This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.
Cashing out stocks essentially means selling them, and most investors should be able to sell their stocks without too much trouble. Buying stocks can be fairly straightforward, whether online or through a financial advisor. 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. Or they could choose to withdraw funds from the stock market to cover short-term, daily expenses with cash earned from the sale. So, how might investors go about cashing out stocks? And, what factors might individuals curious about how to cash out stocks bear in mind? Here’s an overview of the how and when of selling stocks.
• Stocks can be cashed out by selling them through a broker on a stock exchange.
• 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.
• Motivations for selling stocks include accessing cash for expenses, cashing out profits, preventing significant losses, day trading, and offloading low-performing stocks.
• Types of sell orders include market orders, limit orders, stop orders, and trailing sell stop orders.
Are you sitting on some stocks and wondering how to turn them into cold, hard cash? Maybe you need money for a big expense, or perhaps you just want to lock in those sweet profits before the market decides to take a nosedive. Whatever your reason, cashing out stocks isn’t as complicated as it might seem
I’ve put together this comprehensive guide to help you understand the ins and outs of selling your stocks and getting that money into your bank account. Let’s dive right in!
Can You Actually Cash Out Stocks?
Yes, absolutely! Stocks are considered relatively liquid assets, which means they can be converted to cash pretty quickly compared to other investments like real estate or collectibles. However, your money stays tied up in the market until you actually sell.
When you sell a stock for more than you paid, you’ll get your original investment plus profits (minus fees). If you sell for less than you paid, well.. you’ll get less than you invested That’s just how the cookie crumbles in the investing world.
5 Simple Steps to Cash Out Your Stocks
Let’s break down exactly how to transform those digital shares into money you can actually spend
1. Determine Your Investment Goals
Before selling anything, take a moment to think about why you’re cashing out. Is this aligned with your overall investment strategy? Are you selling because you need cash for a big purchase, or are you just panicking because of market volatility?
As Brian Walsh, CFP® and Head of Advice & Planning at SoFi says: “Your goals will largely determine whether or not long-term investing is the right choice for you. So you might want to spend time outlining what you want to achieve—which may depend on your life stage—and how much money you’ll need to achieve it.”
2. Access Your Brokerage Account
Login to whatever brokerage account you use to manage your investments. This might be Fidelity, Charles Schwab, Robinhood, SoFi Invest, or any other platform where you hold your stocks.
3. Place an Order to Sell Your Stocks
Once logged in, you’ll need to place a sell order. This is where you tell the broker you want to sell your stocks. You’ll have several options for how to sell (more on that in a bit).
Most platforms have a trade ticket or order form that looks something like this:
- Select “Sell” (rather than buy)
- Enter the stock symbol
- Enter the number of shares you want to sell (or dollar amount)
- Choose your order type
- Set the time frame for the order
4. Wait for the Sale to Complete
After placing your sell order, you’ll need to wait for it to be executed. This could take seconds or days, depending on the type of order you placed and market conditions.
5. Receive Your Money
Once the sale goes through, the proceeds will be deposited into your brokerage account. From there, you can transfer the funds to your linked bank account, which typically takes 1-2 business days.
It’s important to know that most stock sales settle in two business days (known as T+2), which means the cash from your sale will be available in your brokerage account two business days after the trade date.
Why Are You Selling? Common Motivations
People sell stocks for all kinds of reasons. Here are some of the most common:
Need Cash for Life Expenses
Maybe you’re buying a house, paying for college, or covering an unexpected emergency. Selling stocks can provide the funds you need for major life expenses.
Locking in Profits
If your stocks have performed well, you might want to cash out to secure those gains before market conditions change.
Preventing Losses
Sometimes cutting your losses on a poorly performing stock is the smartest move. No one likes to sell at a loss, but it’s better than watching your investment continue to decline.
Day Trading
Some people buy and sell stocks within the same day to capitalize on short-term price movements. This strategy requires deep market knowledge and comes with significant risks.
Getting Rid of Underperformers
If a stock in your portfolio keeps disappointing, you might decide it’s time to sell and reinvest that money elsewhere.
Understanding Different Types of Sell Orders
When you’re ready to cash out, you’ll need to choose what type of sell order to place. Your options include:
Market Order
A request to sell your stock ASAP at whatever the current market price is. This is the simplest option and guarantees your order will execute quickly, but you might not get exactly the price you expected.
Example: If a stock is currently trading at $40, you might sell for exactly $40, or it could be $39.95 or $40.05, depending on market fluctuations in the seconds it takes to execute your order.
Limit Order
With a limit order, you set the minimum price you’re willing to accept. Your order will only execute if the stock reaches that price or higher.
Example: If you set a limit order for $41 on a stock currently trading at $40, your order will only go through if the price rises to at least $41.
Stop Order (Stop-Loss Order)
A stop order becomes a market order once the stock reaches a certain price. It’s often used to limit losses or protect profits.
