How to Invest When You Receive a Large Sum of Money
Whether it’s a divorce settlement, an inheritance, or a business sale, receiving a large sum of money can feel both exciting and overwhelming. You’ve likely worked hard, waited long, or endured something emotional to get here. And while new wealth can absolutely change your financial future, it can also bring complexity (and pressure!) to make “the right” decisions fast.
The truth? You don’t have to rush. In fact, taking your time is one of the smartest financial decisions you can make.
Here’s what to do first when you anticipate a significant amount of money could be coming your way.
1. Pause Before You Act
A large financial gain often follows a major life event… potentially after the loss of a parent or spouse, the sale of a business you’ve poured years into, or the end of a marriage. There’s usually emotion attached to it.
Rather than making quick decisions, park the funds temporarily in a high-yield savings account or short-term Treasury fund. That brief pause gives you time to:
Let emotions settle.
Assemble your professional team (advisor, CPA, attorney).
Clarify what you truly want this money to do for you.
This could look like:
Opening a separate high-yield savings account to hold the funds while you take a few months to think.
Scheduling meetings with a tax professional and financial advisor before touching any investments.
Creating a simple list of your priorities or goals, such as “fund retirement,” “buy a second home,” or “help my children.”
Just because the money arrived doesn’t mean it’s ready to be invested. Take a breath, build a plan, and make every dollar intentional.
2. Get Clear on the Purpose
Before investing a cent, determine what this money’s job is. Defining the purpose helps you make decisions that actually serve your life.
For example:
You might need it to replace income after a divorce, which could mean focusing on dependable, lower-volatility investments.
You could want to create financial independence and a retirement nest egg after selling a business, leading to a more growth-oriented strategy.
Or maybe you hope to set aside part of it for your children’s education or for charitable giving.
This could look like:
Writing down three goals for your new wealth: security, growth, generosity.
Discussing with your advisor how much you’ll need to keep liquid versus what can be invested.
Allocating specific percentages toward each goal—say 20% to debt payoff, 40% to investment growth, and 10% to giving.
Some people say, “I just want to invest this wisely.” But the better question is: “What do I want this money to do for me five, ten, or twenty years from now?” That’s where good planning starts.
3. Build Buckets for Different Time Horizons
Not all of your money belongs in the same place. Dividing it into “buckets” can make investing feel organized and less emotional.
Here’s what that could look like:
Short-term (1–3 years): Keep funds for near-term goals, like buying a home, paying taxes, or taking a bucket-list trip, easily accessible.
Mid-term (3–10 years): Invest moderately for goals like a child’s wedding, a second home, or business venture.
Long-term (10+ years): Put the rest toward long-term growth and retirement, where it can compound over time.
You might create three separate accounts labeled “Now,” “Soon,” and “Later.” This structure can help you stay calm through market swings—because you’ll know which money is meant to move and which is meant to wait.
4. Understand the Tax Implications
A large influx of money can bring unexpected tax consequences you’ve never had to consider before. Before you invest or transfer anything, talk with your advisor and CPA.
Depending on your situation, this could look like:
Taking advantage of a step-up in cost basis if you inherited investments or real estate. This could potentially reduce taxes when you sell.
Spreading out payments from a business sale over multiple years to stay in a lower tax bracket.
Using trusts, charitable giving strategies, or family gifting to reduce future estate or income tax exposure.
Sometimes the smartest first step isn’t where to invest, it’s how to preserve what you’ve received from unnecessary taxes.
Your advisor and tax professional can model what each option looks like before you move any money.
5. Invest Gradually and Thoughtfully
Even with a solid plan, you don’t need to invest everything at once. Markets move daily, and easing in helps manage both risk and emotion.
This could look like:
Investing one-third of your funds now, another third in three months, and the remainder later in the year (e.g., dollar-cost averaging).
Starting with a balanced portfolio: some stocks, some bonds, and perhaps alternatives. Then adjust as your confidence grows.
Setting up recurring check-ins with your advisor to review progress rather than reacting to headlines.
Successful investing feels usually feels calm, not thrilling. The goal isn’t excitement, it’s endurance.
6. Plan for the Future
Once your plan is in place, make sure your new assets are structured for the long-term, including your privacy and legacy.
This might include:
Updating your will, trust, and beneficiary designations to reflect your new accounts.
Reviewing your insurance coverage to make sure your liability and life insurance align with your current wealth.
Considering whether to establish a charitable fund or family trust to reflect your values and ensure smooth transfer to future generations.
This could look like:
Meeting with an estate attorney to review documents last updated years ago.
Setting up automatic transfers from your new account into retirement or investment accounts.
Creating a donor-advised fund in honor of a loved one if giving is part of your plan.
Even small steps, such as automating savings or updating beneficiaries, can make new wealth feel purposeful, not overwhelming.
Final Thought
A financial windfall can be life-changing, but the best outcomes happen when you slow down, stay organized, and make decisions aligned with your goals and values.
You don’t have to have all the answers overnight. You just need a clear process and a trusted team to help you turn new wealth into lasting confidence.
If you’re expecting or have recently received a large sum of money — from an inheritance, settlement, or business sale — we can help you make strategic, lasting decisions about what comes next. Schedule a call with me and let’s start the conversation: https://calendly.com/winstone-wealth-partners/financial-consultation-with-lauren-smith
Please Note: Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.
While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Lauren Smith and not necessarily those of Raymond James.