17 Halal Investment Options: Find Best Shariah Compliant Investments in Malaysia
A decade or so ago, halal investment options for Muslims are limited. Nowadays though, there are many! Learn how to invest halal in this article – I’ve compiled everything I know about halal investing in Malaysia!
I love the underlying values behind halal investing, like how usury (interest) or riba is prohibited, and how excessive risk-taking or gharar is not encouraged, and how maysir or gambling is forbidden.
I also love how Islamic finance and banking are structured in the for-the-good-of-the-ummah outcome, even though admittedly things are never perfect in practice.
Your Halal Investment Options
Throughout the years, I’ve researched all the different types of Shariah-compliant investments in Malaysia, which are deemed either halal or harus.
It came up to 17 halal investment options, which I’ve divided into 4 categories:
- Islamic Unit trust in Malaysia/ Mutual funds/ Diversified funds
- Shariah-compliant stocks and equities in Bursa Malaysia
- Fixed deposits and cash management platforms
Before you proceed with this article…
There are four things I need to say first:
#1 – Muslims can still make non-Shariah compliant investments
No one is going to stop you. There is no Islamic police who will arrest you or anything. It’s a personal choice.
#2 – Non-Muslims can do halal investing in Malaysia
You absolutely can, no problem. The only downside is the selection is much smaller, and at times non-existent – warrants, futures, and options trading are all not Shariah-compliant.
(Don’t @ me, this is completely true)
#3 – Spellings may differ
For example, sometimes you’ll see Syariah, sometimes Shariah. Doesn’t matter, same thing.
#4 – I’m taking it in good faith
Islam may be perfect (for believers), but Muslims are not. If Islamic finance experts and bodies gave an Islamic product the halal stamp, I’ll add them here, even if there may be conflicting views about the ‘Islamic-ness’ of it all.
With that in mind, let’s start.
Category #1: Islamic Unit trust in Malaysia/ Mutual funds/ Diversified funds
There are many options for diversified funds, including Islamic unit trusts and mutual funds in Malaysia. Let’s go through them one by one.
#1 – Tabung Haji
Tabung Haji is fully Shariah-compliant. They will also sort out and pay zakat contribution from your investment profits on your behalf.
Those of you who want to go on hajj, you HAVE to open Tabung Haji account and maintain a minimum balance of RM1300.
#2 – ASNB funds
The most popular ASNB (Amanah Saham Nasional Berhad) funds are ASB (Amanah Saham Bumiputera) and ASN (Amanah Saham Nasional).
To be absolutely clear, even though a significant chunk of the fund is invested in non-Shariah compliant assets, it received the ‘harus’ fatwa from the National Fatwa Council based on the principles of Maqasid al-Shariah (top row, furthest right).
#3 – EPF/KWSP
If not mistaken, accounts registered before 2017 are conventional accounts by default. So if your EPF account is registered before then, you need to do the switch from conventional to Shariah yourself.
The process to switch from conventional to Shariah is very simple:
- Log in to EPF i-Akaun portal
- Find Simpanan Shariah at the top bar
- Complete e-akad
- Done; it will be implemented from 1 Jan the next year
#4 – Islamic unit trusts from Private fund management companies
As for other Islamic unit trusts, you can generally (but not always) find out if the fund is shariah-compliant or not by looking at the fund name. If it has the words ‘Shariah‘, ‘Islamic‘, and/or ‘Sukuk‘ (Islamic version of Bonds) in the name, it’s an Islamic investment.
You can also tell that they’re Shariah-compliant investment if they use Arabic terms like Al-[name] in the name, or it’s issued by an Islamic fund management company, like AIIMAN.
To learn more about investing in unit trusts and where to find them, please refer to my 3 Ways to Pick the Best Unit Trust in Malaysia (Advisory & DIY Method) article.
#5 – Robo advisor
As of writing time, Wahed Invest is the ONLY Shariah-compliant roboadvisor in Malaysia.
Originally from New York, this platform is great for Muslim investors who want to diversify their investments easily, as they can guide and suggest various portfolios suitable to one’s risk appetite. They also have very affordable fees.
I love it as they help me diversify into US and emerging markets, and help to calculate zakat pelaburan as well, making the purification process easy.
Read my review: The Ultimate Wahed Invest Review After 3+ Years In, RM11,000 Invested
Category #2: Shariah-compliant Malaysian stocks and equities in Bursa Malaysia
All Shariah-compliant stocks and equities are managed by Bursa Malaysia Islamic Services Sdn Bhd (BMIS), a wholly-owned subsidiary of Bursa Malaysia which is regulated, transparent and fully Shariah-compliant.
