and sell holdings regularly I’m not sure how the resultant capital gains can be isolated and purified while I hold them. SPUS and AMAGX ratios are only for dividends.
I do not plan to sell for a few years, but when I do would a general 5% purification on capital gain be acceptable? But then what about the capital gains accumulated through the years from the funds activities?
Welcome to the community. If you’re not selling this year, have you made any capital gains? I believe you should be fine just purifying your dividends on an ongoing basis, and then when you have capital gains, you can purify a portion of those gains. That’s how I see it.
Jazaka Allah khayran for your reply brother Farhan!
My understanding is that ETFs and mutual funds change their holdings occasionally, so wouldn’t there be capital gains as a result of that activity? Which would be reflected in the price of the ETF or mutual fund.