What is Halal Investing?

Halal investing follows Islamic financial principles — avoiding interest (riba), excessive uncertainty (gharar), and prohibited industries like alcohol, gambling, and conventional banking. Stocks are screened against financial ratios to ensure the company's business and finances align with Islamic law. The core idea is simple: invest only in companies whose primary business is permissible (halal) and whose financial structure doesn't rely excessively on interest-based debt. Key principles: 1. Business Activity Screening — The company must not derive significant revenue from prohibited activities. 2. Financial Ratio Screening — Debt, cash holdings, and receivables must be below specific thresholds relative to market capitalization. 3. Income Purification — Even compliant companies may have small amounts of non-permissible income, which investors should donate to charity.