- It is possible for stocks to be added to the shariah-compliant list, or taken out of it. Refer to the most updated list
- Shariah-compliant stocks, ETFs and REITs make up a fraction of the overall stocks, ETFs and REITs. For example, only 5 out of 19 REITs are Shariah-compliant investments.
- Bursa Academy is a GREAT place to learn – workshops available all the way from beginner to advanced investors
All the data here are taken from List of Shariah-compliant securities from Securities Commission.
#1 – Shariah-compliant Stocks in Bursa Malaysia (i-Stocks)
Go through the latest halal stocks list and see which ones you may want to own, whether for short or long term. You still have to apply stocks investing strategies.
Note: Even though everything in the halal stocks list is Shariah-compliant, you still have to avoid Interest, Uncertainty and Gambling (Riba, Gharar and Maysir) as they are prohibited under Islamic Finance guidelines.
For example, using one’s life savings to invest in just one stock based on a rumor would be considered speculative bordering on gambling and therefore not encouraged, even if it is a Shariah-compliant stock.
#2 – Shariah-compliant Exchange-Traded Funds in Bursa Malaysia (i-ETFs)
As of writing time, there are 6 Shariah-compliant exchange-traded funds listed in Bursa Malaysia:
#3 – Shariah-compliant Real Estate Investment Trusts in Bursa Malaysia (i-REITs)
As of writing time, there are only 5 out of 19 REITs are Shariah-compliant. Here they are:
In addition to the above REITs, AHB or Amanah Hartanah Bumiputera is fully Shariah-compliant. They will also sort out and pay zakat contribution from your investment profits on your behalf.
#4 – FCPO Contract (Crude Palm Oil Future Contract)
If you want to do halal trading in Malaysia, this is the one for you!
According to Bursa Malaysia, Crude Palm Oil Future or FCPO contract is Shariah-compliant. Muslim traders can check out this option. Apparently even short-selling is permissible (how does that work..? Nevermind)
*This is the extent of my knowledge on FCPO contracts. If you have experience, or know good places to learn, please add in the comments section.
Category #3: Fixed deposits and cash management platforms
#1 – Shariah-compliant fixed deposits
It’s super simple to identify Shariah-compliant fixed deposits in Malaysia. All you have to do is make sure the fixed deposit name ends with ‘-i’.
RinggitPlus.my makes fixed deposit product comparison easy. You can just click on the Islamic tab, and choices will appear on the right-hand side. You can even further sort it out by tenure.
#2 – Shariah-compliant cash management platforms
Cash management platforms are like fixed deposits, except with no lock-in period. There is no early withdrawal nor penalty for taking out your money whenever you want. In effect, I consider it a better than fixed deposit.
At the time of writing, there are 4 cash management platforms in Malaysia. Only Touch N Go’s Go+ is Shariah-compliant.
FAQ: Is Stashaway Halal?
No, Stashaway is not Shariah-compliant. Stashaway Simple used to be Shariah-compliant, but not any more.
Category #4: Others
There are various types of assets that Muslims can invest in and profit from capital gain and/or dividend and/or revenue. Some examples include gold, property and more. Let’s cover a bit about them:
#1 – Gold
As an investment, generally speaking, gold is super halal. In fact you can even say that Islam LOVES gold. So much that the State of Kelantan wants to be more Islam by trying to promote gold dinars and dirhams usage as legal tender.
You can invest in gold through a few methods:
- Physical gold – coin, bar, jewelry
- Digital gold – e-gold, gold investment account
- ETF – Trade Plus Shariah Gold Tracker (GOLDETF) (you can get at Bursa Malaysia, Wahed Invest etc)
Note: You can read more about investing in gold in Malaysia in the The Beginner’s Guide to Buying Gold in Malaysia article.
How to determine gold investments’ halal status
Physical gold‘s halal status is easy enough to determine. Like property, all gold jewelry, coins, bars, etc, must be bought with halal income/salary and it’s halal.
With e-gold or digital gold or gold investment accounts though, it can be a bit trickier to determine. Unethical parties HAVE used the gold name to promote Ponzi schemes, or sometimes claim that they have the gold but in fact, don’t.
(A requirement to halal status is the company MUST have the gold in their possession. It can’t be some ‘hypothetical’ gold).
Gold scams happen fairly often, which is sad.
#2 – Global stocks and ETFs
Many brokers allow you to buy global stocks and ETFs, of which a fraction of it are halal investment funds. To learn more, visit my How to Buy ETFs in Malaysia Easily and SAFELY article (you can also buy stocks from the platforms mentioned in the article).
