If you hold shares for trading
A trading portfolio is like business inventory: it exists to be sold. Zakat is due on the full market value of the shares on your zakat date — no adjustments, no estimates.
If you hold shares long-term
For buy-and-hold investors, the majority contemporary view looks through the share to the company behind it: zakat is due on the zakatable portion of the company's assets — its cash, stock, and receivables rather than its factories and premises.
Most people cannot compute that figure for every company they own. The common estimate when the breakdown is unknown is 25 to 40 percent of market value.
Practical notes
Whatever treatment you choose, value the portfolio at its market value on your zakat date and apply it within your single annual calculation — see when is zakat due for how the date works.
Consistency matters more than the exact percentage: pick an approach, note it, and reuse it every year so your zakat does not swing on method changes.
A worked example (illustrative numbers)
A trading account worth $10,000 on the zakat date: zakat is 2.5% × $10,000 = $250.
The same $10,000 held long-term, using a 30% zakatable-portion estimate: the zakat base is $3,000, and zakat is 2.5% × $3,000 = $75. Paying on the full value instead would bring it back to $250.
Frequently asked questions
How much zakat do I owe on shares?
Trading shares: 2.5% of full market value. Long-term holdings: 2.5% of the zakatable portion of the company's assets — often estimated at 25–40% of market value when unknown — or, in the simpler practice many use, 2.5% of the full market value.
Do I pay zakat on the full value of my index funds?
Index funds are long-term holdings for most people, so the zakatable-portion view applies, with the 25–40% estimate when the breakdown is unknown. Many people simply pay on the full value as a safer, simpler practice.
Do I count shares separately from my other wealth?
No. Value everything on one zakat date — shares, cash, gold, business assets — subtract immediate debts due within the year, compare with nisab, and pay 2.5% on the net total.
What value should I use on my zakat date?
The market value of the shares that day. Prices move constantly, so the number is only ever a snapshot — pick your zakat date, take the value on that date, and move on.