What is the ruling on dealing in stocks in companies and in banks, and what is the ruling on the profits from them?

The questioner : What is the ruling on dealing in stocks in companies and in banks?

The Shaykh : As is clear to everyone, companies deal with banks and engage in transactions involving riba (usury or interest). Therefore, it is not permissible to participate in them for one who believes in Allah and the Last Day. There are many lawful ways, so a Muslim should choose them and prefer them over other ways. As for dealing in these paper currencies, this is a calamity that has spread throughout the Islamic lands, and trade in them has become widespread. We do not see dealing in them as permissible except within the limits of dire necessity, because they have become like gambling; from one evening to the next, the poor person becomes rich and the rich person becomes poor. Therefore, we do not see trading in these paper currencies as permissible except to the extent that a Muslim is compelled to do so in order to survive. As is well known among scholars, dire necessity permits what is prohibited. However, this rule must be taken with its accompanying condition, which is the statement of the jurists: "Necessity is estimated according to its measure." Therefore, it is not permissible to deal with companies, nor is it permissible to deal in this paper currency.

The questioner : And if he did deal in them, what is the ruling if he took money from them? If he dealt in stocks and previously made profits, what is the ruling on the profits he took?

The Shaykh : The ruling on the profits is that naturally, some of it may be lawful and some may be forbidden. So he must strive and keep before his eyes his saying (peace and blessings be upon him): He should take his principal and what he is convinced is lawful from the profit, and he should spend the rest on public utilities.