Here, I must give a shoutout to MIDF Invest – it can help you filter Shariah-compliant stocks and ETFs easily (not all brokers have this feature).
#3 – Property
Properties, whether house or land is considered shariah-compliant investment provided it is not obtained via illegal or unethical means, nor used for illegal or unethical purposes.
One should also be mindful to take Islamic finance products (ie Islamic loans and takaful) instead of conventional when purchasing and managing said properties.
#4 – Cryptocurrency
Hold up, some of you might say.
Is cryptocurrency halal investment?
Some types of assets may have conflicting fatwas depending on their usage. For example, there are various fatwas on cryptocurrencies/ digital assets, with some fatwa councils in some countries issuing the ‘haram’ ruling, while others giving guidelines on cryptocurrency zakat (thus implying permissibility).
Therefore, fatwas must be taken into context – for example, cryptocurrencies may be viewed as haram if used for overly speculative or risky activities, such as trading with leverage.
If you don’t know what you’re doing – and most people don’t – it’s just borderline gambling and therefore haram. However, if you keep and treat cryptocurrencies like (digital) gold, then it is permissible.
#5 – Equity Crowdfunding (ECF)
Ethis Co is an equity crowdfunding platform specialising in projects benefitting the ummah.
My personal opinion is this type of investment opportunity is only for Muslims who have reached financial freedom and would like to use their wealth to benefit society.
#6 – P2P Financing
Funding Societies is a peer-to-peer financing platform. Essentially, you gain profit by lending money to SMEs.
As of May 2022, Funding Societies have started offering Shariah-compliant Islamic financing option.
Obligatory Funding Societies referral link: Get RM30 when you deposit a minimum of RM1000.
#7 – Other assets
For other assets or investments without the Shariah-compliant label or certification, it is wise to refer back to Islamic Finance guidelines – it’ll tell you whether the investment fits the Islamic investment criteria by its activities.
According to Bursa Malaysia, companies will be deemed as Shariah non-compliant if they are involved in the following core activities:
- Financial services based on riba (interest);
- Gaming and gambling;
- Manufacture or sale of non-halal products or related products;
- Conventional insurance;
- Entertainment activities that are non-permissible according to Shariah;
- Manufacture or sale of tobacco-based products or related products;
- Stock broking or share trading on Shariah non-compliant securities,
- and Other activities deemed non-permissible according to Shariah
Halal investments I personally have
My own halal investing portfolio includes:
- ASB + ASB loan
- Tabung Haji
- EPF and PRS for retirement fund
- Cryptocurrencies (I accumulate most of my crypto stash for free by working for it)
- Wahed Invest – love the US and China ETFs (obligatory referral code – use ‘surbin1’ to get signup RM10 bonus)
- Best Invest
- Gold (I have both digital and jewelry)
- MIDF Invest – I have the S&P 500 Shariah ETF
(Disclaimer – none of these should be taken as personalised investment advice.)
So which is the Best Shariah Compliant Investments in Malaysia?
You might see all these halal investment options but what you really want to know is… which is the best Shariah compliant investments in Malaysia? Which one(s) should YOU invest in?
I personally invest in a lot of different types of Shariah compliant investments but that’s only due to my work as a personal finance content creator.
You don’t have to do ALL the investments I did – the best halal investing strategy can be as simple as following these 3 Steps:
First, complete Step 1:
- Save up 3-6 months’ expenses in ASB, Tabung Haji, and/or Touch n Go Go+
- At the same time, open up retirement accounts like EPF and PRS and invest consistently there.
Then, Step 2:
- Continue increasing your income and investing consistently in any of the diversified funds (see Category #1). Start with what you can afford – RM100 per month, then increase to RM200, RM300 and so on
- Continue until you accumulate six figures. In the meantime, if there is anything else you’re interested to invest in, only allocate 1-5% of your savings to that investment to start*
- *This will help you avoid losing (a lot of) money due to inexperience and/or scam, but still allow you the chance to learn and make mistakes (everyone will make mistakes)
Ongoing – Step 3:
- Hire a financial planner so they can give you personalised investment recommendations and advice
If you’re new to investing, I suggest starting with this article: 3 Best Investments in Malaysia (+ The Best Way to Invest Your Money). It tells you which investments to prioritise first and general guidelines before doing risky investments
Any other ways to invest halal in Malaysia?
That should be most of the halal investing options available in Malaysia, for Muslims and our friends. At this point in my life, not ALL of my investments are halal, but most of them are. I’m a work in progress, as we all are.
Are there any other ways to invest halal? Please help me to improve this halal investing article – I’m no Islamic finance expert, just a passionate student. I’m also someone who sins a lot and tries her best to make up for it by writing (hopefully helpful) articles like these.
