Getting your hands on the cash after selling stocks isn’t quite as instant as swiping a credit card. If you’re planning a big purchase or just need quick access to your investment money, understanding exactly when those funds will hit your account is super important. I’ve been trading for years and still sometimes forget about settlement periods when I’m eager to use my stock sale proceeds!
In this article, I’ll walk you through the entire process from clicking “sell” to having spendable cash in your pocket, including the recent changes that have made this whole process faster.
The Stock Settlement Process: Faster Than Ever Before
First things first – when you sell a stock, the transaction isn’t officially complete the moment you hit the sell button. There’s this thing called “settlement” that has to happen first.
What is settlement? It’s the official transfer of ownership where you get your money and the buyer gets their shares, Only after settlement is complete can you actually access your funds
The New T+1 Settlement Rule (Big Change in 2024!)
Here’s some great news for us investors! As of May 28, 2024, the SEC has shortened the settlement cycle for stocks, bonds, ETFs, and certain mutual funds from T+2 (two business days) to T+1 (just one business day).
This is a pretty big deal and makes the whole process much faster than it used to be:
- Before 2017: T+3 (three business days)
- 2017 to May 2024: T+2 (two business days)
- Current (since May 2024): T+1 (one business day)
This means if you sell your Apple or Amazon shares on Monday, the transaction will officially settle on Tuesday (instead of Wednesday under the old rules). That’s one full day faster access to your money!
What T+1 Really Means for Your Wallet
Let’s break this down with a practical example to see how this affects your actual timeline for getting paid:
| Day of Sale | Settlement Date (T+1) | Funds Available |
|---|---|---|
| Monday | Tuesday | Tuesday |
| Tuesday | Wednesday | Wednesday |
| Wednesday | Thursday | Thursday |
| Thursday | Friday | Friday |
| Friday | Monday | Monday |
As you can see, if you sell on Friday, you’ll need to wait until Monday for settlement due to the weekend. (And don’t forget that holidays can delay things further!)
How to Actually Get Your Money After Settlement
OK so your trade has settled – now what? How do you actually get that money into your bank account or as cash in hand? This is where things can still take a bit more time, depending on your chosen method.
Option 1: ACH Transfer to Your Bank Account
Most brokerages offer free ACH (Automated Clearing House) transfers to move money from your brokerage account to your checking or savings account. However, ACH transfers aren’t instant:
- Typical ACH transfer time: 1-3 business days
- Cost: Usually free
- Convenience: High – can be set up online
So even though your stock sale settles in T+1, if you choose ACH to get the money to your bank, you might be looking at a total of 2-4 business days from sale to cash in your bank account.
Option 2: Wire Transfer to Your Bank
If you need money ASAP and can’t wait for ACH:
- Wire transfer time: Same day (if initiated early enough)
- Cost: $20-$35 from sending bank + possibly another fee from receiving bank
- Convenience: Medium – might require phone call or in-person visit
While faster, the fees make this less attractive unless you really need the money immediately.
Option 3: Using a Brokerage Account With Checking Features
This is my personal favorite option! Many modern brokerages offer integrated cash management accounts with:
- Debit cards
- ATM access
- Check writing abilities
With these features, you can access your money directly from your brokerage account as soon as the trade settles, without transferring it anywhere else.
For example, with my Fidelity account, I can sell a stock on Monday, and by Tuesday after settlement, I can swipe my Fidelity debit card at a store or write a check against those funds. Super convenient!
Real-World Example: Selling $10,000 of Stock
Let’s say I need to buy a used car for $10,000 and want to sell some of my Amazon stock to pay for it.
Monday: I sell $10,000 worth of Amazon stock
Tuesday: The trade settles (T+1) and funds are available in my brokerage account
From here, I have several options:
- Use my brokerage debit card (if my account has one) to pay the car seller on Tuesday
- Initiate an ACH transfer on Tuesday, with money arriving in my bank account by Thursday or Friday
- Request a wire transfer on Tuesday morning, with funds arriving in my bank account same day (with fees)
- Write a check from my brokerage account (if available) on Tuesday
The T+1 settlement gives me access to my money much faster than in previous years!
