Starting Sept. 5, trade settlement will finally improve, slightly. Now when you buy or sell a stock or bond instead of waiting three days for the trade to settle, you’ll only have to wait two. It’s better but you still have to keep settlement times in mind when withdrawing funds.
Most people don’t notice this delayed settlement when they invest money because the security will show up instantly in their account. However, when they sell and they are told they will have to wait three days before the money can be withdrawn, you would think they heard they had to give up their first born. This waiting time is because the system is so large and complex, BloombergMarkets writes about it HERE.
While this is a 33% improvement, it seems woefully slow given the times we live in of instant money transfers and instant blockchain settlements. I imagine it won’t be too long before we move to one day, then same day settlements.
Until then it is important to keep these settlement times in mind when withdrawing funds for spending. Don’t wait until the last minute when you need to pay a bill, close on a house or send in a tuition payment. I would suggest requesting funds two weeks in advance to allow for a cushion in case any issues arise.
If you haven’t recently reviewed your financial plan you should contact your CERTIFIED FINANCIAL PLANNER™ Practitioner.