Example: If your stock is trading at $40 and you set a stop order at $38, your order will trigger if the price falls to $38 or below.
Stop-Limit Order
This combines a stop order with a limit order. You set both a stop price to trigger the order and a limit price to control the lowest price you’ll accept.
Example: With a stop price of $39 and a limit price of $37, your order will convert to a limit order if the stock drops to $39, but you won’t sell for less than $37.
Important Factors to Consider When Cashing Out
Selling stocks isn’t just about placing an order. There are several things you should consider before hitting that “sell” button:
Capital Gains Taxes
When you sell stocks for a profit, you’ll owe taxes on those gains. The tax rate depends on how long you’ve held the stock:
- Less than a year: Taxed as ordinary income (your regular tax bracket)
- More than a year: Taxed at the lower long-term capital gains rate (0%, 15%, or 20% depending on your income)
Fees and Commissions
While many brokerages now offer commission-free trading, there might still be other fees involved. Check your broker’s fee schedule before selling.
Market Timing
Trying to time the market perfectly is nearly impossible, even for professionals. Don’t let the pursuit of the “perfect” selling price keep you from making a reasonable decision.
Your Overall Investment Strategy
Consider how selling fits into your broader investment plan. Are you rebalancing your portfolio? Taking profits? Raising cash for another opportunity?
Pros and Cons of Reinvesting vs. Taking Cash
When you sell stocks, you have two main options: take the cash or reinvest in something else. Here’s a quick look at both sides:
Reinvesting Pros:
- Potential compound growth over time
- Opportunity to diversify your portfolio
- Hedge against inflation (cash loses value over time)
Reinvesting Cons:
- Can’t use the money for immediate needs
- Potential capital gains taxes
- Continued exposure to market risk
Taking Cash Pros:
- Money available for other financial needs
- No further market risk for those funds
- Peace of mind if you’re worried about market downturns
Taking Cash Cons:
- Miss out on potential future growth
- Cash value eroded by inflation over time
- May still owe taxes on gains
Platforms for Buying and Selling Stocks
There are tons of options for where to buy and sell stocks these days. Some popular choices include:
- Online Brokerages: Fidelity, Charles Schwab, E*TRADE, TD Ameritrade
- Investment Apps: Robinhood, SoFi Invest, Webull
- Traditional Financial Advisors: For those who prefer personalized guidance
Most platforms now offer commission-free trading for stocks and ETFs, making it more affordable than ever to invest.
Common Questions About Cashing Out Stocks
How long does it take to get money after selling stocks?
Typically, the sale itself happens almost instantly with a market order (or when conditions are met with other order types). However, the settlement period is usually T+2, meaning the funds will be available in your brokerage account 2 business days after the trade. From there, transferring to your bank account usually takes 1-3 additional business days.
Do I have to sell all my shares at once?
Nope! You can sell just a portion of your holdings if you prefer. Many brokerages even allow you to sell in dollar amounts rather than share numbers.
What’s the best time of day to sell stocks?
There’s no universally “best” time, but many traders avoid the first and last 30 minutes of the trading day when prices can be more volatile. The middle of the day tends to have more stable prices.
Will selling stocks affect my credit score?
No, selling stocks has no impact on your credit score whatsoever.
Final Thoughts
Cashing out stocks is a normal part of investing, whether you’re taking profits, cutting losses, or just need the money for something else. The most important thing is to make these decisions based on your financial goals and situation, not out of fear or greed.
Remember that selling stocks will likely have tax implications, so it’s always a good idea to consult with a tax professional if you’re unsure how a large sale might affect your tax situation.
And hey, don’t beat yourself up if you don’t time your sale perfectly. Even the world’s best investors can’t consistently predict short-term market movements. What matters is that your decision aligns with your overall financial plan.
Have you cashed out stocks before? What was your experience like? I’d love to hear about it in the comments!
Motivations for Selling Stocks
Some investors watch their portfolios closely, selling stocks regularly to cash out profits or avoid significant losses.
However, one common reason investors decide to sell stocks is that they need the cash from the investments to pay for living expenses. While different investors might sell for various reasons, it can be helpful to understand the motivation that drives the desire to sell.
So, why might investors want to cash out stocks? Some common reasons could include the following:
Select a product to get started.
By Michael Flannelly. February 25, 2025 · 13 minute read
This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.
Cashing out stocks essentially means selling them, and most investors should be able to sell their stocks without too much trouble. Buying stocks can be fairly straightforward, whether online or through a financial advisor. 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. Or they could choose to withdraw funds from the stock market to cover short-term, daily expenses with cash earned from the sale. So, how might investors go about cashing out stocks? And, what factors might individuals curious about how to cash out stocks bear in mind? Here’s an overview of the how and when of selling 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.
• Motivations for selling stocks include accessing cash for expenses, cashing out profits, preventing significant losses, day trading, and offloading low-performing stocks.
• Types of sell orders include market orders, limit orders, stop orders, and trailing sell stop orders.