Making Your First Investment
You've decided you'd like to start investing, exciting! We've written this guide with the first-time Muslim investor in mind.
Don't allow yourself to get overwhelmed with the landslide of articles you come across online. You don't need to know that much when you're just starting!
There's just 2 things you need to get past the first step:
- Some money (surprise, surprise!). You don't need to be born into royalty though -- you could start with as little at $1 but you probably want to start with at least $50 so you're committed.
- A brokerage account
I'm going to go ahead and assume you've already got the money sorted, so let's talk about setting up your brokerage account.
Setting up your brokerage account
Gone are the days when you had to settle for greedy brokers that charged you $15/trade. Be careful, though: they're not extinct yet!
A brokerage account is just a fancy name for an account that lets you trade.
When picking a brokerage account, there are a few really important things you want to make sure to get:
- Commission free (so you're not paying a per trade fee)
- Zero fees (no setup, monthly or "volume" fees)
- Supported in your country of residence (especially important if you're a non-US investor)
- Licensed & properly regulated; choose a broker that's regulated, and ideally in the same market you're investing in. For the US, this is commonly known as FINRA/SIPC insured.
Depending on where you are in the world, this criteria already narrows down the list of brokerage firms to just a few.
One platform we've come across (and we've tried many!) that satisfies all these criteria is Alpaca. An up and coming brokerage, they're fully SIPC insured (insured up to $500,000 per account) and registered with FINRA (the Financial Industry Regulatory Authority), so you know they're legit. You get commission free investments on all US stocks, as well as access to crypto (if that's your thing).
Best part? They're available to residents in over 100 countries.
You can sign up for Alpaca here:
Heads up: We are NOT affiliated with Alpaca, and this isn't even a referral link. We're not even getting a kickback from them for making this recommendation! They just happen to be the best solution we've come across. That's why we recommend starting with them.
- Check your email inbox
- Click “Confirm Subscription” in the email we just sent
What should I invest in?
Once you've setup and funded your brokerage account, the next step is to start investing! Most people invest most of their money into funds — with the S&P500 being the most popular one. The idea is simple: instead of buying individual companies (that represent a higher, more concentrated risk), you can buy 500 of the biggest companies in the US instead.
Of course, the problem with the S&P500 is that it contains companies that aren't halal (like Bank of America).
The solution? Buy one of the Shariah compliant ETFs instead like
Alpaca supports these funds, so you can just buy them directly.
Continue to invest a part of your monthly paycheck in the fund; that's all!
Important caveat on investing in Halal ETFs
If you'd like to invest in individual stocks, or you're going to be investing substantial amounts of money, you'd probably want to find a way to avoid the high fees that Shariah compliant funds charge (roughly 20 times more expensive than their non-halal counterparts), or find other funds that better meet your goals.
Concerned about the high fees, or want more diversification? That's where Amal Invest comes in!
What is Amal Invest?
Amal Invest is the first investing app, built for Muslims!
You might've heard of halal screening apps like Islamicly, or Zoya — they're useful for screening, but not very useful when you want to actually trade.
That's where we come in!
Amal Invest comes with a built-in Shariah screener, so you can see if a stock is compliant or not — right there in the app.
What's more, it even allows you to buy compliant versions of funds (like the S&P500) without paying any fees to fund managers!
Learn more, check out our website →