How Long Should I Keep My Financial Statements?

paper-shreddingAs an investor, it’s easy to get overwhelmed by the volume of paperwork you receive for your accounts. Account statements, prospectuses, annual reports and statements of additional information are just a few of the items that may appear in your mailbox or email inbox. We are often asked by our clients which documents which should be kept and which are safe to discard.

The following is a guide for how long to keep financial statements, what to keep, and what you can get rid of.

Mutual Fund Prospectus

A prospectus details the investment objectives and strategies of a particular fund or group of funds, as well as the finer points of the fund’s past performance, managers and financial information. This allows you to better understand the funds you are invested in.

Each time a company updates the prospectus, they’ll send a new one out. There is no requirement or need to keep the prospectus once you have reviewed it. If you choose to hold on to your prospectus, throw it out when you receive the most current copy or you have reviewed the information. Most investment companies provide prospectus information on their websites, along with current up-to-the moment performance data.

Trade Confirmations

This is a written acknowledgment provided by a custodian or broker (such as Schwab) indicating a trade has been completed. It includes details such as the date, price, commission, fees, and settlement terms of the trade. You should hang on to the trade confirmations until you receive the monthly statement that includes transaction from that month. Once you verify the statement correctly reflects the trade, you can shred the trade confirmation.

Account Statements

The monthly statements from your custodian contain important information such as the current value of your investments and transaction information. While the transaction information is needed for determining gains or loss for your taxes, custodians (such as Schwab) are now required to include the gains and loss information on the form 1099 that is issued.

Should you keep your custodian statements for reasons other than taxes? Opinions vary. Some say you should keep a statement until all the investments purchased on the statement are sold. For investments managed by Blankinship & Foster, we strongly recommend you compare the information on your custodian account statements with the information on the quarterly reports you receive from us. However, once you have done this, it’s not important to keep the monthly custodian statements. We have records of all the information and can reproduce the statements at any time.

Form 1099

1099s are typically received from the custodians and mutual fund companies by the beginning of February. This form provides important information needed by your tax preparer. The Form 1099 should be kept with the tax return it is associated with. And how long should you keep the tax return information? It depends on what the information is, but most tax preparers recommend keeping it at least 7 years.

Blankinship & Foster Quarterly Statements

Quarterly statements contain performance information for year-to-date, last 12 months, 3 years, 5 years and since inception.   Once the Blankinship & Foster Quarterly Report is received, the previous one can be discarded. If for some reason you need an older one, we can always reproduce it for you.

Electronic delivery is another option for the delivery of transactions and statements. Schwab allows you to sign up for electronic delivery of the shareholder material (such as the fund prospectus), trade confirmations and Schwab monthly statements. You can choose to have all material received electronically or select the material you want to receive electronically. To enroll in the electronic delivery of your account documents, you need a schwaballiance.com login ID and password. Please give us a call if you would like us to help you with this process.

Free Shredding

Remember, we offer free shredding for all of our clients. We retain the services of a bonded shredding company and have opened this service to all of our clients. Take advantage of our quarterly Throw Out Thursday program (the next one will be on February 19th), or give us a call if you would like to bring it by another time that is more convenient for you.

About Teresa Kakadelas

Teresa Kakadelas, CFP®, CDFA™ is a lead advisor and a member of the firm’s Executive Committee. Teresa heads up the firm’s Financial Planning Team, continually identifying and helping solve financial planning issues for clients. Teresa started the firm’s “Wise Women” luncheons, designed to help clients with financial education. Teresa and her family live in Carlsbad. She enjoys traveling, cooking and spending time with her family.

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