How Long Should You Keep Financial Records?
Sophia FloerschHow Long Should You Keep Financial Records?
When it comes to managing your finances, it's important to keep track of all your financial records. But how long should you keep them? Here's a breakdown of how long you should keep certain financial records and why.
Tax Returns and Supporting Documents
You should keep yourtax returnsand supporting documents for at least seven years. This is because the IRS can audit your tax returns for up to seven years after you file them. Supporting documents include W-2s, 1099s, and receipts for deductions.
Investment Statements
You should keep yourinvestment statementsfor as long as you own the investment and for seven years after you sell it. This is because you may need to prove the cost basis of the investment when you sell it, which is used to calculate capital gains taxes.
Bank and Credit Card Statements
You should keep your bank and credit card statements for at least a year. This is because you may need to refer back to them for record-keeping purposes or to dispute a charge. However, you can often access older statements online from your bank or credit card company.
Insurance Policies
You should keep your insurance policies for as long as the policy is active. If you cancel a policy, you should keep it for at least a year in case you need to refer back to it.
Real Estate Records
You should keep records related to your real estate for as long as you own the property and for at least seven years after you sell it. This includes closing documents, deeds, and mortgage statements.
Investment Strategies
Managing your financial records can be overwhelming, but it's important to stay organized. One strategy is to digitize your records and store them in a secure online platform. This can make it easier to access and manage your records, as well as protect them from physical damage or loss.
Investment Stories
Keeping financial records may not be the most exciting part of managing your finances, but it's crucial for your financial health. One investment story to keep in mind is the importance of diversification. By spreading your investments across different asset classes, you can reduce your risk and potentially increase your returns over time.
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