The stock market is not for everyone. Many people have lost fortunes on it, whilst others have made fortunes it. A stock can sometimes decline by as much as 50% in a single day. Although this is incredibly rare, the point about stock market volatility stands.
If you’ve tried investing on the stock market, tried different strategies and have decided you definitely don’t wish to continue, here’s what you should do.
1. Close/ sell your stocks
You’ll have to decide how quickly you want to exit the stock market. If you’re in a hurry to quit the stock markets, you may have to sell your stocks at whatever price the market values it at. If you’re not in a hurry for the money, it might be a good idea to assess whether waiting a little longer may result in fetching a better price for your stocks.
Perhaps you find checking stock prices daily a source of frustration. If so, you are better off setting a ‘limit order’, which means your trading platform automatically will sell your earmarked stocks at the price you desire (assuming the stock price actually reaches that level). If you’re unsure how to do this, check out the article that discusses this in more detail.
2. Withdraw your money
Once you sell your stocks, the money will be returned to your trading account – not your bank account. You have to then manually transfer it to your bank.
You should note that the trading platform will only return the money to its original source. So, if the funds originated from your HSBC account, it will have to go back into that account. You will not be able to get it transferred to your spouses' account (or any on else’s for that mater) .
The other thing to note is that withdrawal time may take 5-10 days. This is because it may take around three days for the money to settle into your trading account once you have sold your stocks. It may take another three days or so to have it transferred to your bank account. Obviously, if this involves a cross-border money transfer, it will take even longer.
Depending on the platform you use, there’ll be different methods to withdraw the money. X-O, for example, require clients to email customer services with a withdrawal request. Meanwhile, eToro, allow clients to withdraw via the website.
3. Close your account
If you pull out all your money from your trading account, it will not automatically result in your account being closed. You have to close it manually. Be prepared for some last ditch pitching by the trading platform to keep you on board. If you’ve made your mind up, you just need to tell them you’re not interested.
If you’ve borrowed money from your broker (which Muslims shouldn’t do because it almost always involves riba), it’ll probably appear on your credit file and will remain ‘open’. This could be a problem for you in the future if, say, you want to take out a Home Purchase Plan. In fact, even if you close your trading account, it may still appear on your credit report, but it will also say ‘closed’ and therefore should be overlooked by the decision-maker.
4. Ask for your details to be wiped out from their records
Due to GDPR rules, organisations have added responsibility when they handle client data. This is relatively new, but it is good news for consumers. If you do not wish to keep a live trading account open, you probably don’t want your trading broker to keep your details. You should ask them to delete all your records. There are two main ways to do this: A) Contact customer service and ask them to remove details.
B) Contact the Data Protection Officer (DPO) directly and ask for your details to be removed. The DPO can usually be contacted fairly easily. Simply, go to the terms and conditions (usually there’ll be a link at the bottom of the website and find the section on data protection (which may be under the privacy policy).
Once you’ve done steps 1-3, that will be the end of your stock market career.
I went through this process in 2010, then after a 10 year gap, I re-joined the world of stocks. You might change your mind in the future. I certainly did.
If you’ve reached this stage, the good thing is that at least you’ve tried it and you know what’s involved- you’re making an informed decision. There won’t be a point in your life when you say “if only I invested in the stock markets…” If you have come out with a loss, put that down as the cost of learning. You’re wiser for it.
I usually finish my articles with an invite to join my free 30 Day Trading Programme to learn more. However, that doesn’t seem appropriate here. So I will say something else. Whatever you do, please do not leave your money in the bank to erode over time. This is one of the worst things you can do. Perhaps the stock market hasn’t worked out as an investment, but there are other investment opportunities out there. At the very least, you should consider putting your money into an Islamic bank ISA account. Yes, you’ll get an insulting 0.6% return, but that’s 0.6% more than 0. It’ll offset the inflation a bit.
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