Build Halal Wealth
This guide explains how to get started in investing in the stock market in the safest & cheapest way possible, and how to use Canadian tax-sheltered accounts to buy halal assets that grow over time. If you find this guide useful, please share it with your friends and keep us in your dua'a.
Common Registered Investment Accounts: TFSA and RRSP
To "buy stocks", first you need to open an investing account. Start with a tax-sheltered account, then you put assets inside it. TFSA and RRSP are powerful Canadian government programs that let you grow your wealth tax-free.
TFSA
Tax-Free SavingsYou pay tax on your salary, put what's left into the TFSA, and never pay tax again on the growth or withdrawals.
You invest $1,000. It grows to $5,000. You take the $5,000 out. You pay $0 in tax.
RRSP
Registered RetirementMoney you put in reduces your taxable income today. The government gives you a tax refund now, but you pay tax when you withdraw it at retirement.
If you earn $70,000/yr (approx. 30% tax bracket) and contribute $5,000 to your RRSP, you will receive a tax refund of ~$1,500 when you file your taxes.
Important: The RRSP deadline is the end of February!
The 60-day period after Dec 31st is the best time to start contributing to your RRSP. Contributions made before the end of February can be used to lower your taxable income for the previous year, allowing you to claim a refund immediately when you file your tax return.
❓ RRSP & TFSA FAQ
My work offers RRSP matching. Is this enough?
Matching is essentially "free money", but you need to check two things before taking advantage of it:
1) are your investments halal?
Important: You must check if the investment options within these matching programs are halal. Unfortunately, many workplace programs only offer standard interest-based or non-compliant investment options (see "What makes a stock Halal?" section below).2) are you getting the full benefit of your RRSP by maxing out your contribution room?
Your work matching program is a great start but it may not be enough if you aren't maxing out (if you can) your total available contribution room.
What is Contribution Room? It is the maximum amount the CRA allows you to put into these accounts. For RRSPs, it's usually 18% of your previous year's income (up to a max value). You can find your exact limit on your CRA My Account.What happens when I withdraw?
Example: You withdraw $10,000 for a car. You pay $0 tax. Next year, your contribution limit increases by $10,000 so you can put it back if you want.
Example: You withdraw $10,000 to fix your roof. The bank must withhold ~20% ($2,000) for the CRA immediately, and you only receive $8,000 cash.
Can I only withdraw from RRSP when I retire?
No. You can withdraw from an RRSP at any time. However, it is common to wait until retirement because that is when your income—and therefore your tax bracket—is typically at its lowest, meaning you pay less tax on the money you take out. If you withdraw while working a high-paying job, you will lose a large chunk of that withdrawal to taxes.
What to hold: Stocks vs. ETFs (or Precious Metals)
Inside your TFSA or RRSP, you can hold individual stocks or ETFs (you can also hold gold or other precious metals - see below). Why ETFs are better: An ETF (Exchange Traded Fund) is a single ticker that contains hundreds of stocks. This is "diversification," and it is the safest way to grow wealth.
⚠️ The Problem
Standard ETFs like the S&P 500 (SPY) or VTSAX contain interest-based banks, gambling companies, and alcohol producers. These are not shariah compliant.
What makes a stock Halal?
1. Business Screening
The company cannot make its money from: Interest (Banks), Alcohol, Tobacco, Gambling, Adult Entertainment, or Pork Products.
2. Financial Screening
The company must not have excessive debt. Generally, debt must be less than 33% of the company's total market value.
20-Year Growth Comparison
Starting with $100 in 2005
The Cash Trap: $100 kept in cash 20 years ago is still $100 today. But because of inflation, that $100 only buys about $60 worth of today's groceries and gas. Investing in Halal Assets is the only way to stay ahead.
Popular Halal ETFs:
View Detailed ETF Comparison Guide →For example, here is an independent audit for SPUS (in accordance with the AAOIFI standards) deeming it compliant from a Shariah perspective.
Beyond Stocks: Precious Metals
While the stock market offers long-term growth, many investors also hold gold or silver as a hedge against inflation and economic instability.
Gold
There are two primary ways to own gold within your digital portfolio:
📈 Option A: Gold ETFs
You can buy an ETF like GLDM or PHYS. These represent physical gold held in a vault. It trades just like a stock—you can buy or sell it in seconds through your TFSA or RRSP.
