If you’re new to investing, you might have asked yourself, “When I sell a stock, where does the money go?” It seems like it should be simple… you hit “sell” and the money shows up in your bank. But the truth is a little more complicated. The money doesn’t just appear in your checking account, and what happens next depends on how your brokerage account works and ultimately what you decide to do with it.
This article explains where that money goes, how long it takes to access it, and how your investment account actually works behind the scenes.
The short answer
When you sell a stock, the money goes into the cash balance of your brokerage account. It doesn’t go to your checking account automatically. From there, you can withdraw it, reinvest it, or let it sit. You usually need to wait two business days for the sale to settle before the money is fully available to move.
What happens after you sell
Once you sell a stock, the transaction creates cash inside your brokerage account. But that cash is not immediately available to transfer out. Instead, it goes through a settlement process. In the U.S., stock trades typically follow a T+2 rule, meaning the trade settles two business days after it is made. Only after this point can you use the money without restrictions.
The money will still show up in your account as “unsettled cash” or “pending,” depending on your brokerage. You can usually see it in your balance right away, but it’s not ready for withdrawal until that T+2 window passes.
What your brokerage account actually holds
Most beginner investors think of their account like a piggy bank for stocks. In reality, it functions more like a mix of a bank and an investment vault. Your account has two major components: investments and cash.
Your investments include anything you’ve bought, like stocks or ETFs. Your cash balance includes deposits you’ve made and money from sold investments. When you sell a stock, you’re converting part of your portfolio back into cash, but that cash stays inside the brokerage account until you decide what to do with it.
How to move the money to your bank
After your trade has settled, you can transfer the cash to your checking account. Most brokerages offer a simple withdrawal tool. You select your linked bank account, choose the amount, and confirm the transfer.
It usually takes one to three business days for the money to show up in your bank. This process is manual. Selling a stock doesn’t trigger an automatic withdrawal. You have to take action to move the money yourself.
What if you want to reinvest instead?
You don’t have to withdraw anything. Many investors choose to leave the money in their account and use it to buy more stocks or other assets. Once the funds are settled, you can reinvest however you like.
Some brokerages even let you enable dividend reinvestment or recurring buys. Keeping the cash inside your brokerage also avoids any delay from transferring it back in later.
Why the money doesn’t go to your bank automatically
Brokerages don’t assume what you want to do with the proceeds. You might sell a stock to shift into another investment, rebalance your portfolio, or just sit on the cash. Automatically sending that money to your bank could cause problems, especially in accounts with tax rules like IRAs. Keeping the funds inside your brokerage gives you more control and avoids unexpected issues.
Can you spend money directly from a brokerage account?
Not directly. A standard brokerage account doesn’t function like a checking account. You can’t swipe a card or pay bills from it…. but it’s real money that can be easily moved. If you want to spend the money, you’ll need to transfer it out to your bank like I mentioned above. Some brokerages offer cash management features that come with a debit card, but those are separate setups you must enable.
Do you have to pay taxes when you sell?
It depends on the type of account you’re using. If you’re trading inside a retirement account like a Roth IRA or traditional IRA, you can buy and sell investments as much as you want without triggering taxes right away. Gains inside these accounts are either tax-free (Roth) or tax-deferred (traditional), as long as you follow the withdrawal rules.
In a regular taxable brokerage account, selling a stock for more than you paid can trigger capital gains taxes. If you held it for less than a year, you may owe short-term capital gains, which are taxed like ordinary income. If you held it longer than a year, you’ll usually pay a lower long-term capital gains rate. Selling at a loss may allow you to offset gains elsewhere and lower your overall tax bill.
At the end of the year, your brokerage will send you a 1099 form that lists what you sold and what you earned. You’ll use that form when filing your taxes.
The Bottom Line
When you sell a stock, the money stays inside your brokerage account. It moves into your cash balance, not your bank. You can leave it there, reinvest it, or move it to your checking account once the trade settles. Understanding this process helps you avoid confusion and take better control of your investments. Once you know how it works, it’s simple to manage going forward.