Thanks for reading. God willing, my pahala points – and yours – will add up 🙂
I love this article! I recently got into personal finances and I made a mistake in investing in non-Syariah compliant stocks because in the beginning it didn’t cross my mind. Had to sell them when I realised it.
Hope to read more about Halal investment strategies.
Thanks for sharing and for your kind words! Which stocks did you get (and sold off)? Hope you didn’t lose too much during the process.
Good website you have over there at howtolemons.com!
I bought IGBREITS in the beginning because it had a higher dividend yield. Sold it off and bought AXISREITS afterwards.
Luckily only lost around RM100.
Thank you for your compliment :). Been working hard just trying to build it up.
Thanks for sharing Suraya! Much needed. But, why do you say you have a complicated with Islam, I become sad when I read it so. Islam means submission, you must trust Allah for you to feel peace with this religion, (trust and submit your faith towards Allah). I don’t mean to be judgmental. If anything, this comes from a good intention from a fellow Muslim to another Muslim ☺️. I enjoy your content as always.
Thanks for your well-wishes 🙂 But here’s my counter-argument – doesn’t it mean something that I choose to follow this path which is still hard for me? It’s okay to admit its not always easy
Thanks Suraya for sharing the useful information on this article, I just wanted to ask if any of the ETF options that you mentioned are available for people from outside Malaysia and are not Malaysian citizens ?
And any reference where I can check the performance of those funds over the last few years ?
I’m not familiar with global ETFs offerings and its requirements to different nationalities
Is there a step by step guide on how to transfer from Maybank2U to Wahed Securities? Can you point me to the website or write one? I am having problem doing so even with the account details e-mailed by Wahed Securities. Thank you in advance.
I found this link https://support.wahedinvest.com/hc/en-us/articles/115002951169-How-can-I-add-funds-to-my-account-
If you still cant, I’m really not sure why that mgiht be, but your best bet is to get support from Wahed team themselves
Thank you for the excellent article.
Do you know where I can find a step by step guide on doing transfer to Wahed Securities via Maybank2u online banking?
You mentioned Funding Societies should get their “Halal Stamp” soon. I read somewhere that they have applied for approval but for some ‘Riba-free’ lending solutions… Sharia-compliant lending I suppose (microLeap offers both Sharia-compliant & Conventional ).
Would you know if any of the others are moving towards this approach?
I didn’t know about microLeap offering Shariah option, thanks, will check them out!
Don’t know much about FS’s update. Been checking in my account once in a while, no news yet :/
“Muslims can still make non-Syariah compliant investments. No one is going to stop you. There is no Islamic police who will arrest you or anything. It’s a personal choice.”
My two cents. In principal, regardless whether there is no Islamic police or not, Muslims should always invest in Syariah compliant investments. To not do so goes against the principals of Islam.
Yes you’re right. And my statement is still factually correct
Just few things to note:
1) for stocks, just because they don’t participate in impermissible businesses, does not necessarily mean it’s shariah compliant. There is a leverage requirement which states they should not have more than 1/3 of their capital funded by debt. Same applies to equity crowdfunding.
2) for fiat currencies, please note the instruments that is being used to invest in those currencies. If it’s a direct 1:1 purchase, it’s permissable. But if you are trading it, most brokerage use an instrument called CFD, which just like any derivative product, are not permissable.
3)digital currencies – there are no strong fatwas to say it’s halal or haram but most local and international scholars are leaning towards haram. Which makes sense due to the speculative nature of crypto and the lack of physical asset. Also, if it’s dealt with great uncertainty, the default judgement is makruh or impermissible.
Thanks for your input Abdar! Lots of things to learn
Thanks for sharing this article, long time looking for Shariah Compliant investment, now i found one.
Glad it helped Afiffuddin!
Thank you, this article have been really helpful.
Welcome and I’m glad 🙂 All the best to yoU!
Excellent write up, thanks heaps.
I’d love to hear your thoughts on KAB Gold found in this article: https://www.majalahlabur.com/pelaburan/tutorial-beli-emas-secara-online/
Would you choose KAB over Hello Gold?
Thanks in advance.
I personally wouldn’t, but only because I don’t like sales agent system where they ask you to buy a big amount of their product to become a sales agent
I believe you need to include future trading such as FCPO as it deemed as shariah compliant
I’ll explore it, thanks Wan Amin 🙂
I am from India, how can I invest in Malaysia REIT can you tell me the process and islamic finance bank is totally free from interest or some % is always there.
I have no idea on the process to invest in Malaysia REIT for Indian nationals
Islamic finance use the term profit rate instead of interest rate. Some % is always there