Answered by Shaykh Faraz A. Khan
Question: I have recently received £60,000. from the sale of a house I partly owned. It was mortgage free (halal). I own no property and live with my mother, I am divorced, my children are adults and live with their mother. People are advising me to get a mortgage and to earn rent from the property. Alternatively if I leave the cash in the bank, the bank uses it (for haram) anyway and because of inflation it loses its value over time it becomes less. I am told this is risky but I should buy gold or silver as a ‘hedge’ against inflation. What should I do which is halal and still continue to protect my savings from inflation?
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health states.
To clarify, it is permissible to leave money in a credit union or bank, despite the fact that banks use their money for what is Islamically unlawful and unethical. If one does so, one must keep one’s money in a non-interest-bearing account; if such an account is not available, then one must donate the interest amount, without intention of charity or expectation of its reward.
Regarding hedging against inflation, one may, for example, invest one’s money in land, precious metals, or other stocks/companies that are sharia-compliant. Scholars have outlined the general conditions of halal investment, which can be found here:
Conditions for Investments in Shares
Investing in Stocks and Working as a Stock Broker
And Allah knows best.
wassalam
Faraz
Checked & Approved by Faraz Rabbani