Investing for Hajj

Download our Hajj Worksheet for a handy method to calculate how much to save for Hajj.

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Hajj Worksheet

Early Bird Hajj Financial Planning

by Dr. M. Yaqub Mirza

Islam mandates that all Muslims who are financially and physically capable perform a pilgrimage to Mecca — the Hajj — once in a lifetime. Besides commanding his companions to perform it, the Prophet (Salla Allahu Alayhi wa Sallam) advised them to financially prepare for it, and delineated the specific way in which each of the rituals involved was to be performed. The Sunnah raised the religious and ethical value of pilgrimage to such an extent that it has become the ultimate worldly hope of a Muslim's life.

The Hajj should be undertaken as an affirmative response to Allah's (Subhanahu wa Ta'ala) calling. The verse that the pilgrim chants throughout the pilgrimage is an expression of his acquiescence to Allah's (Subhanahu wa Ta'ala) call. The Hajj is an act of presenting one's self before Allah (Subhanahu wa Ta'ala). Muslims prepare for it as if they were leaving this world altogether. First, they must pay off their debts including any zakah due on their wealth. They must also return whatever was given to them in trust and have enough savings to bear the expenses of the journey — expenses such as travel, Hajj tax, lodging, and the procurement of an animal (or sacrifice voucher) for slaughter. In additon, they must also provide for their families and dependents during their absence. Since no Hajj is valid if it is performed "on credit," the pilgrim must have previously earned and saved enough to cover these expenses.

Every Muslim must make Hajj a priority and plan to perform it as soon as possible at least once in a lifetime. The cost of performing Hajj the second time may be contributed to Islamic charities.

The Cost of Hajj

What would be the cost of Hajj for someone living in the United States? How much should be invested? To assist in this process, Saturna Capital developed a simple worksheet that can help determine the savings goal. The worksheet assumes Hajj costs rising on the average due to inflation of 5% per year in the United States and pretax average return of 8% per year. Provision should also be made for taxes that will have to be paid on income from the investment.

For example, if a person plans to perform Hajj in 5 years, assuming Hajj costs today of $6,500 per person, then the person would need to put aside and invest $6,163 immediately. Alternately, they may invest an equivalent amount over an extended period of time: annually $1,465, quarterly $366, or monthly $122. The prospective pilgrim may consider investing a bit more than these amounts to cover rising costs or lower investment return. For a husband and wife, simply multiply these amounts by two.

As Muslims are strongly discouraged to incur debt, this approach of saving, investing, and spending on future needs can also be used for other purposes such as saving for a vehicle, college education, a child's marriage, and Umrah. The same worksheet can be printed and used for each such expenditure.

About Debt

According to a hadith (related by al-Nisai and al-Hakim), The Prophet (Salla Allahu Alayhi wa Sallam) is reported to have said: "O Allah, I seek refuge in Thee from unbelief and debt." A man asked him, "Do you equate debt with unbelief?" He replied, "Yes." In another well known hadith (reported by al-Bukhari), the Prophet (Salla Allahu Alayhi wa Sallam), who often said, "O Allah, I seek refuge in Thee from sin and debt," was asked, "Why do you so often seek the protection of Allah from debt?" He replied, "One who is in debt tells lies and breaks promises."

Borrowing cannot be taken lightly and it is clear that borrowing can endanger one's morals. After calculating how much a person needs to save and invest the next task is to find a place where to invest.