Pro Tips for Faster Access to Your Stock Sale Proceeds
After years of trading, I’ve learned a few tricks to speed up the process:
- Sell early in the week to avoid weekend delays in settlement
- Set up a brokerage with cash management features so you don’t need to transfer money out
- Keep some cash buffer in your accounts so you’re not completely dependent on settlement timelines
- Know your brokerage’s cutoff times for same-day processing of transfer requests
- Consider margin accounts which may allow immediate access to funds (though be careful with margin!)
Factors That Might Delay Your Payment
Despite the new faster T+1 settlement, a few things can still slow down the process:
1. Weekends and Holidays
If you sell on Friday, settlement won’t happen until Monday because markets are closed on weekends. Similarly, market holidays will push settlement to the next business day.
2. Technical Issues
Occasionally, brokerages experience system issues that delay processing. While rare, it can happen.
3. Security Holds
Large or unusual transactions might trigger security checks that delay fund availability.
4. International Transfers
If you’re transferring money to international bank accounts, expect additional delays of 3-7 business days.
Why Did the SEC Change to T+1 Settlement?
You might wonder why the SEC decided to speed things up. There are several good reasons:
- Reduced market risk – Less time between trade and settlement means less chance for things to go wrong
- Improved liquidity – Faster settlement means investors can access and reinvest funds more quickly
- Keeping pace with technology – As technology improves, there’s less need for long settlement periods
- Aligning with consumer expectations – In an age of instant payments in other areas, stock settlements needed to catch up
Which Investments Follow the T+1 Rule?
Not every investment follows the same settlement timeline. Here’s a quick reference:
- T+1 (One business day): Most stocks, bonds, ETFs, and some mutual funds
- Same day: Money market funds
- Variable: Options, futures, forex, and certain specialty investments
FAQs About Getting Paid From Stock Sales
Can I use the money from a stock sale immediately?
Not quite immediately. You need to wait until settlement (T+1, or one business day). However, some brokerages with margin accounts may allow immediate access.
What happens if I try to withdraw unsettled funds?
Most brokerages won’t let you withdraw unsettled funds. If you have a margin account and withdraw before settlement, you could face a “good faith violation.”
Does dividend payment follow the same timeline?
No. Dividend payments have their own schedule set by the company. Most dividends are credited to your account on the payment date specified by the company.
Can I speed up the settlement process?
No, the T+1 settlement is a regulation that applies to all brokerages. However, you can choose faster methods (like wire transfers) to access your money after settlement.
How do I know when my funds have settled?
Most brokerage platforms show your “settled cash” or “available to withdraw” balance separately from your total account value. Check your account or mobile app for these details.
Final Thoughts
The move to T+1 settlement has been a huge improvement for investors who need quick access to their stock sale proceeds. While it’s still not instant (like some other modern payment methods), it’s significantly faster than the old three-day wait we had before 2017.
For most investors, the current one-business-day wait strikes a good balance between security and convenience. And if you really need faster access, using a brokerage with integrated banking features is definitely the way to go!
Have you noticed the faster settlement times since the change in May 2024? I’d love to hear about your experiences in the comments below!
How Quickly Can You Withdraw Funds After a Sale?
Under T+1, you can now access your cash the next business day after selling a stock. However, how fast you can actually withdraw that money depends on how you transfer the funds.
If you use an automated clearing house (ACH) transfer to move the funds to your checking or savings account, it could still take one to three business days. ACH transfers are generally free, but they aren’t instant. If you need the money faster, wire transfers are an option and can be completed the same day, but they come with fees—up to $35 from both the sending and receiving institutions.
What Does the T+1 Rule Mean for Investors?
The new T+1 settlement rule has streamlined the process of trading stocks, bonds, ETFs, and certain mutual funds. Instead of waiting two days to officially complete a sale, investors now only need to wait one day. For those who trade regularly or need quick access to funds, this has been a significant improvement.
For example, if you sell shares of a stock on a Thursday, under the old T+2 system, the funds wouldn’t have been available until the following Monday (assuming no holidays). With T+1 in place, the funds are available on Friday, giving you quicker access to your cash. While it may seem like a small change, it can make a big difference in liquidity and investment planning.