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I will be graduating soon from university with a masters degree in computer science. I will get a good salary when I start working and I will save about 1000 euros each month. However I'm looking for a way to invest my money, but in a halal way because I'm a Muslim. The halal way is simply that there shouldn't be a fixed interest rate for the investment. In the most simple form, a halal investment is like going to a merchant and giving him some money and tell him to use it to make business. If the business succeeds then I take profit relative to the investment I made. If the business loses, then I lose the money. So halal means i could lose or profit. Not in the banks where I'm always guaranteed to profit a fixed amount each month or year.

Can you please recommend halal ways to invest and grow my saved money?

Edit: I need to assert that my definition of halal investments here is very very basic. If you are a Muslim or have knowledge in Islamic finance, then I guess this question is targeted for you. Also if you know some Muslims who do halal investments, then probably you also are a target for this question :)

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Invest in stocks and shares, rather than putting the money in a bank savings account / buying bonds? –  Gagravarr Aug 13 at 11:37
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So, to summarize: DAX, MDAX, SDAX, and as a computer scientist, TecDAX, of course. :) –  Alexander Aug 13 at 11:55
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halal rules of course face the same problem as legal rules: there are many novel complex financial products, and it's unclear how to apply the age-old rules. That said, vanilla convertible bonds may be a reasonable option, especially those which don't pay interest. You might benefit from a share price increase, but you're protected against a share price decrease, at the expense of not receiving interest (which usually would be a downside). Or just buy German government debt, that's currently at 0% interest anyway. –  MSalters Aug 13 at 13:04
    
I don't have any specific recommendations, but you might have luck reaching out to others in the Muslim community in your area (or via family, etc.) to see if they have any practical experience or advice on this matter. –  BrenBarn Aug 13 at 18:19
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@user13041: So? Bonds trade on the open market, and can go up or down, just like stocks. Just not a whole lot. –  MSalters Aug 14 at 13:26

3 Answers 3

The UK has Islamic banks. I don't know whether Germany has the same or not (with a quick search I can find articles stating intentions to establish one, but not the results). Even if there's none in Germany, I assume that with some difficulty you could use banks elsewhere in the EU and even non-Euro-denominated.

I can't recommend a specific provider or product (never used them and probably wouldn't offer recommendations on this site anyway), but they advertise savings accounts. I've found one using a web search that offers an "expected profit rate" of 1.9% for a 12 month fix, which is roughly comparable with "typical" cash savings products in pounds sterling. Typical to me I mean, not to you ;-) Naturally you'd want to look into the risk as well.

Their definition of Halal might not precisely match yours, but I'm sure you can satisfy yourself by looking into the details. I've noticed for example a statement that the bank doesn't invest your money in tobacco or alcohol, which you don't give as a requirement but I'm going to guess wouldn't object to!

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Yeah halal is more than what I actually meant in my definition. Yes investing in companies that work in tobacco or alcohol is not halal. Or any company that does harmful stuff. –  Alex Twain Aug 13 at 22:09
    
Unfortunately we don't have Islamic banks in Germany yet. –  Alex Twain Aug 13 at 22:10
    
@AlexTwain: In that case I guess you have a two-part problem. (a) what countries can I hold a bank account in? (which is a finance-related question, and hopefully leads you to a country that does have Islamic banking). Failing that (b) how can I assess whether a savings product is halal? (which is a combined question in finance and Islam, and probably quite tricky). "Regular" banks will lend your savings at interest, so I presume are out even if they don't pay a fixed rate for some reason... –  Steve Jessop Aug 14 at 10:52
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... "Regular" companies you could assess for yourself and if they're "good enough" in terms of their activities and practices, buy shares. You might be compromising somewhat, since most companies will keep some proportion of their assets in interest-bearing accounts. Financially speaking there are some drawbacks to having no cash savings and holdings in a small number of companies, of course. You aren't very diversified and you risk needing the money when the market is low. –  Steve Jessop Aug 14 at 10:54
    
You may be interested in this article islamtelegraph.com/sharia-finance-comes-to-germany –  algiogia Sep 12 at 8:15

You can invest in a couple of Sharia-conform ETFs which are available in Germany and issued by Deutsche Bank (and other financial institutions). For instance, have a look at these ETFs:

DB Sharia ETFs

In addition, Kuveyt Turk Bank aims to become Germany's first Islamic bank offering Sharia conform investments (Reuters).

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What is actually a halal investment? Your definition of halal investment is loose and subject to interpretation.

On one hand, nothing is fixed in the financial world. You might get a 10 Year Germany Bund with a fixed coupon rate of 1%, but the real rate of return of this investment is far from fixed. It depends on the market environment, the inflation, etc. (Also, you can trade this investment on the secondary market at any time.) Moreover, the country can default. For example, nothing is "fixed" if you hold the Argentina bonds. You might think a saving account in the bank is a fixed investment. But again, what about the inflation? And if you talk with the account holders in Cyprus, you will understand there is no such thing that you are "guaranteed to profit a fixed amount each month or year". So, from this point of view, everything is "halal", because nothing is fixed and the risk of losing the principle is alway there.

On the other hand, if you assume that investing a government bond and having a saving account is not halal by definition, you will end up with a situation that every investment is not halal. Suppose you invest in a company. What does the company do with your money? Sure, they will use some of your money to buy equipments, hire new people, and so on. But they will always save some money as cash reserves to meet the short-term and emergency funding needs. Those cash reserves are usually in the form of highly liquid investment, such as short-term bonds, money market funds, savings in a bank account, etc. Because those investments are not halal per definition, is your investment in the company still halal?

So in the end, you might just do whatever you want depending on your interpretation.

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You have a point, but I don't think this is a very helpful answer. In a religious context, the goal is likely to find a solution that maintains the spirit of the proscription against usury, etc., and also perhaps one that has some level of support from religious authorities. Just constructing a technical argument to justify whatever you want is unlikely to be satisfactory. –  BrenBarn Aug 13 at 18:24
    
It's so complicated to explain. I guess my question then is targeted to Muslim users or those with knowledge in Islamic finance rules. –  Alex Twain Aug 13 at 22:06
    
This link touches on the subject lightly azzadfund.com/HalalInvesting.aspx –  Alex Twain Aug 13 at 22:06
    
But your answer is not a helpful answer. –  Alex Twain Aug 13 at 22:07
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Although the answer is not helpful to the OP, I think it still may be useful to anyone else considering whether/how to follow the rules. –  Ganesh Sittampalam Aug 15 at 7:43

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