Asset Record Keeping

Essential for investing in the stockmarket!

Keeping asset records is an essential part of household record keeping. Managing stock investments by keeping accurate records is an essential part of this exercise.

Maintain a Filing System

A filing system is all that is needed, with a folder for each share. Records required include all buying and selling documents that would normally be printed off and filed when buying and selling with an online broker.

While some organizations provide a service using online record keeping, there is inevitably a cost for the privilege.

So, when starting out, or with a smaller portfolio, it is not cost effective to pay for these services.

If using an online broker, monthly reports from the share registry that record your share holdings for each company may be received. I retain these so I can cross-check their records against my share buying and selling activity.

Interim- and final-dividend records also need to be filed in order to facilitate the preparation of taxation returns.

Accounting fees are reduced if dividend re-investment is not undertaken. This is because each time a dividend is converted into more shares, a new capital-gain or capital-loss event at some future time will ensue. That will requires additional accounting effort.

I keep paper records of shares that are on my watch list. These are shares that I may consider buying in the future when conditions are more favorable.

I record and file performance information about watch-list shares on a (paper) template that I can refer to at a later date when their situation changes.


Portfolio Size

How much record keeping is required will depend very much on the size of a portfolio. A conscientious investor needs to determine how much time is available to keep up with this aspect of investing.

This will determine how many shares that can be realistically held in the portfolio.

If working full time, a portfolio of eight to ten shares may be all that a value investor can comfortably handle. Whereas, if retired or not employed, accommodating fifteen to twenty shares in the portfolio is likely to be manageable.


Estate Planning

Keeping records is also important from an estate planning perspective. Shares may only constitute part of an individual's financial affairs, but for any heirs who do not have stock market experience, untangling a portfolio may constitute a complex exercise.

It will also save them time and money if a thorough estate planning exercise has been previously undertaken by you.


To Conclude

The benefit of keeping well-organized and accurate paper records is that it will save you time and money when it comes to completing a tax return.

While I find paper records still a viable option, organizations such as share registries provide a free service by holding share information online.

Spreadsheets can provide a convenient way of storing dividend information although tax offices can now get this information directly from share registries in some countries.

It can't be over-emphasized that thorough record keeping is an essential part of investing, whether it is value investing or otherwise. The buck usually stops with each of us!

The related article below examine the importance of estate planning in more detail.

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Related Article

Estate planning - is an important and often neglected aspect of record keeping. Worth a read if this applies to you?

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