Windfall Wisdom: Navigating Sudden Wealth

Wealth Planning

April 8, 2024

1:39 min

Woman on her phone

Here are some tips to consider if you’ve found yourself with sudden wealth:

By Amie Suttenfield
Vice President
Financial Advisor, LPL

It may sound like a dream come true, but depending on the circumstances, it can be emotionally trying and stressful. When a sudden windfall takes place, it’s crucial you take time to think about what is important to you. Here are some tips to consider if you’ve found yourself with sudden wealth:

  • Don’t rush to sudden decisions: This is especially true if emotions are high, such as in the loss of a family member. As you navigate this important decision, consider parking the funds in an FDIC insured money market or savings account.
  • Consider your personal financial situation: Do you have high-interest debt that may make sense to pay down/pay off? Are you in or nearing retirement, and looking for additional income to supplement your retirement savings/pension?
  • Don’t settle: Find a Financial Advisor who is a fiduciary + a great match for YOUR personality, values, and lifestyle. The advisor that was a best fit for your mom/dad may not be the best fit for you. Steer clear of any advisors who seem to rush you into making a decision more quickly than you feel comfortable. And remember, it never hurts to obtain a second opinion when you are on the receiving end of a large amount of wealth.  
  • Make sure you understand the tax implications of all decisions: A good CPA is worth their weight in gold! Trust me, a surprise at tax time is never fun.
  • Remember the strategy of dollar cost averaging (DCA) for any funds that you choose to invest: While we all wish we knew the optimal day to invest a large sum of money into the market, the prudent approach to investing funds that have not been exposed to stock/bond risk, would be to consider a DCA approach. This will allow you to invest at different points in the market + gives you the flexibility to pause/stop additional contributions if your circumstances or goals should change prior to the final investment.

Category: Wealth Planning

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. "Value investments" can perform differently from the market as a whole.  They can remain undervalued by the market for long periods of time.

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