What to Do After a Windfall? Steps to Financial Security

9/2/2025 - By Michael C. Hall, CFP

So, your ship finally came in! Perhaps you sold a business. Maybe you have an inheritance, or you happen to have won the lottery! No matter the source, you have a windfall and need to make sure you are making the most out of it. The stock market is at or near an all-time high and you may be asking “What if you get in at the wrong time?”

There are several elements that come into play and by incorporating a couple of strategies and understanding your needs and tolerance for risk, you can proceed with confidence.

Understand Your Timeline

If you are planning to use these assets in the near term, 2 years or less, then stay in the shallow end of the pool. Stick to:

  • Cash and cash equivalents
  • Short-term CDs
  • Money Markets
  • Short-term Treasury Bonds

This will allow you to earn interest and will provide liquidity when you need it.

If you have long term goals for this money (like funding your retirement), then it is time to consider making it work harder for you. This includes investing in:

  • Equities
  • Broader Fixed Income investments

However, there may be a timing risk that comes along with this investment. There are 2 ways to reduce this risk.

Strategy 1: Dollar Cost Averaging

At its core, this is buying a fixed dollar amount of the same investments at regular intervals over time. Most investors have been doing this without realizing it. If you have been saving in a 401k through payroll deductions, that is Dollar Cost Averaging. By purchasing investments over time, you reduce the likelihood of investing everything just before a downturn. (It’s worth mentioning that the opposite could be true as well. You could be investing at the beginning of a remarkable period for returns.) Based on your outlook and the state of the market, you may choose to spread out your purchases of investments over a few months or for as long as a few years. You and your advisor can come up with a schedule that will allow you to invest comfortably and confidently.

Strategy 2: Portfolio Diversification

Different types of investments behave differently from one another. In tough times, more conservative investments tend to appreciate in price. In good times, more aggressive investments can provide substantial rewards. By investing in a balanced manner, you can prevent yourself from being too heavily invested in one or the other and getting caught on the wrong side of a market trend.

The real magic happens when you combine these two approaches. Once you and your advisor have identified the type of portfolio that is most appropriate, you can set a schedule to put the portfolio in place. As an example, if you are using a 60% Stock and 40% Fixed Income portfolio. And, you have decided that you would like to spread out your investment purchases over 1 year. This means that every 3 months you would take 25% of the cash and use it to purchase the appropriate investments. Each time you purchase, 60% of the cash would be used to buy Stocks and 40% would be used to buy Fixed Income. And at the end of 12 months, you would be fully invested without ever having been overly exposed to one type of market, bull, or bear.

So, take your time. Speak with your Financial Advisor about your situation. Together you can create a plan that aligns with your needs and preferences and turns your windfall into a foundation for financial security.

If this sounds like you and you would like to hear more about how we can help, then we would love to hear from you. Give us a call or request to speak with an advisor at SaltmarshFA.com.

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