Cost of living crisis: how easy is it to sell shares?

As the cost of living crisis bites, some investors might be thinking about selling shares in order to stay afloat. So, how easy is it to offload stocks?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image of person checking their shares portfolio on mobile phone and computer

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Britons are facing the worst squeeze on their spending since the 1970s. Bills are rising left, right and centre while inflation continues to soar.

So, given the rising cost of living, is it a wise idea to offload shares in order to stay afloat? And if so, how easy is it to sell investments? Let’s take a look.


What’s the situation with the rising cost of living?

Prices of everyday goods and services are 6.2% higher than they were a year ago, according to the latest figures from the Office for National Statistics.

More worryingly, perhaps, is that April is the month where the majority of the population will see the cost of energy, water, broadband and even mobile phone contracts go up. Energy price hikes have understandably been given the most attention over recent weeks. That’s because many households are now paying 54% more for their gas and electricity.

Importantly, these utility price rises sit alongside the hike in National Insurance (NI), which will be seen in the pay packets of millions of workers at the end of the month.

The 1.25% increase has been dubbed the ‘worst timed tax rise in history’ and has been heavily criticised across the political spectrum. While the chancellor recently announced new NI thresholds, cushioning the blow for some, the changes don’t come into play until July.

Sadly, there isn’t much light at the end of the tunnel for struggling households. That’s because the Bank of England suggests the UK inflation rate will hit 8% by June. Meanwhile, it’s been suggested that the energy price cap will further increase in October, potentially adding hundreds of pounds more to annual bills.

Should you sell shares if you’re struggling?

Amid the cost of living crisis, it’s likely many will be struggling to stay afloat. If you have a savings pot, breaking open the piggy bank may be a necessary action this year. But what if you have investments? Should you sell shares too?

Obviously, the answer to this question will depend on your individual circumstances. Ideally, if you have investments, you’ve also got access to an emergency cash fund to protect you from unforeseen expenses. However, if you don’t have such a fund, or you’ve exhausted it, then selling shares to support yourself through the cost of living crisis may be the right option. 

However, you should never sell shares just because the stock market has recently gone down (or up). That’s because such actions relate to timing the market, and this is rarely a winning strategy. Instead, it’s best to focus on understanding how a share sale will impact your ability to afford bills over the coming months. 

If you are considering whether to sell shares, it’s also wise to consider your finances going forward. For example, if you’ve found yourself thinking about selling shares already, it’s possible your emergency cash fund was too small.


How easy is it to sell shares?

A recent survey by Aviva that looked at attitudes towards stocks and shares ISAs revealed that 11% of respondents had concerns about withdrawing funds. 

This suggests that a significant minority of people believe withdrawing funds from an investment account is a faff. 

In reality, selling shares is just as easy as buying them. If you want to offload stocks, you simply need to sign in to your share dealing account and select how many shares you wish to sell. Once you’ve done this, your provider will quote you a price. You can either accept (and the sale will go ahead) or decline.

Once you’ve sold your shares, which may not happen instantly, the proceeds from your sale will be moved to a cash account within the investing platform. You should then be able to transfer this cash sum to your bank account.

Can you re-buy shares after selling them?

If you sell shares now and your financial situation improves in future then yes, you can re-buy shares. Obviously, you’ll have to re-buy shares at their new price. So, you could be paying a higher or lower price than you sold them for.

It’s also worth knowing that if you sell shares in a stocks and shares ISA and want to re-buy shares in a different tax year, you’ll use a future year’s ISA allowance.

Even if you re-buy shares within the same tax year, you still might not be able to replace what you took out, unless your stocks and shares ISA is ‘flexible’. Many stocks and shares ISAs aren’t flexible, so this is something worth checking.

To learn more about buying and selling shares, take a look at The Motley Fool’s investing basics guide.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

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