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There is a wealth of information available for purchasing stocks, but investors typically give selling them much less consideration.
That’s incorrect because the money is earned during the sale. Making the correct decisions can be crucial to realizing your gains or, in other situations, minimizing your losses.
Selling stocks can be a crucial part of your investment strategy, allowing you to realize gains, rebalance your portfolio, or free up capital for other investments. But once you’ve decided to sell, the question becomes: how do you actually get your money?
This guide will walk you through the process of receiving your funds after selling stocks covering the following key aspects:
Understanding Settlement Dates:
- T+2 Settlement: Stock trades typically settle two business days after the trade date. This means that the buyer will pay for the shares, and the seller will receive the proceeds, on the second business day following the sale.
- Exceptions: Some exceptions to the T+2 settlement rule exist, such as trades involving foreign securities or options contracts. Your broker will provide specific details about the settlement date for your particular trade.
Receiving Your Funds:
- Brokerage Account Deposit: The most common way to receive your funds is through a direct deposit into your brokerage account. This is the simplest and most convenient option, as the money will be readily available for you to use for other investments or withdrawals.
- Check Payment: If you don’t have a brokerage account or prefer to receive a physical check, your broker can mail you a check for the proceeds of your sale. However, this method may take longer to receive your funds.
Factors Affecting the Amount Received:
- Sale Price: The amount you receive will be based on the sale price of the stock, minus any applicable fees or commissions.
- Fees and Commissions: Brokerage firms typically charge fees for selling stocks, which can vary depending on the firm and the type of account you have. These fees can reduce the amount of money you receive.
- Taxes: Depending on your location and tax situation, you may be responsible for paying capital gains taxes on the sale of your stocks. This will further reduce the amount of money you receive.
Additional Considerations:
- Fractional Shares: If you sell fractional shares, the proceeds will be rounded down to the nearest cent.
- Dividend Payments: If you receive a dividend payment on the stock you sold after you placed the sell order but before the settlement date, you will still receive the dividend payment.
- Foreign Currency: If you sell stocks traded in a foreign currency, the proceeds will be converted to your account’s base currency, which may result in additional fees.
Here’s a table summarizing the key points:
| Aspect | Details |
|---|---|
| Settlement Date | Typically T+2 business days after the trade date |
| Receiving Funds | Direct deposit to brokerage account or check payment |
| Amount Received | Sale price minus fees, commissions, and taxes |
| Fees and Commissions | Vary depending on the brokerage firm and account type |
| Taxes | Capital gains taxes may apply |
| Fractional Shares | Proceeds rounded down to the nearest cent |
| Dividend Payments | Still received if declared before settlement |
| Foreign Currency | Proceeds converted to account’s base currency |
By understanding these key aspects, you can ensure a smooth and efficient process of receiving your funds after selling stocks. Remember to consult your broker for specific details about your account and any applicable fees or taxes.
3 steps to selling stocks
When you sell will rely on your risk tolerance, investing timeframe, and investing strategy.
Sometimes though, loss aversion and fear get in the way. There are good reasons and bad reasons to sell stocks. Check your emotions when youre ready to pull the trigger. Advertisement.
Charles Schwab |
Interactive Brokers IBKR Lite |
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| NerdWallet rating NerdWallets ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
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NerdWallet rating NerdWallets ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
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NerdWallet rating NerdWallets ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
4.1 /5 |
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Continued underwhelming performance in comparison to the competition, careless leadership, and management choices you disagree with could all be considered valid reasons. Perhaps you’ve determined that your money would perform better somewhere else, or you’re harvesting losses to balance gains that will result in income tax obligations.
The bad reasons are usually a hasty response to sporadic company news or brief fluctuations in the stock market. When things go rough, giving up only makes your losses more permanent, which is the last thing you want. (You know the saying: Buy low, sell high. Consider your initial motivation for purchasing the stock before deciding to sell. Examine your logic to make sure you’re not caving in to an emotional reaction you might come to regret. Did you think about what information or circumstances would lead you to sell it?
» Prone to emotional investing? Check out robo-advisors
Decide on an order type
The options for order types are the same if you are familiar with purchasing and selling stock. But the objective is different: you use order types to control the price of buying stock. Your primary goal in the sale is to minimize losses and optimize profits.
|
Order type |
What it is |
Use it if… |
|---|---|---|
|
Market order |
A request to buy or sell a stock ASAP at the best available price. |
You want to unload the stock at any price. |
|
Limit order |
A request to buy or sell a stock only at a specific price or better. |
Youre fine with keeping the stock if you cant sell at or above the price you want. |
|
Stop (or stop-loss) order |
A market order that is executed only if the stock reaches the price youve set. |
You want to sell if a stock drops to or below a certain price. |
|
Stop-limit order |
A combination of a stop order and a limit order: A limit order is executed if your stock drops to the stop price, but only if you can sell at or above your limit price. |
You want to sell if a stock drops to a certain price, but only if you can sell for a minimum amount. |
Let’s go through some examples. Let’s say you own a stock that is currently trading for $40.
The order will execute at the going rate in a matter of seconds. In the time it takes to place and complete the order, stock prices may change, so you might sell for $40 or just a little bit less or more.
The risk is that there are no restrictions and your stock could sell at any price.
The order will only be executed if the stock is trading at or above the limit price that you specify. Your order will only be executed if the stock trades at or above $41 if your limit order is for $41.
The risk is that if the stock never reaches your limit price, you might decide not to sell.
Your order will only be executed if your stock starts trading at or below the stop price that you have set. Should the stock price drop to $38 or below, your order will execute as a market order if your stop price is $38.
The risk is that there is no floor, so you could sell for less than your stop price. Additionally, a brief price reduction could result in a sale when you don’t want it to.
You set both a stop price and a limit price. If the stock’s bid price falls to $39 and your stop price is $39 and your limit price is $37, your order will execute as a limit order at or above $37.
The risk is that even though you’ve set a floor, you might decide not to sell at all if the stock falls below it too soon, which can occur in a volatile market.
» Go deeper: Discover the insider tip for profitable stock trading.
How To Sell Your Stocks on Robinhood – Quick Tutorial
FAQ
Do you get money immediately after selling stock?
How do I get my money after selling shares?
How do I cash out my stock?
Where does my stock money go when I sell it?
How do I sell stocks?
There are several steps involved in selling stocks, including the following: 1. Determine your investment goals: Consider why you want to sell your stocks and whether it aligns with your overall investment goals. 2. Access your brokerage account: You need to access or log in to your brokerage account to sell your stocks. 3.
How do you cash out stocks?
• Stocks can be cashed out by selling them through a broker on a stock exchange. • Selling stocks can provide cash for major expenses or to reinvest in other assets. • Steps to cash out stocks include determining investment goals, accessing a brokerage account, placing a sell order, waiting for the sale to be completed, and receiving the proceeds.
Should you sell shares?
Selling shares might ensure there’s enough cash around to cover big expenses. One benefit to having cash on hand instead of having money invested in stocks is that cash is not subject to the ups and downs of the stock market. However, the value of cash is impacted over time by inflation.
Should you sell stocks?
But, when it’s time to sell shares, some beginning investors struggle with how to turn their stocks back into cash. After all, money invested in stocks is not immediately cash. Investors may want to sell stocks for a wide variety of reasons. They might wish to reinvest the cash into another asset with an eye toward long-term gains.