How do I pay zakat on stocks and shares I own?

Zakat on shares depends on your intention. If you actively buy and sell shares as a trader, treat your whole portfolio as trade goods: value it at market price on your zakat date and pay 2.5% of the total, alongside any dividends or cash held. If you hold shares long-term as an investor for dividends and growth rather than quick resale, many scholars, including contemporary fiqh councils, say you only owe zakat on the company's underlying zakatable assets — cash, receivables, and trade inventory — proportional to your shareholding, not on fixed assets like factories or real estate the company owns. Since working this out requires financial statements most investors don't have, a common simplified approach, endorsed by bodies such as AAOIFI, is to pay zakat on roughly a quarter to a third of the market value of long-term holdings, reflecting the typical liquid-asset share of an average company; some scholars are more conservative and prefer closer to the full value. Whichever method you choose, apply it consistently year to year. Shares held inside retirement or brokerage accounts follow the same logic once you have access to the funds.

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