Asset Record Keeping
Essential for investing in the stockmarket!

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

A filing system is all that is needed and a folder for each share. Records required include all buying and selling documents that you would normally print off and file if you are buying and selling with an online broker.

While some organisations provide a service using online record keeping, you inevitably pay 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, you may receive monthly reports from the share registry that record your share holdings for each company. ThI retain these so I can cross-check their records against myshare 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 you do not participate in dividend re-investment.

Each time a dividend is converted into more shares, you are setting up a new capital-gain or capital-loss event at some future time that will require additional accounting effort.

You may also choose, as I do, to keep paper records of shares that are on your watch list. These are shares that you may consider buying in the future when conditions are more favourable.

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.

My e-book, which will be available soon, contains a blank template and case studies of how the template can be used to determine share value of selected companies. The completed template becomes a useful record that can be filed.

The importance of record keeping cannot be over emphasised. How much is required will depend very much on the size of your portfolio. You will need to determine how much time you have to keep up with this aspect of investing.

This will determine how many shares you can realistically hold in your portfolio.

If working full time, a portfolio of eight to ten shares may be all you can comfortably handle. Whereas, if you are retired, you may be able to accommodate fifteen to twenty shares in the portfolio.

Of course, it is not only home record keeping that will eat into your time. For each share, a certain amount of reading is required in order to keep you up to date with the company’s operations.

Announcements, interim and final reports, annual general meeting agendas and reports of acquisitions all require your attention if you are to fully appreciate what the company is up to.

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

The benefit for you in keeping your own well-organised and accurate paper records is that it will save you time and money when it comes to completing a tax return.

It may also save your heirs time and money if you have undertaken thorough estate planning.

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