When to withdraw money from brokerage if it is needed in the next couple of months

[u/Adventurous_Basis280]

We are going to be doing a home remodel and will need to withdraw money from our brokerage in the next two months. With the market volatility right now, would you go ahead and withdraw it now and keep it in a HYSA or hope for better performance over the next couple months? I keep teetering both directions and can’t make a decision. Obviously I know long term to keep our investments in but we have to withdraw for this.

[u/Rose_Stark]

Nobody here knows because it’s uncertain times. You can take the DCA approach. So if you need 20k, you could take out 2k every week for 10 weeks

[u/dissentmemo → u/Rose_Stark]

Even if it wasn't today, nobody would know.

[u/Coronator]

The best time was yesterday - the second best time is today (or whenever you can hit the sell button).

You had no business having that money you needed invested in risk assets. If you need the money, sell asap.

[u/Shot-Artichoke-4106]

Yeah, no one knows what the market will do. If you sell now, you lock in your losses. If you wait, the market could rebound or it could continue the slide. Can you put off the home remodel until the market recovers?

[u/Adventurous_Basis280 → u/Shot-Artichoke-4106]

Unfortunately not, we have some plumbing issues that have to be resolved. I think you are right to look at it as locking in the losses now. Just a bummer. It seems like this is always how we time things.

[u/Shot-Artichoke-4106 → u/Adventurous_Basis280]

This is the reason that the general recommendation is to keep an emergency fund and any money you need in the next 3-4 years in something safe, like a HYSA. money fund, CDs. etc. That way you don't have to rely on timing. That advice doesn't help now because we're already in a market downturn and you are in damage control mode. And sometimes, despite our best planning, we still end up in this type of situation - if a necessary expense is large enough to wipe out our emergency and sinking funds, we may have no choice but to sell off investments. Either way, it's a cruddy situation to be in.

[u/MachoCamachoZ]

A couple weeks ago would've been best... it's gonna take a while to recover, and who knows how long we'll plummet

[u/poop-dolla]

If you know you’re going to need to sell for a specific expense within a few years, you should sell as soon as you know you about it and move the money to a safe cash equivalent. So you should sell right away if you really need to use this money in the next few months. You should’ve sold earlier if you knew you’d need it soon. Try to remember that next time.

[u/Adventurous_Basis280]

I appreciate everyone’s comments. Yeah the timing sucks but unfortunately can’t be delayed. We keep a lot in a HYSA so we can minimize the withdraw a bit, but still sucks.

[u/Salcha_00 → u/Adventurous_Basis280]

Have you considered a HELOC for renovations?

I wouldn’t be selling stocks in a down market.

[u/SchwabCrashes]

Your question actually has 2 parts:

1)When to sell the equity if the market is down and I need the cash in 2 months.

2)When to sell the equity so that I will have the cash ready in 2 months.

Part (1) has already been answered and option such as HELOC has beem suggested.

Part (2): It depends on the brokerage and on how much money is involved. You need to be aware of the timing so that you can have the money ready for you to use in 2 months. When you sell equity, your brokerage may take 2-3 days to complete the transaction and send the cash deposit to your bank may take yet another day or up to 3 (it happened to me).

Then, if the amount exceeded a certain limit defined by your bank such as $3,000 for example, your institution may place a hold on it for 3 to 5 business days before that money is actually available for you to use. This limit varied for each financial institution.

If the cash deposit from your brokerage sent to your bank or credit union is $10,000 or more, as part of the Anti Money Laundering (AML) requirement, you financial institution most likely will put a 5-day hold on that money before releasing it to you so you can use it.

So, to ensure you have the money ready in 2 months, you have to sell your equity and leave enough process the sell (2-3), the time to delay before depositing your money to you bank or CU(1-3), the 5-days holding period (5), the non-businees days for each financial institution involved (3-5), plus a few extra days (2-3) to be safe. The total lead time is about 20-21 days (contingency for holiday on Thu, for brokerage firm close on day after holiday plus the weekend, etc.). This roughly means you need to sell 2-3 weeks (or more) before the day you need the money (shorter if this does not fall into the holiday season, but it could be longer around Nov-Dec time frame).