What to Do with a Large Sum of Money? Ideas for Long-Term Growth and Financial Security

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Receiving a large sum of money can happen unexpectedly, like through inheritance, business, or property sale. It’s important to have a plan for how to handle this situation.

What to Do with Large Sum of Money?

1. Release Your Earnings

If you’re paying off high-interest debt with your current income, such as credit cards or other debt with double-digit interest rates, using some of your cash to reduce or eliminate that debt makes a lot of sense.

What could you do with your monthly cash flow if you didn’t have to pay credit card bills? You will reduce your monthly payment burden and associated opportunity costs by paying them down. This will allow you to pursue more lucrative opportunities.

2. Establish a Csh Flow.

Unless you already have more money than you know what to do with, creating cash flow is an excellent way to spend it. By putting your money to work for you, you will have more wealth and more options for how to spend and invest it in the future.

What is the most effective financial strategy for generating cash flow? Private lending and rental real estate are two examples of investments that provide monthly cash flow.

3. Make a Down Payment on a Home.

Encourage clients to buy homes instead of renting, as making a 20% down payment on a mortgage is a wise financial decision. Owning a home or investing in rental properties is beneficial.

4. Put Money aside for Long-Term Growth.

If you don’t need immediate cash and want to leave a legacy, we recommend looking into high cash value life insurance. Your insurance’s cash value component allows you to save at competitive rates while also earning dividends.

Cash value insurance has hidden power through leverage. The insurance company lends you money as collateral for your policy through a life insurance policy loan. Consider compounding if you’re wondering why you’d choose a loan instead of getting cash directly.

Liquidating a savings account means starting over, losing interest. A policy loan lets you use money while it still earns interest and dividends.

What is Considered a Large Sum of Money

Most Americans believe that to be considered “rich,” an annual income of around $100,000 is required. This is according to a data company that polled more than 1,000 Americans about how much money they needed to make each year to qualify as wealthy.

“People are split on whether a person earning $90,000 per year is ‘neither rich nor poor’ (46 percent) or ‘rich’ (44 percent),” according to data farm. “At $100,000, public opinion has shifted much more strongly toward ‘rich,’ with only one-third (34%) believing someone earning this much is ‘neither rich nor poor.”

 How to Protect Large Sums of Money

1. Make the Best Use of Your Money

You could receive a large payout, an inheritance, compensation, or land royalties. Make the most of your money now so that it can benefit you and your family later.

2. Clear Your Debts.

Determine which debts to pay off first if you have a lot of them. Some will cost you more in the long run than others. Speak with a free financial counselor about what you owe and which debts should be paid first. If you are unsure whether you owe a debt, get all of the details before paying it.

3. Open a High-Yield Savings Account.

If you deposit funds into a high-interest savings account and leave them there for six months or a year, they will earn interest. Interest is money added to the money you put in.

4. Distribute Your Sending Over Time.

It can be tempting to spend a large sum of money all at once if you come into a large sum of money. Spread out your spending to give yourself a little extra money every two weeks to spend on things you need. A financial counsellor or a financial capability worker can assist you in determining how to proceed.

5. Invest Your Funds

Investing is when you put money into a managed fund, shares, or property in the hopes that it will grow. Some investments may involve risks and scams, which may result in the loss of your money.

Make sure you understand the risks before investing your money.

6. Be Wary of Con Artists.

Someone who knows you’ve made some money may try to con you. If someone approaches you with an offer to spend your money, make sure they aren’t trying to con you. If an offer appears to be too good to be true, it most likely is.

People may call, email, or visit your local community center to ask you to invest in a business. Don’t give them any details. Instead: 

  • Take a step back.
  •  Put the phone down.
  • Delete and block any emails or messages sent by the individual.
  •  Stop putting up with them.

7. Dealing with Financial Pressure from Family Members

If your family knows you’ve received a large sum of money, they might expect you to give it to them or buy them something. Dealing with financial pressure from family members can be difficult, but you must first look after yourself.

