Disposition: Overview, How It Works, Example

By Kristi Waterworth – Updated Jun 25, 2025 at 7:47 PM | Fact-checked by Frank Bass

Key Points

Disposing stocks or bonds involves selling them on their relevant markets and may lead to capital gains taxes.
Significant business asset sales must be reported if exceeding 10% of fiscal year assets, as regulated by the SEC.
The disposition effect describes the trend of selling winning investments too soon and holding losing ones too long.

Just like everything that goes up must come down, eventually, every investment that's bought must be sold. Learn about the different types of disposition, the basics of how it works for different investments, and what this means for you as an investor.

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Person in business suit holding sign that says Time to Sell. — Image source: Getty Images.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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