How Do You Cash Out Stocks? A Complete Guide for Beginner Investors

Let’s be honest – everyone talks about buying stocks, but not many folks explain how to actually get your money out when you need it! I’ve been there, staring at my brokerage account wondering “okay, now how do I turn these little digital shares back into actual cash I can use?”

If you’re reading this, you’re probably in the same boat. The good news? Cashing out stocks is actually pretty simple once you know the steps. In this guide, I’ll walk you through everything you need to know about selling your stocks and getting that money into your pocket.

The 3-Step Process to Cash Out Your Stocks

Let me break this down into three easy steps that anyone can follow:

Step 1: Figure Out When to Sell Your Stocks

Timing matters! The whole point of investing is “buy low, sell high” right? But deciding when to cash out isn’t always straightforward.

Here are some good reasons to consider selling

• The stock is consistently underperforming compared to similar companies
• Company leadership has made decisions you don’t agree with
• You’ve found better investment opportunities elsewhere
• You need the cash for a planned expense (like buying a house)
• You’re strategically harvesting losses to offset taxable gains

But be careful! Many people sell for the wrong reasons, like:

• Panicking during short-term market fluctuations
• Reacting emotionally to a single news headline
• Getting scared by temporary price drops

I always remind myself to think about why I bought the stock in the first place. Has anything fundamentally changed about my investment thesis? If not, maybe I should hold onto it.

Step 2: Choose Your Order Type

This part might seem a bit technical, but stick with me! When you sell stocks, you need to tell your broker exactly how you want the sale executed. There are several order types to choose from:

Let me give you some examples to make this clearer. Say you own a stock currently trading at $40:

Market Order: You’ll sell immediately, maybe for $40 or slightly higher/lower depending on market conditions. This is the simplest approach but gives you no control over the final sale price.

Limit Order: If you set a limit order at $41, your order will only execute if someone’s willing to buy at $41 or higher. The risk? If the stock never reaches $41, your order won’t execute.

Stop-Loss Order: If you set a stop price at $38, your shares will automatically sell if the price falls to $38 or below. This protects you from further losses, but in volatile markets, you might sell for less than your stop price.

Stop-Limit Order: If you set a stop at $39 and a limit at $37, your order converts to a limit order when the price hits $39, but won’t sell below $37. This gives you protection but may mean you don’t sell at all if the price drops too quickly.

For beginners, market orders are often simplest, but as you get more experienced, you might want the extra control that limit orders provide.

Step 3: Fill Out the Trade Ticket

This is the part where you actually place your sell order. Whether you’re using Schwab, Fidelity, or any other broker, the process is similar:

1. Log into your brokerage account
2. Find the trading section (usually labeled “Trade” or “Trading”)
3. Select the account containing the stocks you want to sell
4. Enter the stock symbol (like AAPL for Apple)
5. Select “Sell” as your action
6. Enter how many shares you want to sell (or the dollar amount)
7. Choose your order type (market, limit, etc.)
8. If using a limit or stop order, enter your price
9. Set the time in force (how long your order remains active)
10. Review everything carefully
11. Submit your order

At Schwab, for example, you can use either the All-In-One Trade Ticket or the SnapTicket® feature. The SnapTicket is accessible through popular pages like Summary, Research, Watchlist, and Positions.

For the time-in-force option, you typically have choices like:

• Day (expires at market close if unfilled)
• Good-Til-Cancelled (remains open until filled or you cancel it)
• Immediate or Cancel (must fill immediately or gets cancelled)
• Fill or Kill (entire order must fill immediately or gets cancelled)

For most regular investors, the “Day” option is perfectly fine.

What Happens After You Sell?

After you’ve placed your sell order and it executes, the cash from the sale doesn’t immediately appear in your account that you can withdraw. Most brokers operate on what’s called a “T+2” settlement period – meaning the trade settles (and the cash becomes available) two business days after the transaction.

So if you sell stock on Monday, the cash typically becomes available for withdrawal on Wednesday.

Important Considerations When Cashing Out Stocks

Tax Implications

This is huge! When you sell stocks at a profit, you’ll owe taxes on those gains. How much depends on:

• How long you held the stock (less than a year = short-term capital gains taxed as ordinary income; more than a year = lower long-term capital gains rates)
• Your total income for the year
• Your filing status

I’m not gonna sugarcoat it – you should definitely talk to a tax professional before making large stock sales, especially if you’ve had big gains. The last thing you want is a surprise tax bill!

Fees and Costs

While many brokers now offer commission-free trading for stocks, there might still be other fees when you cash out, like:

• Account transfer fees (if moving money between institutions)
• Wire transfer fees (if you need the money quickly)
• Possible account maintenance fees

Check your broker’s fee schedule before selling to avoid surprises.

Consider Partial Sells

You don’t have to cash out all your stocks at once! Sometimes it makes sense to sell just a portion of your holdings. This can help:

• Meet your cash needs while keeping some market exposure
• Gradually rebalance your portfolio
• Minimize tax impacts by spreading gains across tax years

Common Mistakes to Avoid When Cashing Out Stocks

I’ve made some of these mistakes myself, so learn from my experience:

1. Selling everything during market downturns – Panic selling usually locks in losses
2. Not considering tax consequences – Surprise tax bills are never fun
3. Focusing on short-term price movements – Daily fluctuations don’t define a good investment
4. Setting unrealistic price targets – Being too greedy can mean missing good selling opportunities
5. Forgetting about your overall investment strategy – One stock sale should fit into your bigger plan

Real Talk: When Should You Actually Cash Out?

Ok, so we’ve covered the how, but what about the when? Here’s my take:

• You’ve reached a financial goal: If you invested for a specific purpose (down payment, education, etc.) and have reached your target amount, it’s fine to sell!
• Your investment thesis has changed: If the reason you bought the stock no longer applies, it might be time to move on.
• You need to rebalance: If one stock has grown to dominate your portfolio, selling some to maintain diversification makes sense.
• You need the money: Life happens! Sometimes you just need cash, and that’s okay.

Final Thoughts

Cashing out stocks is a normal part of investing – you buy with the intention of selling someday! The key is making thoughtful decisions rather than emotional ones.

Remember that the process itself is pretty simple:

1. Decide when to sell
2. Choose your order type
3. Fill out the trade ticket

The technical part of selling stocks is easy. The hard part is making wise decisions about when to sell and for what reasons. That’s where having a clear investment strategy really helps.

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Yes, you can cash out your stocks at any time by selling them through your brokerage account.