I Just Received a Financial Windfall — Help!

What to Do With a Financial Windfall (So You Don’t Blow It)

How to Make the Most of an Inheritance, Lottery Win, or Unexpected Jackpot

Imagine this: one day you open the mail (or your banking app) and see more money
than you’ve ever had in your life.

Maybe it’s a six-figure inheritance from a distant relative.
Maybe you hit the lottery jackpot.
Maybe your uncle left you an investment property in his will.

Whatever the source, a financial windfall—whether $10,000 or $1,000,000—is an
incredible opportunity. But without a plan, it can just as quickly become a lost one.

Here’s how to think smart, act steady, and use that money to build long-term financial
freedom.

Step 1: Pause, Don’t Pounce

First rule of windfalls? Do nothing… at first.

Give yourself time to breathe, especially if the windfall is tied to an emotional event like
the death of a loved one. Don’t rush into decisions or make any major purchases
immediately.

Put the money into a high-interest savings account for a month or two. You’re not losing
money. You’re buying clarity.

Step 2: Understand Where It Came From (and What It Means)

Here are some common types of windfalls, and what to be aware of:

• Inheritance or Estate SettlementCheck if taxes have already been paid. Canada doesn’t tax inheritance itself, but
  capital gains and RRSP withdrawals within an estate can trigger taxes.
• Lottery WinningsUnlike many countries, lottery wins in Canada are tax-free. But any growth from
  investing that money? That’ll be taxed.
• Real Estate TransferInheriting property can come with ongoing expenses (insurance, taxes, maintenance).
  Decide whether to sell, rent, or move in. And know that capital gains may apply if you
  sell it later.

Step 3: Prioritize Smart Financial Moves

Before you plan the dream vacation, do this:

1. Eliminate high-interest debtPay off any credit cards or payday loans. That 20%+ interest rate? Gone.
2. Build or top up your emergency fundAim for 3–6 months of essential expenses. Peace of mind = priceless.
3. Maximize your registered accountsInvest within TFSAs, RRSPs, RESPs (if you have kids) before moving on to taxable
   (non-registered) or margin accounts.

   Registered accounts offer tax-free growth (TFSA), tax-deferred savings (RRSP), or
   education matching (RESP). Use ’em.

Step 4: Invest It for Long-Term Growth

Now the fun part—growing your windfall.

The best strategy for most Canadians?
A low-cost, broad-market ETF portfolio that offers automatic diversification and long-
term returns.

You’ve got two main options for investing your lump sum:

Lump Sum Investing

Investing the whole amount right away gives your money more time in the market.
Historically, this has outperformed other strategies more often than not—but it’s not for
the faint of heart.

Dollar Cost Averaging (DCA)

With DCA, you invest smaller amounts over time (e.g., $5,000/month for 12 months).
This smooths out market volatility and reduces emotional decision-making.

What we recommend?

If you’re nervous about timing or volatility, use a hybrid approach: Invest half now, half
using DCA over the next 6–12 months.

Step 5: Think About Wealth Structure & Taxes

Once your windfall gets into the six-figure or seven-figure territory, it’s worth thinking
strategically:

• Consider a Holding CompanyIf you plan to invest in real estate, dividend-paying stocks, or run a business, a holding
  company can offer tax deferral and asset protection benefits.
• Open a TrustTrusts allow you to control how and when family members access money. Great for
  protecting minors or vulnerable beneficiaries.
• List Your BeneficiariesMake sure your investment accounts (TFSA, RRSP) have up-to-date beneficiaries—
  spouse, kids, etc. This avoids probate fees and helps with tax-efficient wealth transfer.

Talk to a financial planner or estate lawyer for custom advice here.