How to Cash In Stocks and Receive Your Money

Selling stocks allows investors to free up capital for other opportunities or personal needs. This process requires understanding how shares are converted into cash. Successfully navigating a stock sale ensures proceeds are received efficiently and financial considerations are addressed. This guide outlines the essential steps to transform your stock holdings into accessible funds.

Preparing to Sell Your Stocks

Before selling stocks, confirm where investments are held and ensure account access. Most holdings are managed through a brokerage account, accessible online or via direct communication. Up-to-date login credentials or broker contact information is a foundational step.

Once accessed, identify the specific stocks and number of shares to sell. This information is typically found within your brokerage account’s portfolio or holdings section, often alongside the stock symbol (ticker). Reviewing statements or online account details will confirm these specifics.

Understanding different order types is a crucial preparatory step. A “market order” instructs your broker to sell shares immediately at the best available price. This order guarantees execution but not a specific price, as the final price might fluctuate, especially in fast-moving markets.

A “limit order” allows you to specify a minimum selling price. Your order executes only if the stock’s price reaches or exceeds your limit. While providing price control, there is no guarantee it will be filled if the market price never reaches your set limit. Select the appropriate order type based on your priority: immediate execution or price certainty.

Before selling, ensure your brokerage account is linked to your bank account. This connection is essential for transferring sale proceeds. Most firms offer online methods to link accounts by providing bank routing and account numbers. Some platforms may require a small verification deposit to confirm the link, a process that might take a few business days.

Executing a Stock Sale

With preparations complete, place the sell order through your brokerage platform. Most online brokerages provide an intuitive interface for trading, typically found under sections labeled “Trade,” “Invest,” or “Sell.” This is the initial step in liquidating your stock.

After locating the trading section, select the account from which to sell shares. Then, enter the stock symbol (e.g., AAPL) of the company. This ensures the correct security is identified for the transaction.

Specify the number of shares to sell. Online platforms allow choosing between selling a specific number of shares or your entire holding. Select the order type: a “market order” for immediate execution or a “limit order” to sell only at or above a specified price.

Before submitting, review all order details on a confirmation screen. This summary typically includes the stock symbol, number of shares, chosen order type, and an estimated trade value. Verify this information for accuracy. Once confirmed, click a button, often labeled “Place Order” or “Confirm Trade,” to send your instruction to the brokerage.

After placing the order, monitor its status within your brokerage account, usually in an “Order Status” or “Activity” section. Orders might show as “Pending,” “Open,” “Filled,” or “Canceled.” A “Filled” status indicates successful execution, while “Pending” or “Open” means the order is still awaiting execution, which can happen with limit orders if the price condition is not met.

Receiving Your Sale Proceeds

Once your stock sale order is executed, the transaction enters a settlement period before funds become available for withdrawal. The standard settlement period for most stock trades is two business days after the trade date (T+2). This means if you sell shares on a Monday, funds will generally be settled and available by Wednesday.

Once funds are settled, initiate a transfer from your brokerage account to your linked bank account. Most brokerages offer several withdrawal methods. An Automated Clearing House (ACH) transfer is a common, usually free option, allowing electronic money movement. ACH transfers typically take one to three business days, though some may offer same-day processing for an additional fee.

Wire transfers offer a faster alternative, often completing within the same business day, especially for domestic transfers initiated before a brokerage’s cutoff time. However, wire transfers usually incur a fee, ranging from $15 to $30 per transaction, depending on the brokerage and receiving bank.

Another option is requesting a physical check, which your brokerage can mail. This method is generally free but is the slowest, with checks typically taking five to ten business days to arrive. To initiate any of these transfers, log into your brokerage account, navigate to the “Transfer” or “Withdraw” section, select the desired method, specify the amount, and confirm the transaction.

Tax Considerations for Stock Sales

Selling stocks can have important tax implications, primarily related to capital gains and losses. A capital gain occurs when you sell a stock for more than its cost basis (typically the original purchase price plus any commissions or fees). Conversely, a capital loss happens when you sell a stock for less than its cost basis.

The tax treatment of capital gains depends on your holding period. If held for one year or less, profit is a “short-term capital gain” taxed at your ordinary income tax rate (10% to 37%). If held for more than one year, profit is a “long-term capital gain,” typically taxed at more favorable rates of 0%, 15%, or 20%.

Brokerage firms report stock sales to you and the IRS on Form 1099-B, “Proceeds from Broker and Barter Exchange Transactions.” This form details the gross proceeds, date of sale, and often the cost basis of shares sold. You will receive a separate Form 1099-B from each broker through which you sold securities.

Maintaining accurate records of your purchase price (cost basis) is crucial for calculating capital gains or losses correctly. The cost basis generally includes the original purchase price plus any commissions or fees paid. If you reinvested dividends or had stock splits, your cost basis may be adjusted, impacting the calculation of your gain or loss. Accurate records ensure you report the correct figures on IRS Form 8949 and Schedule D when filing your tax return.