Everything About Shariah Compliant Investments (Full Guide)

This guide walks you through everything you need to know about Shariah-compliant investments.

“What if your money is growing… but in a way that goes against your values?”

That’s the uncomfortable reality many Malay Muslim professionals in Singapore face today.

I’ve sat across clients who only realised years later that their portfolios weren’t fully Shariah-compliant — some even had riba’ (interest-based) elements hidden inside.

How would you feel if the wealth you worked so hard for actually contradicted your principles?

The truth is: Shariah-compliant investing isn’t complicated. But without clarity, many get stuck in 10-year lock-in traps, pay hidden fees, or invest blindly.

And by the time they realise? It’s too costly to exit.

Let’s fix that.

1. Shariah-Compliant Investing Meaning and Examples

Let’s start off with the basic question — what is shariah-compliant investing?

It simply means growing your wealth in a way that follows Islamic finance principles. For Shariah compliant investing, assets must meet specific requirements and fall into categories that are permitted under Shariah law.

That includes:

• No riba (interest) — Any investment that earns income purely from interest, such as conventional bonds, is prohibited.

• No gharar (excessive uncertainty/speculation — Day trading, gambling, or highly speculative assets are not allowed.

• No haram industries — Companies involved in alcohol, pork products, adult entertainment, gambling, weapons, or similar prohibited activities. Each company must be thoroughly reviewed to ensure its business model and financial practices are in line with Shariah compliance.

Instead, the focus is on risk-sharing, ethical practices, and supporting businesses that align with the Islamic values and principles.

Think of it as socially responsible investing — but with clear rules grounded in Shariah law.

Examples:

• Global Shariah Equity Funds (investing in screened companies like healthcare, tech, halal consumer goods; each company is evaluated for Shariah compliance)

• Sukuk Funds (Islamic bonds, a type of Shariah-compliant investment product)

• Shariah-compliant ETFs (these funds track indexes composed of Shariah compliant companies and assets, ensuring the portfolio consists of Shariah compliant investment products)

Do you actually know what your current portfolio is invested in? Or have you just assumed “halal” because someone told you so?

What Types of Investments Are Allowed in Islam?

Islam encourages investments that are productive, transparent, and halal. Some of the investment options allowed include:

• Shariah-Compliant Funds – professionally managed funds that screen out haram businesses.

• Sukuk (Islamic bonds): Instead of interest, investors share in profits from an underlying asset or project.

• Shariah-Compliant ETFs (Exchange Traded Funds): Track indices like the Dow Jones Islamic Market Index or S&P Shariah indices.

• Real Estate Investments: As long as rental income comes from halal sources.

• Stocks of Ethical Companies: Businesses that meet the screening process set by Shariah boards.

Today, investors have a greater choice of Shariah-compliant investment options, with a broader selection of asset classes and strategies available beyond traditional portfolios.

By contrast, conventional fixed income securities that earn purely from interest are not allowed.

2. Understanding Shariah-Compliant Investment

A Shariah-compliant investment isn’t just about avoiding the haram. It’s also about positive alignment:

• Clean businesses you’d be proud to support

• Disciplined screening by Shariah boards (like FSAC in Singapore)

• Ongoing monitoring to stay compliant. A shariah board provides governance and oversight, ensuring that investments continuously meet Shariah principles through regular compliance audits and management reviews.

Think of it like football. Every player must follow the rules. No shortcuts, no illegal tackles. Same with your money — the rules matter if you want to play clean and win long-term.

3. Is Shariah Investing For You?

Pros

• Peace of Mind: No guilt about where your money comes from

• Global Access: You can still invest in top-performing markets, just screened ethically

• Flexibility: Some funds have no rigid lock-ins (rare, but possible with licensed access)

• Legacy Aligned: Your children inherit wealth that’s clean and purposeful

• Rising Popularity: Shariah-compliant investments are gaining popularity globally and in Singapore, reflecting growing acceptance and investor interest

Cons

• Limited Choices: Not every fund is Shariah-compliant

• Extra Due Diligence: You need to verify certifications (not all “halal” is truly halal)

• Potentially Lower Short-Term Returns: Because you avoid speculative industries

But here’s the key: The long game matters more than the short-term.

Tenang tu lebih mahal daripada return tinggi yang tak halal.

4. What Are Shariah Investments (And How Do You Access Them)?

In Singapore, you can access Shariah-compliant investments through:

• Direct Unit Trusts → CPF or cash, no lock-in, licensed advisors only (few have this license — alhamdulillah, I do).

