Is Zakat due on money invested in an Islamic bank at a rate of 2.5% of the total amount, or only on the profits, taking into consideration the need for money to spend on family and children and to preserve the principal?

Zakat (definition) is obligatory on invested capital and its profits when a year has passed over the principal, provided it reaches the nisab (definition). The profit must be added to the capital to calculate zakat on the total amount. The fact that zakat might affect expenses or necessitate taking from the principal does not alter the ruling of the matter, as a person might be a zakat-payer and a zakat-recipient at the same time. Zakat does not diminish wealth; rather, it increases it and blesses it, as the Prophet, peace and blessings be upon him, swore: "(Charity does not decrease wealth)."