The life of humans has developed in such way as the time passes by, that it influences their needs as well. The needs categorized as the secondary one in previous era have transformed into primary needs in order to adapt the trend in this modern world. And people are automatically forced to fulfill these needs. We can call this thing as the main essence of working and gaining salary.
The salary gained from working is the most common income for Indonesian people, even for people in the worldwide. However, there is another way where we can get income without working physically. It is done by doing investment, particularly investment in stock. Most of us must have been familiar with this term.
Stock investment itself is a proof that a person gives certain percentage of capital to a company. By buying the stock, one owns the stock of the company and delegates the professional management to manage the company. The stock owners have rights to claim the income obtained by the company, claim the company’s asset, and attend the meeting of stock owners.
In stock investment, stock owners can get the profit in the form of dividend (profit gained by the company) or capital gain (price gap between selling price and buying price). There are some types of stock, such as common stock, preferred stock, and blank stock.
These types of stock determine different profit and right of the stock owners. Whereas the stock can be classified into 9 sectors, namely agriculture; mining; basic industry and chemicals; miscellaneous industry; consumer goods industry; infrastructure, utility, and transportation; property, real estate, and building construction; finance; and trade, service, and investment.
Stock is one of the instruments in stock market and included as a security possessed by a company. The price of the stock is the indicator of buying and selling activity in stock exchange, where the real-time stock price is provided. On the other hand, the dynamics of stock price is indicated by stock price index. If the stock price index is increased, then the stock price in market is also increased.
Many financial experts view stock as the best instrument for long term investment. Some of them argue that stock investment is almost similar to investment done with our close friends in restaurants, minimarkets, or other business fields. But, besides the 10 types of investment allowed in Islam, how is actually the Islamic law of investment in stock?
Related to this matter, there are different opinions from our scholars.
- The first opinion is that stock investment is haram or forbidden if it is done in a company which is contradictory to the principal of Islam. For example, the company which produces alcohol or is related to the processing of fork; conventional financial services such as bank and insurance; or entertainment industry such as casino, gambling, and prostitution.
These things are fundamentally categorized as haram in Islam. Allah clearly mentions in Al-Qur’an that alcohol and fork are forbidden, while conventional bank and insurance industry are categorized as types of usury in Islamic economics. Some reliable sources also mention that there are 15 prohibitions of insurance in Islam.
حُرِّمَتْ عَلَيْكُمُ ٱلْمَيْتَةُ وَٱلدَّمُ وَلَحْمُ ٱلْخِنزِيرِ“Prohibited to you are dead animals, blood, the flesh of swine,…” (Al-Maidah: 3)
يَسْـَٔلُونَكَ عَنِ ٱلْخَمْرِ وَٱلْمَيْسِرِ ۖ قُلْ فِيهِمَآ إِثْمٌ كَبِيرٌ وَمَنَٰفِعُ لِلنَّاسِ وَإِثْمُهُمَآ أَكْبَرُ مِن نَّفْعِهِمَا ۗ“They ask you about wine and games of chance. Say, ‘In both these, there is great evil, even though there is some benefit for people, but their evil is greater than their benefit.” (Al-Baqarah: 219)
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوا۟ ٱلرِّبَوٰٓا۟ أَضْعَٰفًا مُّضَٰعَفَةً ۖ وَٱتَّقُوا۟ ٱللَّهَ لَعَلَّكُمْ تُفْلِحُونَ“O believers! Do not swallow interest, doubled, and redoubled, and be mindful of Allah so that you may attain true success.” (Ali-Imran: 130)
By doing investment in such company, it means that we indirectly support them and confront what Allah orders even though this is not our real goal at all. Hence, there is no dispute in this opinion. It has been clearly decided and agreed that we are not allowed to invest stock in the companies mentioned above.
- In accordance to the first point, investment in stock is permissible for Muslims as long as the companies are relevant to the shariah principle. The examples of this company are transportation, healthcare, electronics, wood industries, or plantation. Moreover, there are some requirements that should be fulfilled so that Muslims can buy stock from the company.
These requirements are debt or market value of equity (36 months average) is less than 33%, account receivables or market value of equity (36 months average) is less than 49%, and cash + interest bearing securities or market value of equity (36 months average) is less than 33%.
- The last opinion of Islamic law of investment in stock is, according to K.H. M. Shiddiq al-Jawi, that stock investment is forbidden regardless to the principles applied by the company. It means that even though the company is not opposite to the principle of Islam, it is still not permissible to buy stock, because the problem lies in the mechanism of transaction.
In nowadays practice, there is a lot of selling and buying stock which do not apply principles of the Islamic economic system. Firstly, there is no ijab and qabul in the transaction while this is required in Islam. Secondly, there is no negotiation or discussion between the company and the stock owner. The stock owner just do unilateral transaction in buying the stock from the company.
From the opinions above, the last one is agreed by most of the Muslim scholars. The opinion which is debatable is included as syubhat, the one that basically should be avoided by Muslims.
When we do not know exactly whether the thing is allowed or not according to Islamic point of view, we are recommended to take the safest way as the form of obedience to Allah. Moreover, it is done to accomplish the purpose of Islamic economy in life.
وَأَنَّ هَٰذَا صِرَٰطِى مُسْتَقِيمًا فَٱتَّبِعُوهُ ۖ وَلَا تَتَّبِعُوا۟ ٱلسُّبُلَ فَتَفَرَّقَ بِكُمْ عَن سَبِيلِهِۦ ۚ ذَٰلِكُمْ وَصَّىٰكُم بِهِۦ لَعَلَّكُمْ تَتَّقُونَ“Indeed, that is My Path—perfectly straight. So follow it and do not follow other ways, for they will lead you away from His Way. This is what He has commanded you, so perhaps you will be conscious of Allah.” (Al-An’am: 153)