What do you mean when you talk about keeping a windfall in cash? Literally under the mattress? In a savings account? Would a CD count? How about a money market fund?
The short answer is any of those, except not under the mattress (Don’t give people are reason to break into your house!).
Essentially the idea is you put money in a safe place where it’s not going to lose value, or at least not lose the complete equivalent to inflation each year (many checking/savings accounts will pay less than inflation, but not *that* much less than inflation). When we’re talking about a windfall, we mean parking it someplace where it won’t lose much value while you decide what to do with it. Someplace pretty accessible and FDIC insured so it doesn’t lose value if an institution goes out of business. “Cash” basically means a safe place for your money where you can get at it. You won’t be making a huge amount, if anything, on this money, but it’ll be safe.
So, yes savings accounts, FDIC insured money market funds, and so on.
With a CD you have to be careful about when you can access the money, so if it is a lot, you might either only use a short-term CD for when you know you’ll have made a decision about where to put the money (say, 6 months out after a family death, for example). Alternatively, you can build a CD ladder, which means having multiple CDs that come due at varying intervals so that if you need, say, 10K, there will be a CD of that amount maturing soon at any point in time.