Storing Financial Records in the Cloud

Fifteen years of data to store

Fifteen years ago I became a serious investor.  I didn’t want to pay the high commission costs that even discount brokers charged in those days. I wanted to make several very small purchases each month so that I could slowly build up a diversified portfolio of stocks.

I learned abut Dividend Reinvestment Plans (DRIPs or sometimes DRPs).  These plans allowed you to purchase stock directly from companies with little or no commission and dividends paid by your companies may be reinvested in additional shares of stock.

The one acknowledged problem with DRIPs is that you had to keep all the individual records from each DRIP yourself.  So I put all the investment information (number of shares purchased, price per share for that purchase, etc.) into Quicken.  I kept the statements I received after each purchase and at the end of the year, I filed away the annual statement of all activity in the DRIP for that year.

Although you can still open DRIPs (and I still have many of the original ones I started years ago), two things have happened to make them less appealing: the costs of DRIPs has generally gone up and the internet revolution has made it much cheaper to invest using an online discount broker.  In many cases the cost of making a DRIP investment is higher than making the same investment at a discount broker online.  I haven’t opened a new DRIP in over a decade.

Where to store fifteen years of financial records

After moving many of my DRIPS to a discount broker, and selling others, I still have a core holding of 16 DRIPs.  An annual statement runs between one and four pages, depending on how much activity took place in the DRIP.  After 15 years, the information on these core DRIPs runs to several hundred pages and grows each year.  If I decide to sell one of these investments, I’ll need these statements if the IRS questions my cost basis.

I could simply leave the records in paper form, but suppose there is a fire, flood, or burglary — well maybe not a burglary since I can’t picture someone carting off these records that would be of no use to them.  Another problem is that if I die without telling my heirs where these papers are located, they might well get tossed out as junk by someone who doesn’t understand their value.

So, not surprisingly I decided to store them in the cloud.  There are two phases to moving paper records to the cloud.  One is the digitizing phase where the papers get transformed into computer files — I chose to save the data as PDF files.  The second phase is to upload the computer files to the cloud.  Converting paper files to computer files was greatly facilitated by my recently acquired Fujitsu ScanSnap S1500.

This is a great document scanner that I’ll describe it in detail in a future CCFF blogpost.  A key characteristic is that it scans at a quoted rate of 20 pages per minute.  So I loaded the 15 years worth of records for one DRIP into the “stacker” and pushed the blue button on the right side.  In less than a minute, a PDF file was generated containing all the data for that DRIP.

The paperwork, converted to PDF format, now was ready to be uploaded into the cloud.  I had to make a decision about where in the cloud to store it.  My first choice was Evernote (see previous blog post).  I’ve been storing the majority of my online notes and documents in Evernote because of it’s great tagging and OCR capability.  But in this case, I really don’t need to search and retrieve information from these DRIP records.  So not wanting to clog up Evernote with information I’d never search for, I decided to more the files to Google Docs.  The total storage requirement for all the DRIP information was less than 60 megabytes, which is only 5% of the total allocation for free users.

It took only a few minutes to upload all the 16 files of DRIP information to my Google Docs account.  What I really enjoyed was tossing all those hundreds of dusty pages into the recycle bin.

A not so obvious advantage of storing in the cloud

Earlier I mentioned the issue that my heirs might not realize the importance of the DRIP (paper) records and toss them out, losing the opportunity to prove to the IRS the cost basis of the DRIPs.  Now that the paper records are gone, replaced by cloud files, how do I inform my heirs of the location of this information?  The solution: make them collaborators on the Google Docs folder containing these files.  Now they have direct access to the folder of financial information right in their own Google Docs account.  Everyone in my immediate family has a Google account, so there is no problem sharing these files with them.  That was one reason why I chose to keep the information in Google Docs rather than in some equally useful cloud space.  I’ll label the shared folder something like, “DRIP info for cost basis”.

Now I think I’ll tackle the mountain of mutual fund statements that I’ve collected over the years!

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