6d (edited) • 🧮 Zakat & Purification
The 5-step Zakat checklist for your investment portfolio (Ramadan edition)
With Eid al-Fitr around just days away, Ramadan is when most Muslims with investments need to calculate their annual Zakat. Here is the complete 5-step checklist.
STEP 1: CONFIRM YOUR ZAKAT ANNIVERSARY DATE
Zakat is due once per lunar year after you've held wealth above the nisab threshold. Most people set their anniversary date at the beginning of Ramadan, but it can be any consistent date.
If you don't have a fixed date yet, set one now. Use today as your anchor going forward. Consistency matters more than the exact date.
STEP 2: CHECK THE CURRENT NISAB THRESHOLD
Nisab is the minimum amount of wealth that makes Zakat obligatory. There are two standards:
Silver nisab: 612.36 grams x current silver price
Gold nisab: 87.48 grams x current gold price
At current prices (March 2026 approximate):
Silver nisab: approximately $550-600 USD / £430-470 GBP
Gold nisab: approximately $7,500 USD / £6,000 GBP
Most scholars recommend using the silver nisab because it is lower and more inclusive. If your total Zakatable wealth exceeds this threshold, Zakat is due.
STEP 3: LIST YOUR ZAKATABLE ASSETS
Zakatable assets include:
- Cash and savings (checking, savings, emergency fund)
- Investment portfolio (stocks, ETFs, mutual funds)
- Gold and silver you own
- Money owed to you that you expect to receive
- Business inventory (if applicable)
Not Zakatable: your primary residence, your car, your furniture, tools of your trade, pension funds locked until retirement (scholars differ on this last one).
STEP 4: CALCULATE ZAKAT ON YOUR INVESTMENT PORTFOLIO
Two accepted methods:
Method A (simple): 2.5% of total portfolio market value at your Zakat anniversary date.
Method B (precise): Calculate underlying Zakatable assets per share (cash + receivables). Musaffa's portfolio tracker automates this for most stocks. You typically pay less Zakat under this method because cash and receivables are usually less than market value.
Either method is valid. Method A is more conservative (you pay more). Method B is more precise.
Important: Use the value at your Zakat anniversary date, not today's value if your anniversary has already passed.
STEP 5: SUBTRACT IMMEDIATELY DUE DEBTS AND PAY
You can subtract short-term debts due within the next lunar year from your Zakatable wealth total. Long-term debts (mortgages, long-term loans) are treated differently by scholars — the most common ruling is to subtract one year's worth of payments, not the entire balance.
Once calculated: 2.5% x net Zakatable wealth = your Zakat obligation.
Pay it to eligible recipients: the poor, the indebted, converts, travellers in need, and those working to collect and distribute Zakat. Many Muslims give to NZF, Islamic Relief, or local mosque zakat funds.
BONUS: DON'T FORGET PURIFICATION
If you received dividends from halal ETFs this year, a small portion may require purification (typically 1-3% of dividends, donated to charity). This is separate from Zakat. Check your fund's annual report or Musaffa for the purification ratio.
Where are you in your Zakat calculation this Ramadan? Any questions about specific assets or situations — drop them below.
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The 5-step Zakat checklist for your investment portfolio (Ramadan edition)
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