What Is The Stock Market?

What are the Islamic teachings about what can be done in stock market business, what precautions should an ordinary Muslim take in this business? Let us try to understand it according to our information.

It is a common observation that every day such companies and schemes come to the fore which make people dream like this and people fall prey to them while trying to make money in easy ways. When they deposit their savings with the company, the company and its scheme disappear as if it never existed and their clients keep shaking hands.

What is Share Market?

Business is not good on the stock exchange. It is a means of extorting money from people, so it is not permissible. If something was worth one lakh at night, how is it possible to have 1000 in the morning? Money is distributed by enticing people. Money is collected. Money is raised through gambling and manipulation.

Shares are allowed to be traded on the stock exchange subject to certain conditions:

  • The company whose shares are being bought and sold, exists outside the company, is not only registered on paper, nor is the total assets of the company in the form of cash, but also the static assets owned by the company.
  • The total or minimum capital of the company should be halal
  • The real business of the company should be legitimate, it should not involve the business of haraam things
  • In buying and selling of shares, all the conditions of buying and selling must be observed
  • The profits earned should be distributed among the total shareholders; some of the profits should not be reserved as a (precautionary) reserve.
  • Direct or indirect interest and gambling is avoided during the purchase and sale of shares. If these conditions are observed in the business of shares, then this business is permissible, otherwise it is not.
  • It is better to avoid this business, as it is very difficult to trade shares in the market with all these conditions, therefore avoidance is advised.

What is Stock Market?

At the same time, it is important to buy shares of only those banks or institutions that do business on Islamic principles. In this case, there is a possibility of both profit and loss. If a company or bank conducts interest-bearing business, investing in it and earning a fixed return on it is tantamount to eating interest. Which is not permissible for a Muslim under any circumstances.

See: meaning-of-alhamdulillah

Prize Bonds

The government borrows money from the people to meet its various productive or non-productive needs. Gives fixed benefits in some schemes. Reward bonds are securities through which the government collects money from the people and uses the money for commercial and industrial purposes and makes a profit to motivate the money givers.

Distributes some of the rest of the profits to the account holders by drawing lots by deducting the administrative expenses from the profits earned for the sake of consolation and encouragement of the account holders. Some get it, some don’t, but the real money is safe. However, it is disgusting that some account holders lose out on profits and some enjoy, While capital is invested by all, however, since it is not a gamble or interest, it is permissible because of this defect.

If the government wishes, the profit earned after deducting expenses should be distributed among all the account holders at a proportional rate and each shareholder should get his fair share. “Earnings with one’s own hands” is indeed the best sustenance, but the sustenance obtained from some other forms is also the best, such as the shar’i portion of inheritance, gifts, booty, etc., is also the best sustenance.

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