• Structured Investments → With welcome bonuses (up to 55%) + loyalty benefits, designed to reward long-term discipline.

• Shariah-compliant accounts → Open a dedicated account for ethical investing, such as a cash upfront or mobile trading account, which gives you access to a range of Shariah-compliant securities and ensures your investments align with Islamic principles.

But beware: not every plan is flexible. Not every “halal” plan is free of hidden costs.

If you discovered today that your current plan wasn’t fully halal — could you exit without penalty?

Why Now Matters?

I’ve met clients who waited years, telling themselves “Next time, lah.”

By the time they checked? They were stuck with penalties, restricted cash flow, and wealth they didn’t feel proud of.

• The longer you wait, the fewer options you’ll have.

• The earlier you act, the more flexible and purposeful your wealth can become.

How I Can Help (And Where to Start)?

I specialize in guiding Malay Muslim professionals and families in Singapore to

• Identify and exit hidden traps in their current plans

• Rebuild flexible portfolios aligned with Shariah principles

• Grow wealth with clarity and structure (not confusion or hype)

Just like coaching a football team — it’s about setting clear goals, having a strategy, and playing the long game.

That’s why I wrote The 1% Within. It’s not just an eBook — it’s a blueprint to help you:

• Spot common mistakes Muslim investors make

• Understand the true meaning of wealth with faith

• Build your own Legacy Playbook

  
  

Frequently Asked Questions (FAQs)

Is the S&P 500 Shariah-Compliant?

The standard S&P 500 index itself is not fully Shariah-compliant because it includes companies in finance, alcohol, gambling, and other prohibited industries.

However, there are Shariah-compliant versions of the S&P 500, such as the S&P 500 Shariah Index, which filters out non-compliant companies and meets the requirements of Shariah boards.

So yes, Muslims can invest in the S&P — but only through the Shariah-compliant screened version.

Is SIP Haram in Islam? Can Muslims Invest in SIP?

This is a common question. SIP (Systematic Investment Plan) by itself isn’t haram — it’s just a method of investing regularly in funds.

What matters is what kind of fund you’re investing in.

• If the SIP goes into a conventional fund with riba or haram industries → not permissible.

• If the SIP goes into a Shariah-compliant investment fund → permissible.

So the action (SIP) isn’t haram. The product you choose determines whether it’s halal or not.

Shariah-Compliant vs. Halal: What’s the Difference?

Many investors assume halal and Shariah-compliant mean the same thing. They’re related but not identical.

• Halal means “permissible” in Islam. It applies broadly to food, lifestyle, and money.

• Shariah-Compliant means following the specific principles of Shariah law, as certified by scholars and Shariah boards.

So while all Shariah-compliant investments are halal, not everything marketed as “halal” has gone through the proper screening process of Shariah boards.

What Are the Five Rules of Shariah in Investing?

When applied to finance and investments, Shariah emphasises five key principles:

1. Prohibition of riba (interest).

2. Avoidance of gharar (excessive uncertainty).

3. Exclusion of haram industries.

4. Risk-sharing: investors share profits and losses fairly.

5. Asset-backing: investments must be tied to real assets or businesses, not speculation.

These rules shape all compliant investments.

Is Singapore Under Shariah Law?

No, Singapore is not governed by Shariah law. It is a secular country with civil laws.

However, Singapore recognises and supports the needs of Muslim investors. There are Shariah-compliant funds, sukuk offerings, and Shariah boards (like FSAC) that provide screening and certification for Islamic finance products. HSBC Asset Management, for example, is known for its reputable Shariah board that oversees the development, compliance, and ethical standards of their Islamic investment offerings in accordance with Islamic principles.

This makes Singapore one of the leading hubs for Islamic finance in Asia, even for non-Muslim investors who want socially responsible investment options. It is important to note that while Shariah-compliant investments adhere to Islamic principles, they are distinct from investment products that focus on sustainability goals, such as reducing carbon emissions or achieving specific environmental and social objectives.

Next Steps

Here’s what I invite you to do:

1. Download The 1% Within (you’ll also get my bonus Legacy Playbook Bundle)

2. Review your current investments — ask yourself honestly: Is this really halal? Is this really flexible?

3. Reach out to me for a private Discovery Call — I’ll show you how to reset with confidence.

Because wealth isn’t just about numbers.It’s about peace of mind. It’s about legacy. It’s about values.

If not now, then when? If not the right way, then which way?