As with everything, it depends. What is your risk profile? The first time I came into some unexpected wealth (from selling stock options) I put it aside to pay

As with everything, it depends. What is your risk profile? The first time I came into some unexpected wealth (from selling stock options) I put it aside to pay for my kids college. In terms of frames of reference, I recognized that "lack of debt" is a big help for new graduates even back then. I had gone through school on a combination of scholarships, grants, and student loans but it cost less back then and when my wife and I got married she had actually saved enough to pay of my remaining student debt (which was < $10K as I recall). Because we didn't have debt, both working as engineers without kids let us save enough and have a good enough debt/income ratio to buy a house in California. And that was what allowed us to stay in California when she wanted to stay home and raise the kids. So looking back, it was a good call. An exercise that I often gave my kids and engineers I've mentored is to "project your expenses forward" to get an understanding of your "burn rate" over time, then invest / save to ensure you're above the power curve (not incurring debt to pay a projected cost). Three areas I look at are < 1yr, < 5yrs, and > 5yrs. For the latter I put stuff in equities mostly, for < 5yrs it is a mix of equities and fixed income notes (bonds, CDs, etc) and < 1yr usually CD's. For example estimated tax payments (income and property) in CD's that are 3 month, 6 month, and 9 month maturities, depending on when the money will be required. My parents put $100K of an inheritance my Dad got into a managed "growth" account, and each year if it had grown > $10K they would take out 10K for a vacation that year. That worked well for them being on fixed incomes. Another friend of mine invested about $500K in a property in the Sacremento area and rents it out which gives them a steady income. It is more work however.