I have a problem trying to ascertain what kind of investments may be permissible in islam and what may not be. If I were to invest in a land with the sole niyyat of selling it in a month to make a profit, would that be permissible. I just feel that it is speculation on my behalf which may be unislamic.
Answer
You can classify investments at times as desirable and less desirable, but you can’t declare an investment unlawful when it hasn’t been declared as such by the shariah. Indeed an earning for which one works genuinely hard is far more satisfying than the one for which less effort has been put in. However all earnings are halal unless specifically stated otherwise in the shariah or unless it could be inferred that an earning is similar to what has been declared haram. The other condition that needs to be satisfied to make earnings legitimate is that one should pay Zakat on them.
In case of profit on land, I don’t see any reason why the land you buy and sell should be seen as unacceptable. The only thing you should try to ensure is that you don’t deceive your seller or buyer, you don’t conceal important information about the land, and you don’t take undue advantage of the ignorance of your buyer/seller. After you make a genuine sale deal, pay 10 percent on the profit you make as Zakat and the rest of the amount would be yours. The 10 percent payment of Zakat would be deducted the same as it is deducted in the case of produce of unirrigated land. In case you have to pay some taxes from your sales proceeds, you can deduct them from the Zakat amount you are required to pay.
Every trader speculates while trading in that he buys those items which he imagines (speculates) are going to sell. How else can he trade intelligently? Illegitimate speculation is that investment which involves gambling in that what is invested is not the full amount required in a genuine transaction, what is gained is the result of unforeseen variables in which the investor plays no role, and there is no economic contribution made towards the economy as a result of that investment. Purchase and sale of land when one invests the full amount of land doesn’t fall in the category of Islamically unacceptable speculation. And Allah knows the best.