She forgot about an old employee account — and found millions in it! Here’s what Dave Ramsey suggests on how to handle a windfall

Still, the sudden windfall left Sarah both happy and confused. She had “no idea” what to do with her unexpected windfall. So she called into The Ramsey Show to ask personal finance commentator Dave Ramsey for advice.

The financial dilemma she faced isn’t exclusive to the ultra-rich — and the lessons Ramsey offered apply to anyone navigating windfalls, not just millionaires.

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Diversify and withdraw in a tax-conscious way

Having so much of your net worth tied up in a single stock is “scary and unwise,” Ramsey said. He recommended that Sarah offload some of the shares and invest her money elsewhere.

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But that sound, practical advice will have drawbacks. Given the size of the fortune, selling even a fraction of the account would likely push her into the top tax bracket — no matter which country she lives in.

In Canada, capital gains aren't taxed at a separate flat tax rate. Instead, only a portion of the capital gain — known as the inclusion rate — is included in your taxable income and taxed at your marginal income tax rate.

For 2025, the Canada Revenue Agency (CRA) confirmed that the capital gains inclusion rate remains at 50%, meaning half of your capital gain is added to your taxable income for the year. (The proposed increase to 66.67% was cancelled by Prime Minister Mark Carney on March 21, 2025.)

So what does that mean in practice? If you sold shares and the profit from that sale was C$2 million, then C$1 million would be added to your taxable income. At the top combined federal-provincial marginal rate — which ranges from around 44.50% in Nunavut to 54.80% in Newfoundland and Labrador, with Ontario sitting at 53.53% and Alberta at 48% — the tax bill on the C$1 million capital gain would fall somewhere between C$400,000 to C$548,000, depending on where you live.

While Ramsey suggested that Sarah speak with an expert tax planner or investment adviser to lower her tax bill, he was crystal clear on the situation’s urgency. He insisted she diversify away from a single stock as soon as possible.

“If I’m you, even if it costs me some money, I would rather have the safety than I would the extra 20%,” Ramsey told her.

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Get in touch with an expert

Sitting down with a financial planner can help you optimize your portfolio so that your net worth isn’t dependent on only one stock or asset.

In Canada, the Government of Canada’s Financial Consumer Agency recommends verifying any financial adviser through the Canadian Securities Administrators (CSA) National Registration Search before using their services. Look for a Certified Financial Planner (CFP) — Canada has more than 17,000 active CFP professionals — or a Registered Financial Planner (RFP). For an advice-only, fee-for-service model where the adviser doesn’t sell investment products on commission, FP Canada’s national directory is a good place to start.

Fee-based advisers typically charge around 1% of assets under management (AUM) annually, while fee-only, advice-only planners charge flat or hourly rates — often a better fit when you want unbiased guidance without sales pressure.

Beyond the importance of diversifying, Sarah’s story could offer another lesson for investors: The value of holding instead of folding. (Note: This is the buy-and-hold approach that many investors, including Warren Buffett, champion for most mainstreet investors.)

Time in the market is better than timing the market

An often-repeated investment principle is that “time in the market beats timing the market.” Popularized by investing experts such as Jack Bogle, it alludes to how it’s a struggle for most investors to find the right stock at the right time and at the best price.

By focusing on a longer timeline, rather than optimizing short-term gains, investors can take advantage of the market’s tendency to go up over the long term. When investors try to time the market, they can end up buying at a peak and selling in a valley. Investing consistently can help your portfolio better manage the ebbs and flows of the market over a longer duration, delivering compound returns.

Buffett captured this philosophy in his 1989 Letter to Shareholders for Berkshire Hathaway: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

In Sarah’s case, this type of “set and forget” approach seems to have paid off. But in the event of a major market downturn, she’d risk losing millions leaving it as-is.

Focus on quality, not quantity

Another Buffett principle is that you should invest in stocks priced on solid fundamentals: Chasing market trends can cost you dearly. According to updated data from Fidelity using Bloomberg figures, a hypothetical investor who missed the best five days in the S&P 500 between 1987 and 2025 could have reduced their long-term gains by 38%.

There’s a lesson with global relevance here for Canadian investors. Whether you’re tracking the S&P/TSX Composite Index or holding a diversified mix of Canadian and global ETFs, the cost of being out of the market on its best days is steep — and those days are impossible to predict in advance.

According to the S&P/TSX Composite Index’s historical record, the index delivered an annualized return of approximately 7.7% from 1979 to 2020. For Canadian investors who want broad, low-cost market exposure, index ETFs such as the iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC) or the BMO S&P/TSX Capped Composite Index ETF (TSX: ZCN) offer access to the Canadian market as a stable portfolio foundation. For U.S. market exposure, Canadian versions of S&P 500 index ETFs — including the iShares Core S&P 500 Index ETF (TSX: XSP) and Vanguard S&P 500 Index ETF (TSX: VFV) — are available on the Toronto Stock Exchange (TSX).

Having a baseline of diversified, low-cost investments can give you more security to build the rest of your portfolio — whether in stocks, real estate or otherwise.

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Diversifying outside the stock market

Not only is the bulk of Sarah’s wealth tied up in a single stock, but it’s also fully exposed to equity market risk. As Goldman Sachs CEO David Solomon noted, a 10% to 20% drawdown in equity markets in the next one to two years is a real possibility. If that turns out to be true, diversification is more than a smart move — it’s essential.

For Canadian investors, real estate has historically been another way to diversify — but you don’t need to become a landlord to get exposure.

Real estate investment trusts (REITs) listed on the TSX offer Canadian investors fractional exposure to large, diversified property portfolios — including residential, commercial, industrial and retail — without needing a large down payment, or the headache of managing tenants. Leading Canadian REITs include Canadian Apartment Properties Real Estate Investment Trust (TSX: CAR-UN), which as of December 31, 2025, owned approximately 45,000 residential suites across Canada. Other options include the Choice Properties REIT (TSX: CHP-UN), Granite REIT (TSX: GRT-UN) and Dream Industrial REIT (TSX: DIR-UN).

Canadian REIT ETFs, such as the iShares S&P/TSX Capped REIT Index ETF (TSX: XRE), offer a diversified basket of Canadian REITs in a single low-cost vehicle.

However, Canadian investors should beware: If you had put money into REITs instead of a broad stock market index fund, you would likely have made less money over the past several years — a fact worth considering when building a diversified portfolio.