Personal Finance

I come from the middle class and just made $3 million from my company that got sold - why am I so nervous?

David Beren

Published: January 15, 2025 12:47 pm

One of the biggest and most challenging financial hurdles is knowing what to do with a sudden windfall. For people who earn their way to riches and wealth through hard work, it is easier to figure out how to manage money along the way, which isn’t necessarily true for those who fall into a pile of cash. 

In the case of one Redditor posting in r/fatFIRE, there is a question about what to do with a $3 million dollar windfall received after his company was sold. The Redditor’s question primarily focuses on what to do with this money to calm their nerves, emphasizing trying not just to build the money but also earn enough to pass it down to his children. 

This is an excellent read about how to smartly handle a sudden windfall without wasting all of the money before it can earn more. 

The Windfall 

This Redditor’s big concern and the catalyst for his post is that the company he works for was sold, and as a result, he received approximately $3 million dollars after tax. Coming from a “working-class background,” this is an incredible amount of money for him and his family. 

Speaking of family, he has paid off the family’s home mortgage and gifted some money to friends, but the remaining funds, combined with his savings, still hovers close to $3 million. As a result, he wants to set up the best path forward financially, not just to grow the money but also to create a scenario in which he can leave his kids some cash. There doesn’t seem to be much interest in leaving his children a “massive wedge of money” but potentially growing the money to increase charitable donations. 

He does understand that setting up trust funds would help workaround the inheritance tax issue, and he is okay with the kids getting some money, just not everything. However, the more significant concern is his current setup, which is split between an NS&I Direct Saver account and a Flagstone account. There are definite nerves around the simplicity of this setup, so he’s unclear about his path forward. 

The Next Steps

First and foremost, the Reddit comment section is adamant that he must leave whatever financial advisor he uses at SJP Financial Group, as Redditors in this subreddit are not fans of this economic group. While this Redditor should undoubtedly speak to a qualified financial advisor (which isn’t me), the comment section is entirely in sync about making a change. 

When making actual changes, the Redditor might be overthinking some aspects. The biggest flag is that he doesn’t have to worry about the tax implications of a trust fund, as he would need to have over $13 million before tax considerations come into play. So, this quickly takes any concern about this subject off the table. 

The biggest idea here, as far as what Reddit recommends, is to put the bulk of the money in an index fund and do little else. Yes, our Redditor should keep a little cash on hand in case of emergencies, but at his age (which is admittedly a guess) at least 70% of his money should be invested in an index fund and allowed to earn over time. 

As we don’t know the Redditor’s exact age, it’s a bit of guesswork, but with three children in high school, there does appear to be plenty of time to earn. Even if he only gets a 6-7% return over the next 20 years, he’s looking at nearly 9 million two decades from now. Even a 4% return is more than double his money over the next 20 years, so I agree with this Reddit recommendation: just put the money into an index fund and forget about it for now. 

Let Money Work For You

One of the most prominent themes you read about in r/fatFIRE is that too many people are too interested in making investment decisions that are more difficult than they need to be. This creates the same level of nervousness the Redditor is experiencing in this case. However, the answer can often be as simple as adding it to an index fund and sit back and watch the returns roll in. 

The bottom line is that the Redditor has paid off his mortgage and seems already to have a good financial head on his shoulders. Knowing this, he should feel comfortable investing the bulk of this windfall and creating an excellent retirement for himself and his children.