Fatawa Answer

Question: Is investing in 529 funds permissible in Islam

ID: 1459

Name: Dealings and Transactions


A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary. The amount we save in this fund is tax free. As we pay high tuition fee in private islamic schools, this fund will save us a lot every year in taxes. My yearly tuition fees for my 3 kids is around $15000. If we make use of this funds, we could save $3000 in taxes every year. The only catch here is that we dont have control on where our money is invested. It is like mutual funds. They may invest our money in Bonds or any company that do not do Halal business. Can our ulema guide us in this topic.


بسم اللہ الرحمن الرحیم

الجواب وباللہ التوفیق

In order to invest in any savings plan, it is necessary to ensure besides other conditions that the company deals in “halal” business and the invested money is utilized in permissible business channels. If the company does not invest in Halal business, or we are unaware where our money is being invested, in either case, it is not allowed to invest your money in such a company. Your stated case falls into the above doubtful category, making it also an invalid investment.

Moreover, their method of profit generation and operative procedures of the company are also not known. Such types of plans usually consist of illegal practices which involve interest and gambling. Therefore, it is important to avoid dealings in such investment schemes.

فقط واللہ اعلم بالصواب

Answered On: Friday, Jan 14, 2022 | N/A

Answered By: Mufti Mohammed Ataur Rahman Sajid

Checked By: Mufti Mohammed Navalur Rahman