Cashing Out Stocks

Prepare carefully when cashing out stock.

Stocks are also referred to as equities or shares and are investments that represent partial ownership in a company. Various investment accounts, like mutual funds, annuities and IRAs, can all house stock portfolios. Investors can also buy stocks individually online or through stockbrokers; some companies also offer Direct Stock Purchase Plans. The best trading apps provide guidance to help you get started, as well as advice about which stocks to buy and sell.

Advertisement

Best Stock Market Apps

When shopping around for the best stock market app to use, you will want to compare their fees, pricing, account types and investment options, investment research, education resources and platforms. According to the writers from Business Insider, the best trading apps let you buy and sell stocks and ETFs without having to pay commissions. An ETF, by the way, is a collection of securities that investors can buy or sell. This investment structure helps avoid short-term capital gains taxes that would otherwise result in many individual securities sales.

Advertisement

Video of the Day

A company like Charles Schwab is a good choice for new and experienced investors alike. There are often no account minimum or trade commission fees charged, plus the company offers free automated advisers. They have an easy-to-use mobile app, too.

SoFi Invest is targeted at rookie investors and has more limited investment choices plus a "Stock Bits" program that lets you buy less costly fractional shares. Fidelity also offers fractional shares and is a good choice for long-term investors looking to stay the course for retirement investing. Other top stock trading apps include Ally Invest, E*TRADE and Bank of America's Merrill. There are also companies that charge fees to offer stock advice, such as Motley Fool and Morningstar. It is wise to check your account statements once you sign up to verify there aren't any unexpected fees.

Advertisement

Reinvest or Cash Out Stocks

The Financial Industry Regulatory Authority (FINRA) explains the two main ways investors earn money through stocks. The first is dividends, which come into play when publicly owned companies earn profits and distribute some to shareholders. Stockholders can accept the cash or reinvest it to buy more stocks in the company.

The second is when stocks are sold, but you only make a profit if the stock price is higher than the original price you paid for it.

Advertisement

Why and How to Sell Stocks

The reasons for selling stocks include wanting to make a profit, hoping to cut losses or just needing the money. In most cases, you must contact your brokerage firm or use your app to sell stocks, and you can look for advice before making your decisions. There are several different ways to cash out on stocks by placing sell orders. The most common types are market orders, limit orders, stop orders and buy stop orders. Once you cash out the stocks, the monies may be deposited into your account; this can take several days.

Advertisement

With market orders, you make a request to sell a stock immediately, explains Investor.gov. This is the fastest option but does not guarantee that the last-traded price is the one you get. A limit order is when you ask that the stock be sold at a specific price or higher. For example, your limit order could specify that XYZ stock sells for no less than ​$25​ a share. Stop orders are also called stop-loss orders and sell stocks when the price hits a specified amount, or a stop price. Buy stop orders are entered at stop prices above the stock's current market price and are initiated to protect profits or limit losses.

Consider also:The Tax Consequences of Cashing Out Employee Stock Options

Advertisement

references