What is halal investing?↓
Halal investing is the practice of building a stock portfolio whose underlying businesses comply with Islamic commercial law (sharia). The main prohibitions are riba (interest income), maysir (gambling), gharar (excessive uncertainty), and dealing in haram goods (alcohol, pork, conventional weapons, adult entertainment). In practice this excludes conventional banks, insurance companies, alcohol producers, tobacco, gambling, and highly leveraged businesses, and favours real operating businesses with conservative balance sheets.
What is AAOIFI Standard 21?↓
AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Standard 21 is the most-cited institutional screen for evaluating whether a listed stock is Shariah-compliant. It uses four tests: a primary-business test (excluding banks, alcohol, gambling, etc.), an interest-bearing debt ratio test (debt / 36-month average market cap must be below 30 percent), a non-permissible income ratio test (income from haram sources must be below 5 percent), and a liquid-assets ratio test (cash + interest-bearing securities / market cap must be below 30 percent). AAOIFI is stricter than the Dow Jones Islamic Index methodology and is considered the institutional benchmark in 2026.
How is AAOIFI different from the Dow Jones Islamic Market Index?↓
Both standards use the same four-test structure (primary business, debt ratio, non-permissible income, liquid assets) but with different numerical thresholds. AAOIFI caps interest-bearing debt at 30 percent of market cap; DJII caps it at 33 percent. AAOIFI is stricter; the resulting list of compliant stocks is consistently smaller. Most institutional Islamic funds follow either AAOIFI or DJII; invest-like.com uses AAOIFI as the default screen.
How does invest-like.com decide if a stock is halal?↓
Every stock in the indexed universe is run through a programmatic AAOIFI Standard 21 implementation at each quarterly refresh. The activity screen checks the company's primary business against a documented exclusion list (banks, alcohol, gambling, tobacco, etc.). The financial-ratio screen checks interest-bearing debt against the 30 percent threshold. The result is a per-stock halal_status: compliant (passes both screens), questionable (borderline ratio), non_compliant (fails one or both), or insufficient_data (data missing). Methodology is published at /methodology/halal/ and the per-ticker page at /halal/[ticker]/ explains exactly why a given verdict was reached.
Are payment networks like Visa and Mastercard halal?↓
Yes under most institutional Islamic screens including AAOIFI. Visa and Mastercard are pure payment networks - they process transactions and charge fees, they do not extend interest-bearing credit (the issuing banks do that, not the networks themselves). Major Islamic index providers (Dow Jones Islamic Market, S&P Shariah, MSCI Islamic, Saudi Tadawul Shariah) all classify Visa and Mastercard as Shariah-compliant. invest-like.com applies the same treatment.
Why are banks excluded from halal investing?↓
Conventional commercial banks earn the majority of their income from interest on loans, which is riba (prohibited under Islamic law). The prohibition is structural, not behavioural - even a well-managed conservative bank earns income in a way that AAOIFI excludes. Islamic banks (which use profit-sharing structures like murabaha and ijarah instead of interest) are separately permissible but are rarely available as listed stocks outside specific Gulf and Southeast Asian markets.
What does the 30 percent debt ratio test actually measure?↓
AAOIFI Standard 21's debt ratio test divides the company's total interest-bearing debt (long-term debt plus current portion of long-term debt) by the trailing 36-month average market capitalisation. A ratio above 30 percent means the company is structurally dependent on interest-bearing financing and is therefore non-compliant. The market-cap denominator (rather than total assets) is deliberately chosen because it reflects the equity-investor's view of the business: how much you're paying for the equity versus how much of the company is financed by interest-bearing debt.
Is the halal screen on invest-like.com a fatwa?↓
No. invest-like.com is not staffed by Islamic scholars and the AAOIFI Standard 21 implementation is a mechanical pattern-match against published criteria. It is a structured filter, not a religious ruling. Investors with a specific scholar or madhhab ruling that differs from AAOIFI Standard 21 should treat the screen as a starting point and consult their scholar for the final word. AAOIFI is the institutional default we follow because it is the most-widely-accepted screen in 2026 and is referenced by central banks in over 40 jurisdictions.