Where to put large sum of money

Whether you received an inheritance, received a bonus at work, or sold your house for a profit, having extra money allows you to grow your savings and possibly meet a goal, such as saving for a down payment on a new car. But deciding where to keep your money isn’t always simple.

With that in mind, consider the following options.

1. High-yield Savings Account

A high-yield savings account is an appealing option for those who want to grow their savings while still having easy access to the money in case of an emergency.

To put the earnings into context, traditional savings account yields are typically very low, as low as 0.01 percent APY. However, the best high-yield savings accounts pay out more than 1% APY.

While maintaining safety and liquidity, you can open a savings account to build an emergency fund or save for a vacation or home repair.

Savings account restrictions may be an issue if you need to access funds from time to time. Depending on the bank’s policies, there may be a monthly limit of six withdrawals or transfers.

Another thing to keep in mind is that while a high-yield savings account may offer a sign-up bonus or an interest rate bonus, you’ll most likely need to keep a sizable minimum balance in the account to earn the higher rate.

2. A Deposit Certificate (CD)

A savings account vs. a certificate of deposit: a CD locks your money for a set period, with a penalty for early withdrawal. CDs can be disadvantageous when rates are low, but they protect savers from falling rates by locking in a fixed rate.

Though longer-term CDs offer higher interest rates, you cannot access the funds without paying a penalty in most cases.

CD laddering increases earnings by opening multiple CDs with different maturity dates. This method offers flexibility and lower risk compared to a single large CD. By having short- and long-term CDs, you can benefit from higher interest rates without excessive risk. It also allows you to take advantage of future higher rates.

3. Investment Account

Consider a money market account if you desire a secure location to store additional funds that provides a greater return than a conventional checking or savings account. Money market accounts resemble savings accounts, but they generally offer higher interest rates and may impose a monthly restriction on the number of checks and debit card transactions.

Money market accounts are secure with federal insurance. The FDIC and NCUSIF insure most banks and credit unions, providing protection for up to $250,000 in deposits.

Consider a money market account as an alternative to a CD if you prefer short-term investment. A minimum deposit is necessary for the best annual percentage yield (APY), and ask about any potential fees like monthly account fees and penalties.

How to Invest Large Sums of Money

There are smart ways to manage a large sum of cash, regardless of its source. These strategies are effective regardless of market conditions. Here’s what to do before and after receiving the money.

1. Select an Advisor

If you lack investing experience, consult a fee-only advisor with a CFP designation before making financial decisions. Stockbrokers and insurance companies may prioritize their own interests when selling investments.

2. Prior to Receiving Your Lump Sum

Depending on how much money you are due to receive, and assuming you have some time before receiving your cash or check, you should start looking for a place to keep it. It is critical not to rush the decision. To invest your money, carefully research savings vehicles or security types.

Your cash windfall may have multiple applications. For example, you could use some to pay off debt, some to give away, some to take a well-deserved vacation, and the rest to invest for retirement. Any money you don’t use within a few weeks can start earning interest.

3. Consider Short-Term Liquid Alternatives

For short-term cash needs, you will most likely invest in a money market fund. Money market funds are liquid, interest-earning savings vehicles that allow you to deposit and withdraw funds at any time (or at least a limited number of times per month) without penalty or fees.

Money market funds can be bought from mutual fund companies, brokerage firms, and banks. Vanguard Federal Money Market Fund (VMMXX) and Fidelity Government Cash Reserves (FDRXX) are reputable institutions with high yields.

4. Determine Your Gals.

Before investing outside of the money market fund, you need a plan for your money. Keeping it in a savings vehicle for too long means missing out on potential returns. To start, figure out what you want to earn and why. This is your “investment objective” as defined by a financial planner.


Making wise financial decisions in your twenties has long-term benefits that can help you achieve financial success in the future. If you follow the six tips listed above, you can improve your credit score, become debt-free, and save money for retirement and other major life events.

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