💰 Option B: Physical Gold
Platforms like Wealthsimple now allow you to buy physical gold directly. The gold is held in your name at the Royal Canadian Mint. You can even request delivery of the physical bars (fees apply).
Silver
Similarly for Silver, you can buy SLVR (in USD) or PSLV (in CAD).
⚖️ Asset Allocation Note
How much should you put in gold or silver versus stocks? This is a highly debatable topic and depends entirely on your personal risk tolerance. Some prefer 5-10% in gold for safety, while others avoid it in favor of the higher growth potential of stocks.
How to Think About Gold in Your Portfolio →How to Get Started (The DIY Method)
You don't need a financial advisor to get started!
Wealthsimple Account
Download the Wealthsimple app. Open a self-directed investing account. It's the easiest and most common DIY investing platform in Canada.
No affiliation with WS
New to Wealthsimple?
If you don’t have a Wealthsimple account, you can create one here. Alternatively, you can use this referral link and we both get $25.
Our goal isn’t the $25 - it’s to get you started! But we established earlier that halal “free money” is always welcome!
1) Check your MyCRA account to see your contribution limits. Over-contributing leads to 1% /month penalties.
2) Wealthsimple enables a feature called “stock lending” by default. This is violating Shariah principles by lending assets for a fee. Make sure to disable this feature.
Transfer Funds
Link your bank and move your initial deposit. It usually takes 1-3 business days to clear.
Buy a Halal ETF
Search for ticker symbols like "SPUS" and place a "Market Buy" order.
Turn on Auto-Invest
The secret to wealth is consistency. Set up a $50 or $100/month recurring buy, and forget about it.
Other Registered Investment Accounts: FHSA and RESP
Beyond retirement and general savings, the Canadian government offers specialized accounts for your first home and your children's future.
FHSA
First Home SavingsThe ultimate account: Tax-deductible like an RRSP AND tax-free withdrawals like a TFSA (if used for a home).
You contribute $8,000. You get a tax refund today. In 5 years, it grows to $12,000. You withdraw it all tax-free for your downpayment.
RESP
Education SavingsSave for your kids' post-secondary education. The government actually gives you money to help.
You put in $2,500 for the year. The government adds a $500 grant (CESG) for free into the account.
❓ FHSA & RESP FAQ
What if I don't buy a home with my FHSA?
If you don't buy a home within 15 years, you can transfer the FHSA balance to an RRSP tax-free (and without affecting your RRSP room). If you withdraw it as cash, it is fully taxed as income.
Can I invest in Halal ETFs in these accounts?
Yes! Just like TFSA and RRSP, if you open a self-directed FHSA or RESP (e.g., through Wealthsimple), you can buy shariah-compliant ETFs like SPUS to ensure your house or education savings are growing ethically.
What happens if my child doesn't go to university?
You can get your original contributions back tax-free. However, the government grants (CESG) must be returned to the government, and you'll pay tax on any investment growth.
Are there age limits?
FHSA: Must be 18-71 and a first-time home buyer. RESP: You can contribute for up to 31 years after opening, but grants usually stop after the child turns 17.
Common Myths
"It's too risky."
While individual stocks are risky, the broad market has historically gone up significantly over any 15-year period. Diversification is your shield.
"I'll wait for a crash to buy."
Waiting for a crash usually means missing out on years of growth. "Time in the market" is better than "timing the market."
The Wealth Projection
The graph shows how your wealth grows over 20 years with consistent monthly deposits. Compounded gains are slow at first, then accelerate.
Assumptions: 8% annual return, monthly compounding, consistent deposits. Market returns fluctuate and are not guaranteed.
Future Work
This guide is a living document. Here are topics we plan to cover in future updates:
🏡 Halal Mortgages
Coverage and guidance on halal mortgage options in Canada.
💰 Zakat on Stocks
Understanding how to calculate and pay zakat on your investment portfolio and stock holdings.
💡 Tips & Tricks
Advanced strategies for currency conversion, other cost-saving techniques and account settings optimizations (e.g. enabling dividends auto-reinvestment or turning off non-halal features).
📖 Additional Resources
Curated list of books, YouTube channels, and educational materials for continued learning.
Here is a great interview to watch for now!💬 Community Discussion
Plans to establish a Telegram channel or forum for questions, discussions, and community support.
🧾 Islamic Will
Guidance on preparing a shariah-compliant will in Canada, including beneficiaries, witnesses, and provincial nuances.