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What does it mean to "liquidate and move to cash"?

I have read several articles and reports about investors suggesting that people should "liquidate stocks and move to cash", but I have yet to find a solid description or explanation of what it means. What exactly does it mean to "liquidate and move to cash"?

Financial Planning, Investing, Stocks
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August 2017

It is a great question and a mistake that many investors make.  "Liquidate and Move to Cash" typically means to sell ALL of your investments when you are scared, feel the market will decline and "cash out" to money market accounts.  This should be contrasted with selling investments to rebalance, re-invest or to pay off debt, etc (that are NORMAL reasons to sell stocks).

I hear this talked about a LOT on my radio show (The STA Money Hour on 950AM KPRC in Houston).  Right now people are calling in and saying "I hate Trump...he's gong to destroy America" or "The market seems high now and I don't want to lose money again"...when that happens, typically the next sentence is usually "should I sell it all (or iliquidate) and move to cash?".

That is typically a bad idea based on market fear...fear and greed are the biggest motivators to buy and sell in the market.  Instead, you should have a disciplined plan as to when you want to buy or sell...AND have that plan in place when you are in a good place (not motivated by fear and greed.

Aligned with this, let me point you to a few articles I wrote or were quoted in that may be interesting to you based on why or why not to "liquidate and go to cash":


July 2017
July 2017
July 2017
July 2017