How to Store Important Financial Documents (and How Long You Should Keep Them For)

Important Financial Documents

A decade or two ago, most people predicted that the 21st century would be completely paperless. While this is a possibility, it is yet to happen as many people still have to contend with paper documents.

Whether your documents include tax forms or property deeds, knowing how to store your financial records can make a big difference in ensuring order to your vital paperwork.

In this article, we will discuss five important financial records, how to store them, and for how long.

1. Paystubs

A pay stub is a document issued by employers at the end of every payment period showing an employee’s payment information. According to financial experts, it is advisable to hold on to your paystubs for at least one year or until you confirm that they are consistent with the amounts entered on your W-2 forms. It would also be best to ensure that your paystubs are stored in a lockable file cabinet with limited access to ensure they are safe.

If you have lost your paystubs, you can use an online pay stub maker solution to generate them yourself. However, make sure your employer signs the document you print before using it for legal purposes.

2. Investment records

If you have investments in stocks, mutual funds, or bonds through a brokerage firm, you will receive quarterly statements showing your investment’s performance. 

The right thing to do is to store these statements until the end of the year or until you receive the annual report of your investment’s performance. As for the annual statements, it is advisable to hold on to them for as long as you own the securities and an additional seven years after selling them for tax purposes. 

The best place to store your statements would be in a lockable file cabinet or have them scanned and stored as digital copies in cloud storage.

3. Loan documents

If you are servicing a loan, it is a good idea to hold on to the paperwork relating to your loan until you have fully paid it off. Once you have paid off the loan, ensure that you get a clearance certificate that you should hold on to forever as proof that you cleared the loan.

The best method for storing loan documents would be in a lockable file cabinet. However, for a loan clearance certificate, it would be best to keep it in a more secure place like a fire-and-waterproof safe in your house or cloud storage as a digital copy.

4. Tax documents

When you are done filling your tax returns, it is always best to keep the documents used up to a maximum of seven years. These will come in handy if the IRS decides to audit your tax returns which can go back to up to six years from the date of reporting it if the IRS suspects foul play.

Due to the sensitivity of the tax issues, it is important to ensure that all your tax-related documents are kept safe and whenever possible in a fire-and-waterproof safe where they can be readily accessible when needed. 

5. Property documents

If you are a property owner, you must keep all records relating to your property and any improvements made on the property for as long as you hold ownership of the property. Additionally, it is advisable to keep those records for a period of up to seven years after the sale of your property for tax purposes.

If you have a rental safe deposit box with a bank, that would be the most secure place to store your property documents. If not, a secure fire and waterproof safe should be your second option.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.