What is the best practice for storing financial records?

Storing financial records in a safe deposit box or organized home files is a best practice for several reasons. Firstly, it ensures that important documents such as tax returns, account statements, and investment records are protected from loss, theft, or damage. A safe deposit box is typically located in a secure facility, providing a high level of safety against risks like fire or flooding at home.

Moreover, organizing these documents in a secure and accessible manner helps you manage your financial portfolio more effectively. You may need to refer back to these records for future financial decisions, audits, or loan applications. Keeping them organized also facilitates easier retrieval and management when it comes time to evaluate your financial situation, perform tax preparation, or update your estate plan.

Other methods of storing financial records, such as keeping them solely on a computer without a backup, can lead to loss due to hardware failures or cyberattacks. Disposing of records after one year may result in the loss of important information that is required for tax purposes or verification of financial transactions. Sharing sensitive financial information with friends and family can lead to potential misuse or breaches of privacy. Thus, the safest and most responsible option is to store financial records securely.