How should you invest in a windfall or proceeds of a business sale? Guide to investing large sums

How should you invest in a windfall or proceeds of a business sale?

The founders and employees at health tech company Eucalyptus are the latest to enjoy significant windfalls after a $1.6bn sale made many of them instant millionaires. It’s one of the biggest staff share payouts in Australian corporate history.

Getting a big payout is a problem many of us would like to have. But it also presents real challenges.

Over the years, I’ve worked with clients who’ve sold businesses, received inheritances, and signed professional sporting contracts. The numbers range from six figures to tens of millions but the emotions are remarkably similar:

• Excitement
• Relief
• Validation

And then a quieter question:

Here’s the advice I give every client after a windfall, and the common traps I see far too often.

Pause before you act

My first piece of advice is always the same. Slow down.

You don’t need to make life-changing investment decisions immediately. Park the funds somewhere safe, like a high-interest savings account. The goal isn’t to maximise returns right away, it’s to create space to think clearly.

A windfall can distort your perception of risk. You might feel invincible, or completely paralysed. Neither is a good mindset for permanent decisions. Give yourself time. Let the emotion settle. Get clear on what this money is for.

Define what the money Is for

Money is only useful if it serves a purpose.

Before we talk about portfolios, I ask clients what this windfall represents to them.

• Is it financial independence? 
• Career flexibility? 
• Security for family? 
• Early retirement? 
• The ability to invest in the next project? 
• Simply a buffer so they never have to worry again?

If this capital needs to fund 40 years of living expenses, your strategy will look very different to someone who still plans to work and sees it as long term growth capital.

Clarity changes everything.

Fix the foundations first

Before investing a dollar, strengthen the foundations.

• Pay off high-interest debt
• Build a cash buffer
• Review insurance
• Update your will
• Consider estate planning and asset protection structures

Windfalls attract attention from family, advisers, opportunists and scammers. You’ll also find no shortage of advisers, brokers and private deal makers suddenly appearing with time limited opportunities. You don’t need to act urgently on any “exclusive” opportunity.

This isn’t about paranoia. It’s about putting guardrails in place before the noise starts. When the foundations are solid, you can make decisions calmly instead of reacting to pressure. Strong foundations help you make calm, rational decisions.

Diversify – especially after a big win

Most windfalls come from concentration. You built or backed one company. You took a big risk. It paid off.

Now the temptation is to repeat the formula, but now is the time to do the opposite.

I’ve seen a lot of discussion about Eucalyptus employees backing the next generation of founders. Reinvesting into startups. Keeping the flywheel turning. For a small portion of capital, that can make sense. But this is where a dangerous assumption creeps in. 

There’s a belief that being part of a successful company makes you better at picking the next success. You’ve seen how a great business scales. You’ve worked alongside talented founders. You understand hiring, culture and product market fit. Surely that gives you an edge? Unfortunately, the data doesn’t support it.

Startup returns are brutally skewed. A tiny number of companies drive the majority of outcomes. Even professional venture capital funds with teams, networks and rigorous processes struggle to consistently outperform. Individual angel investors face even longer odds. Most early stage investments fail. A few break even. A very small number generate extraordinary returns. Experience may improve judgement at the margin. It doesn’t change the underlying probabilities.

If you build your financial foundation on that distribution, you’re recreating the same concentration risk you just escaped.

Can you still invest in startups?

This approach doesn’t mean you should never invest in startups again. Backing founders can be exciting. It supports the ecosystem. It may generate strong returns. But it should sit in a clearly defined risk bucket.

For example: you might allocate:

• 5–15% to high-risk private investments (like startups)
  This is capital you can afford to lose without derailing your long term goals
  
• 85–95% to long term compounding assets such as property or a diversified portfolio designed to grow steadily over decades.
  A globally diversified ETF portfolio spreads risk across thousands of companies. It reduces reliance on one sector, one geography or one management team.

By spreading your risk, you don’t need another home run.

Don’t try to time the market

Another common question is whether to invest the lump sum immediately or stage it over time.

Historically, investing sooner has tended to deliver better outcomes because markets rise over time. But psychology matters. If investing everything at once will cause sleepless nights, stage it over 6 to 12 months.

What matters more than timing is:

• Discipline
• Staying invested despite headlines
• Rebalancing your portfolio
• Keeping fees low

Avoid the “House Money” mindset

Behavioural finance shows that people treat windfalls differently from money accumulated slowly. They take bigger risks. They speculate. They back ideas they’d normally avoid.

I’ve seen clients chase cryptocurrency rallies. Complex private equity and debt deals. Leveraged property plays. All because it feels like a bonus.

But money doesn’t know where it came from.

A windfall can also create the illusion that money is unlimited.

It’s not.

Plan for sustainable spending

If someone receives $2 million after tax and wants to live off it, we’ll talk about sustainable drawdowns.

$2 million invested
4% withdrawal rate
= $80,000 per year income

That can work. But only if spending stays within those boundaries.

Overspending early is one of the fastest ways to erode long-term security. There are well documented cases in sport and entertainment of high earners who ran into trouble after rapid lifestyle inflation.

The goal isn’t to restrict life. It’s to ensure freedom lasts.

Build a plan and automate It

Once your strategy is clear:

• Use low-cost investments
• Automate contributions and rebalancing
• Minimise unnecessary changes
• Look for clear reporting 

There’s a perception that you need a more sophisticated portfolio once you have millions. In reality, complexity usually reduces returns.

The whole point of financial success is freedom. Not replacing startup stress with market stress.

Protecting and growing your wealth

For those who’ve benefited from major liquidity events, like the founders and employees of Eucalyptus, this is a remarkable achievement. But creating wealth once is only half the journey. 

The first chapter was about

• Concentration
• Conviction
• Hard work

The next phase should be about:

• Diversification
• Discipline
• Durability

Celebrate the win. Enjoy a holiday. Support other founders if that excites you. Take thoughtful risks with a small portion.

Just don’t build your entire future on the belief that lightning will strike twice.

Because the smartest move after a big win isn’t to double down on risk. It’s to protect it, and let it compound quietly for decades.

Ready to learn more about investing your windfall the smart way?

This article is adapted from an opinion piece published by The Australian – How to protect a sudden windfall and avoid the traps overnight millionaires face (20 March 2026).