Robinhood has revolutionized the world of investing by offering a simple, commission-free platform for buying and selling stocks. It has made it easier than ever for individuals to engage in the stock market and manage their investments directly from their smartphones. However, while buying stocks is simple, many new users may wonder how to sell stock and cash out their profits. This article will walk you through the entire process of selling stocks on Robinhood, withdrawing your funds, and understanding the key elements involved.
What is Robinhood?
Before diving into the steps of selling stock, it’s important to first understand what Robinhood is and how it works. Robinhood is a popular online brokerage platform that allows individuals to buy and sell various types of financial assets, including stocks, options, ETFs, and cryptocurrencies. It was created with the aim of making investing more accessible by eliminating traditional commission fees, which can often be costly, especially for casual investors.
Robinhood’s easy-to-use app is designed to simplify the investment process, making it attractive to both new and experienced investors. It provides real-time data, user-friendly charts, and straightforward tools for managing your portfolio. Selling stock on Robinhood, just like buying it, can be done quickly through the app.
Step 1: Open the Robinhood App or Website
The first step in selling stock on Robinhood is to open the app or visit their website. To access your account, enter your username and password. If you don’t have an account yet, you will need to sign up and provide necessary information such as identification, bank details, and any other personal information required to verify your account.
Once logged in, you will be taken to your account’s home screen, which will display your portfolio’s current value and all of your investments.
Step 2: Select the Stock You Want to Sell
Now that you are in your account, you need to choose the specific stock you want to sell. In your portfolio, you will see a list of the stocks you currently own. Select the stock you wish to sell by tapping on it. This will open the individual stock’s page, where you can view detailed information about the stock, such as its current market price, your total investment, and performance over time.
Step 3: Click on “Sell”
After selecting the stock you want to sell, you will see several options. Look for the “Sell” button, which is typically located at the bottom of the screen. When you tap “Sell,” Robinhood will prompt you to enter the amount of shares you want to sell. You can choose to sell all or just a portion of your shares, depending on how much you wish to liquidate.
Deciding How Many Shares to Sell
It is important to consider how many shares you wish to sell. If you have a significant amount of stock in one company and are looking to cash out entirely, you might decide to sell all your shares. However, if you only want to take profits or reduce your exposure to a particular stock, you can sell only a portion of your holdings.
Once you’ve decided how many shares to sell, proceed to the next step.
Step 4: Choose Your Order Type
Robinhood provides two primary types of orders: Market Orders and Limit Orders.
Market Orders
A market order is the most straightforward way to sell a stock. When you place a market order, you agree to sell your shares at the current market price, regardless of what that price is at the time. This order type ensures that your trade is executed immediately, but the price may fluctuate during the process. A market order is typically used when you want to quickly sell your stock, especially if you’re in a hurry or if the stock is liquid enough for the price to be consistent.
Limit Orders
A limit order, on the other hand, allows you to set the minimum price at which you are willing to sell your stock. If the stock reaches or exceeds this price, your order will be executed. If it does not, your order will remain open until either the price reaches your desired level or you cancel the order. A limit order provides more control over the selling price but carries the risk that the order might not be fulfilled if the stock price doesn’t meet your set limit.
Choosing the Right Order Type
If you want to ensure that your stock is sold immediately, a market order is your best choice. However, if you’re aiming for a specific price or are willing to wait for the right conditions, a limit order could be more appropriate.
Step 5: Review and Confirm the Sale
After selecting your order type, you will be shown a summary of the transaction. This includes the stock symbol, the number of shares you’re selling, and the total estimated value of the sale. Additionally, Robinhood will provide an estimated price for your shares, which may vary depending on market fluctuations at the time.
Before confirming, carefully review the details of the sale to make sure everything is accurate. Once you’ve confirmed that the information is correct, tap the “Review” button to proceed.
Step 6: Execute the Sale
Once you’ve reviewed the details of your sale, tap “Submit” or “Sell” to execute the order. Robinhood will process the transaction, and you will receive a notification once the sale is complete. If you’ve chosen a market order, the transaction will likely be executed almost immediately. If you’ve placed a limit order, it may take a little longer, depending on the price conditions you set.
Once the transaction is complete, the funds from your sale will be deposited into your Robinhood account.
Step 7: Transfer Funds to Your Bank Account
Now that you’ve successfully sold your stock, the next step is to withdraw the funds and cash out. Robinhood allows you to transfer your funds back to your linked bank account, though it’s important to note that it might take a few days for the transfer to be completed.
How to Withdraw Funds
To withdraw your funds, go to the “Account” tab within the app and select “Transfers.” From there, you can choose the option to transfer your funds to your linked bank account. Robinhood usually offers two methods for transferring funds:
Instant Transfers: This allows you to quickly transfer funds to your linked bank account. However, Robinhood may charge a fee for this service.
Standard Transfers: Standard transfers take longer to process but are generally free of charge.
You will need to follow the prompts to complete the transfer process. Be sure to enter the correct bank account details to ensure the funds are sent to the right account.
Important Considerations When Selling Stock
While selling stock on Robinhood is relatively simple, there are a few important things to keep in mind:
Taxes: Selling stocks can trigger capital gains taxes, especially if you’ve made a profit on your investment. The tax rate will depend on how long you’ve held the stock. If you’ve held the stock for less than a year, the sale will likely be subject to short-term capital gains taxes, which are taxed at a higher rate than long-term capital gains.
Transaction Fees: While Robinhood doesn’t charge commissions on trades, there may be other fees associated with withdrawing funds or using certain payment methods. Always be aware of any potential fees that could affect your returns.
Market Conditions: Stock prices can fluctuate significantly during the day, so the price you sell your stock at may differ from the price you see when you place your order. It is crucial to understand market trends and the performance of the stock you are selling.
Conclusion
Selling stock on Robinhood and cashing out your funds is a relatively simple process, but it’s important to approach it with a clear understanding of how the platform works and the potential implications of selling your investments. By following the steps outlined in this article, you can efficiently sell your stocks, transfer your funds to your bank account, and manage your portfolio effectively. Always remember to review your investment strategy and keep track of your gains and losses for tax purposes. With this knowledge, you can confidently navigate the Robinhood platform and make informed decisions about your financial future.
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