Can I invest/trade in index funds such as Nasdaq100, Dow Jones30, S&P500, etc? I know those index funds have a small percentage of companies that are haram but in Islamic finance, profit purification is allowed.
I have no intention of consuming haram and would want to have permissible income. I am a trader/investor for a living which is why I need to know this. The modern world of finance is very complicated and unavoidable.
Would it be possible to invest/trade in those index funds (Nasdaq100) and every time i receive my profits, I would calculate and donate any haram percentage of the profits to charity to cleanse the rest of my profits?
(Keeping in mind that I don’t mind doing shariah screening for every company in Nasdaq100, in fact I already did and only a small percentage is impermissible)
Assalaamu Alykum @amamm, welcome to the community. Great to have you here. I just took a look at $QQQ in the app. $QQQ is an ETF that tracks the Nasdaq100, so instead of looking up each stock, taking a look at the ETF should save some time.
From what I’ve read, the first order would be to minimize the amount of non-compliant stuff, and then you’ll have to purify the profits of according to the compliant/non-compliant ratio.
I’m basing it on this blog post. Although not directly about a specific fund, I feel addresses the same issue.
Let me know if this makes. Would love to know what others think as well.
But my question is that, despite knowing there are some impermissible companies within Nasdaq100. Can we still invest/trade it, with the intention to purify the profits once received? What would be your opinion?
As you know many things nowadays are unavoidable compared to the time of the Prophet SAW.
Thanks for following up; I appreciate the clarification.
Personally, I try to avoid it wherever possible, but purify if it’s not possible and unavoidable. Ask for forgiveness, and Allah knows best.
I don’t know the constraints you’re dealing with in your brokerage, money, etc., but if you’re investing in individual companies out of the Nasdaq100, maybe it’s possible to avoid the uncompliant ones. Whereas if you have to invest in an index fund or an ETF, you’ll have to purify afterward.