Although owning stock in any company is like sharing ownership of the company, we have categorized it as personal wealth. Therefore, the lower value of the stock at the beginning and end of the year should be added in the category of personal wealth. Personal wealth contains two clauses:

• 1. Considering stock as a readily redeemable asset, we have treated it as another form of savings. Therefore, we suggest using its fair market value to calculate Zakat
  2. There are millions of shares owned by the general public, therefore calculating Zakat on stock and viewing it as a share in ownership is inconvenient. Stockholders need to know their share of cash on-hand, profit, and inventory to use those values in the calculation of Zakat. This information is ordinarily complicated unless it is a partnership of only a few people. Therefore, we generally do not treat stocks as a business partnership.

If one has stock in a company with the intention of long term investment, they can calculate their share of Zakat as a partner in the company owning a fraction depending on the number of shares owned. In this case, a person who has stock in a company needs to figure out the percentage of ownership their stock represents and calculate Zakat on the Zakat-eligible assets of the business (see the next question for more details).

Whereas Zakat is an obligatory act of sharing that happens once a year, Sadaqa/Charity is a voluntary and ongoing form of giving where donations can occur year-round to different causes and organizations with no minimum amount provided or time frame to work with.
Sadaqa doesn’t have the same parameters that Zakat has. Instead, individuals can donate freely any amount whenever they choose. There are generally two types of Sadaqa: one, a donation that helps for the short-term simply called Sadaqa and two, a donation that continues to give in the long-term and even after death, known as Sadaqa Jariyah.

The following categories are based upon the commonality of nisab or the Zakat for different types of wealth:

• Personal wealth:
  1. Money beyond the average level needed for everyday expenses
  2. Gold and silver
  3. Jewelry (only the gold and silver)
  4. Stocks
  5. Business wealth (trade inventory, cash, income, profit, etc.)
  6. Money held in restricted funds such as retirement funds when they are free for use

• Agricultural produce
  1. Produce from cultivated land
  2. Produce from non-cultivated land

• Items that are mined or extracted from the Earth including any buried treasure that is discovered. If this is done as a business, like in mining, and oil, it may be classified along the lines of a business.

• Livestock, which is further divided into three subcategories:
  1. Sheep, lambs, and goats
  2. Cows and buffalos (domestic, not wild)
  3. Camels

• All other animals
  1. There is no Zakat on animals raised as a hobby. For business purposes, the profit derived from this business is handled as profit gained under the personal wealth category. There is no tax on inventory since its exact count cannot be established with certainty — for example, fish in a fish farm.

There are different opinions about this. However, the general opinion is that jewelry, whether it is normally in use, or stored for occasional use, must all be included in calculating Zakat. The value of the gold or silver content in the jewelry should be included in the category of “Personal wealth”. Precious stones (diamonds, ruby, pearls, etc.) are not to be included neither the labor cost of making the jewelry is to be included.