The purification principle : applying the purification when trading stocks

Fatawa Question

Salamu Alaikum I am currently trading stocks for a living and have read your Fataawa regarding trading the markets. I have a few key important questions regarding the three agreed upon key points you mentioned in your Fatwa. First, as far as the debt / equity ratio is less than 1 / 3 or 33.3 %... This is calculated by taking the total short-term and long-term debt over the shareholder's equity, correct ? Secondly, you mentioned how one must calculate the interest recieved by company as an income. I am not certain where to find this number. I have looked through the balance sheets and key stats of the company. Please direct me in the right place. Lastly, which is the point I am most concerned about, you mentioned how one must purify his money of this interest by giving that percentage of his profits as charity (preferably not to an Islamic center, etc.) How exactly does this work ? I trade actively, closing anywhere from 3-7 trades a week. Do I need to take that exact amount after each profitable trade and set it aside in my account, then take all of that together and give it to charity ? Or can I take this total at the end of each month or at the end of each year and then dispose of it ? Of course my concern is that if I do it on a monthly or annual basis is that I am using my total profits (which indoubtedly includes the Haram portion) to make more money in the short-term before disposing of the Haram portion. Forgive me I am not yet as well versed in the various financial and Shariah concepts as I aspire to be. Jazak Allahu Khairan for your time,

Fatwa

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Publication Date

2007-01-23

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-786658

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