assetbest 
A reader asked what to do after selling tech stocks and coming into several hundred thousand dollars. That’s a great position to be in, but deciding how to invest a large cash windfall can feel risky—especially when stock prices look high. Stocks often fall back toward their underlying value, but they can stay overvalued for years. That uncertainty makes many people uneasy about investing a big sum all at once.
Before you invest, ask yourself when you’ll need the money. Any funds you expect to use within the next one to five years should not be placed in the stock market. Stocks can drop sharply at any time, and you don’t want to risk needing cash after a major decline. If you’re planning a large home remodel, buying a car with cash, or need a down payment on a house, keep that money in safe, liquid vehicles.
Short-term options that protect principal and keep funds accessible:
– High-yield cash accounts offered by many brokers and fintech platforms—no management fees and higher yields than typical bank savings.
– Money market mutual funds, which hold short-term debt, remain liquid, and generally aim to keep a stable share value while paying a monthly dividend.
– Certificates of deposit (CDs), available in terms from months to a few years, often pay higher interest than savings accounts; expect a small early-withdrawal penalty.
If you won’t need the cash for five years or more—especially for long-term goals like retirement or a child’s education—the stock market is usually a better choice. Historically, U.S. stocks have averaged roughly 9% per year over many decades. Short-term returns are unpredictable, but over the long run markets have tended to rise.
As a long-term investor, be prepared for periodic downturns and avoid selling in panic after a market drop. Trying to time the market means you have to be right twice—when you sell and when you get back in—which is very hard to do. Research generally shows that lump-sum investing outperforms dollar-cost averaging (DCA) more often over long periods. Still, when markets appear pricey or you’re worried about a near-term decline, DCA—investing fixed amounts at regular intervals—can ease anxiety and lower your average purchase price during downturns. The trade-off is potential opportunity cost if the market keeps rising while you’re waiting to invest the rest.
After a windfall, take a breath. You don’t have to decide immediately. Learn the basics of investing if you feel unsure, and consider reading a short, reliable primer on the subject. Put any money you’ll need soon into short-term cash instruments, and invest long-term funds in a diversified stock portfolio. With a thoughtful plan and patience, a cash windfall can grow and compound over time. Congratulations on the windfall—invest wisely and let your money work for your future.
