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10 Type of Investment Allowed in Islam

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Investment is a term that is used and related to finance and economy. According to Wikipedia, that term is related to assets accumulation with a hope that it can get benefits in the future.

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Investment is also known as investment funds. In Islam, economic activity is very near with activity of Muslims. It does not explain explicitly about investment but based on Quran surah Yusuf (12) verse 46 – 50, Allah Subhanahu wa ta’ala said :

 12 : 46 (After that servant met with Yusuf, he said)

“Yusuf, O man of truth, explain to us about seven fat cows eaten by seven [that were] lean, and seven green spikes [of grain] and others [that were] dry – that I may return to the people; perhaps they will know [about you].”

12 : 47

[Yusuf] said, “You will plant for seven years consecutively; and what you harvest in its spikes, except a little from which you will eat.”

12 : 48

“Then will come after that seven difficult [years] which will consume hat you saved for them, except a little from which you will store.”

12 : 49

“Then will come after that a year in which the people will be given rain and in which they will press [olives and grapes].”

12 : 50

“And the king said, “Bring him to me.” But when the messenger came to him, [Yusuf] said, “Return to your master and ask him what is the case of the women who cut their hands. Indeed, my Lord is Knowing of their plan.” (Q.S. Yusuf : 46 – 50)

Based on Allah’s Words above, it can be concluded that we are not allowed to spend all sources of riches that we have. But, we have to advantage these sources of riches for important needs. Put simply that these verses teach us to invest as the law of put money in stocks according to Islam.

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Type of Investment Allowed in Islam

It has explained clearly that Allah Subhanahu Wa Ta’ala gives His sign to us in a form of Quran as our  life guide that must be obeyed. Although in Islam, we are encouraged to invest, but there are also a principle of economic system, ways, order and types of investment that are allowed in Islam.

As additional references for you, here are 10 types of investment allowed in Islam. Check them out.

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  1. Business

The Messenger of Allah shallallahu ‘alaihi wa sallam is known as a famous trader. Because of him trading business investment  is one types of investment that is recommended in Islam.

Even, the Prophet Muhammad shallallahu ‘alaihi wasallam did it by himself to manage his resources. As it is mentioned in Quran Surah Al-Ahzab verse 21 :

“There has certainly been for you in the Messenger of Allah an excellent pattern for anyone whose hope is in Allah and the Last Day and [who] remembers Allah often.”

So, we should follow the best business investment from the Prophet Muhammad Shallallahu ‘alaihi wa sallam.

See also : How to be successful in Business in Islam

  1. Rent the Land

In Hadith of Bukhori Number 2329 and Muslim Number 1551 is explained that the Messenger of Allah SAW gave the date garden and fields in Khaibar area to the Jews. They cultivated it at their own expense. With the agreement that Rasulullah SAW got a half of its harvest.

This is the most suitable investment for you who have lands, fields or gardens if you did not have time to cultivate them. So, you can rent it to others who need it and you will get its advantages, too. As the Prophet Muhammad SAW example above.

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  1. Raising Animals

The next best investment in Islam is raising animals. You must know that the Prophet Muhammad shallallahu ‘alaihi wa sallam is a goat herder. He has also dozens of camels which the price of one camel can reach the hundreds of millions now.

  1. Gold

Gold is the most profitable of investment. Besides that, Islam allows us to take a gold investment. You can buy gold bars directly or through mortgage, then when the price of gold increases, you can sell it again. This investment is very suitable to be chosen as a long term investment because gold has a stable price. Nevertheless you have to pay attention and have thoroughness, patience and accuracy in this investment.

See also : Laws of gold trading in Islam

  1. Property

Although it does not frills sharia but the investment in property is an investment that is allowed in Islam. There are many various forms of property, such as land, buildings, shop, and many more. You can rent these property to people who need it. So, of course you will get profit from that lease.

  1. Sharia Deposits

Sharia deposits is a mechanism where customers deposit some money to the bank. Then in a period of time, that money will result interest. In sharia deposits, the interest is given in the form of redistribution or mudharabah.

The size number of profit sharing depends on how profitable the financial institution in managing the money that you have deposited. So, this is not classified into usury. Because Islam clearly forbids usury.

  1. Sharia Banking Products Investment

Investment of Islamic banking products become one of halal investment and it is allowed. In this case, this investment is different with conventional banking products. Because you will receive a profit in the form of profit sharing and it is not a fixed interest form.

Surely, this thing will avoid you from the activities of riba. So you can choose a type of sharia banking product to be used as an investment form. See also law of working in Bank in Islam.

  1. Land Investment

You can also invest in land products. As you know that land has a price that will increase every year. If you bought a piece of land with a cheap price, then its price can increase fivefold in the next ten or twenty years. Even if your land location was strategic to open a business, then the price can be higher.

  1. Sharia Insurance

Sharia insurance is one of the next profitable investments. In sharia insurance, you have still ownership rights over the money that you have deposited. So that later, if that money is returned to you, then you have still rights of it.

It is different with the conventional insurance system where the premium is the absolute right of company, so you do not have right in that money.

  1. Sadaqah

Sadaqah is not only a form of investment in the world, but it is a form of investment in the hereafter. Sadaqah has many benefits. In the view of Islam, It is mentioned clearly in Quran that Allah SWT will multiply the rizq of someone who gives sadaqah. As the word of Allah SWT :

“Those who spend their wealth in the way of Allah is like a seed [of grain] which grows seven spikes; in each spike is a hundred grains. And Allah multiplies [His reward] for whom He wills. And Allah is all-Encompassing and Knowing.” (Q.S. Al-Baqarah : 261)

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Those are ten type of investment allowed in Islam. Of course, this article add your knowledge about investment and you can choose investment that is allowed in Islam. So, it can avoid you from practice and form of investment that is not compatible with Islamic principles. Hopefully this article can be useful for you. Thank you.

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