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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Evernote

Evernote is a free cloud computing program that lets you take notes on any subject using a large set of tools.  The Evernote website describes its product’s capabilities as, “Type a text note. Clip a web page. Snap a photo. Grab a screenshot. Evernote will keep it all safe. “.  That’s “step 1”. 

Step 2: “Everything you capture is automatically processed, indexed, and made searchable. If you like, you can add tags or organize notes into different notebooks.”

Step 3 is described as: “Search for notes by keywords, titles, and tags. Evernote magically makes printed and handwritten text inside your images searchable, too.”

The Evernote software resides in several places.  You install Evernote on all of your computers and many smartphones (iPhone, Android phones).  All of your notes are synchronized in the cloud at your Evernote account and then updated to all of your computers and phones.  You can create, read, and edit your notes in the online cloud application as well as on any of your computers and smartphones. 

While steps 1 and 2 let you capture your notes in many ways (they forgot to mention you can input audio notes too) and organize them, the real magic is in how easy it is to find anything in your notebooks.  You simply type any text into the search box and out pops a list of all of your notes that contain that text.  The text is even highlighted inside of each found note.  If you took a photo of a sign with the camera in your smartphone or any camera and attached that jpeg file to a note, then after a while the OCR recognition kicks in and the text in that sign is indexed even though the original jpeg was a picture and not text.  For example if you came upon a sign that said, “Cheap cigars, all you can smoke for one dollar” and photographed it, then after you added the jpeg file to a note, you could subsequently do a search on “cigars” (by typing “cigars” into the search-box and this note would be found.

This might not seem that big a deal when you only have a handful of notes, but as you use Evernote for years and have thousands of notes the magic becomes clear.  If you put your whole life into Evernote, you’ll be able to find anything by a text search for the words you remember, by the tags you added to the note, or by browsing the notes in a notebook.  At the moment I have two invoices from the plumber who came to my house last week.  I’ll scan each invoice into a jpeg file and add them to Evernote with the tag “Plumber”.  Then I just have to click on the tag plumber to find the invoices.  Or if I just want the invoice that dealt with “faucet” I can type that word into the searchbox and the note containing the invoice for that repair will come up.

Searches are for words you typed into the notes as well as words found in the attachments
Bandwidth =24 megabytes per month

Evernote lives in several places.  Besides the copy of your notes in the cloud, there is a version for your Mac or PC that is a fast way to get scans and jpegs into Evernote and also to search notes for specific text.  There are versions of Evernote for smartphones such as iPhones, Android phones, and other smartphones.  This lets you scan a document at home, search for specific notes (like shopping lists) using your smartphone, or even using the online (cloud) version if Evernote when you are using someone else’s computer.  I have Evernote on my laptop and have access to all my notes when I travel.

Premium account features

There are several advantages to having a Premium account.  One advantage is that your monthly bandwidth goes up to 500 megabytes.  I’ve been busy scanning documents and stuffing them into Evernote and I’ve yet to use more than 30 megabytes in a month in my premium account.  By the way, the cost of a Premium account is $45 per year.

I could probably live within the 24 megabytes per month limit on a free account, but I decided to get a Premium account because of one special feature it has.  While the free account makes text notes searchable (and also jpeg files that contain text in the image, and handwritten notes), it doesn’t make graphic PDF files searchable.  PDF files that contain text are searchable, but not PDF files that contain only graphics, such as scanned documents.  However, if you have a Premium account, then the graphic PDF files you add to Evernote are put through an OCR process just like jpegs.  So, if you have a 30 page printed document and you scan it into a PDF file, that document becomes searchable when you load it into an Evernote Premium account.  But it is not searchable when loaded into a free account.  I find this so useful, that I was willing to pay for a Premium account.

Another feature that some users will find useful, is that syncronization with the cloud happens more quickly for Permium users than for free users.  It’s just on of the perks for being a Premium user.  Another perk is priority tech support.

Uses of Evernote

Examples of use: shopping lists, reducing clutter (paper invoices scanned into Evernote), Scanned articles from magazines and newspapers, clipping all or parts of a webpage you find online for information you want in the future.  Many people take pictures of information with their digital cameras or cameraphones and later copy them into Evernote.  Any text content in the jpegs are searchable.

I put scans of all my blood work into Evernote; I can instantly find out if a questionable reading has happened before or see a trend in any of the tests.  As I mentioned, I put all the invoices I recieve into Evernote for future retrieval.  I had a hot water heater replaced and I scanned the invoice and put it into Evernote.  Sometime later, I wanted to recall how much the heater cost.  I searched in Evernote for “Hot Water” and that invoice quickly came up.

Conclusion

If you like the idea of putting most of the information in your life online and in an easily searchable format, then Evernote is for you.  Start with the free version and if you decide that the Premium features are valuable to you (as I decided), then get the Premium version for $45.  Whatever device you enter a note, it is quickly available on all the other devices you own that have Evernote installed because all copies of your notes are synchronized with the copy in the cloud.

Dropbox — Almost in the Cloud




I’ve been told that “Dropbox” is a good place to store files in the cloud. Is that true?

While I’m a big fan of Dropbox and use it all the time, technically speaking, it is not a cloud storage location. Here is a link to the Dropbox website: https://www.dropbox.com/

Dropbox is a wonderful online extension to your desktop computing, but it’s missing a key cloud component as we’ll see.

When installed, Dropbox puts a folder on your desktop computer. It looks and works like any other folder (or directory) on your computer. You move files into your dropbox folder; you take files out of your Dropbox folder. If you put a Word document into the Dropbox folder, then you can edit it in Word directly in your Dropbox folder.

So what’s the big deal?

The big deal is that you can put your Dropbox folder on every computer you use (home PC, laptop, work computer). You can even put it on your iPhone. Any files you store in the Dropbox folder are synchronized among all your computers. If you edit a file in the Dropbox folder at work and then return home, the file is on your home PC is identical with the file at work, with all the edits you performed at work in place. If you take your laptop to a hotspot and make a change to the file, the version on both your home computer and your work computer reflect this change.

Dropbox has one more trick. Your files are accessible online (once you log in to the Dropbox website). If you visit a friend and use his computer’s browser, you can log on to Dropbox.com and access your file. You can download the file to your friends computer, make changes in the file and then upload it to Dropbox.com. Now your laptop, home computer, and work computer will all have this update. Amazing!

But you said Dropbox isn’t a cloud computing site. It sure sounds like one. Why isn’t it in the cloud”?

The key component that Dropbox is missing for cloud computing is there is no software to process files at the Dropbox website. Remember when you were at your friend’s house you had to download the file to his PC to work on it. That’s because there is no wordprocessing software (or other document processing software) at Dropbox. Even when you worked on your file at work, home, or on your laptop, your computer had to supply the software. If you didn’t have Word on one of the computers, then you couldn’t edit the file in the Dropbox folder.

So Dropbox is a wonderful way to alway have access to a file on all your computers, but you have to do your processing on those computers and not in the cloud.

Dropbox lets you store up to 2 gigabytes of data for free online, just not in the cloud.


Retirement Planning in the Cloud

A friend of mine is approaching retirement.  She would like to get an overview of all her investments, both retirement assets and non-retirement assets.  She would like to see how her actual asset allocation (percent is stocks, bonds, and cash) differs from her desired allocation.  A spreadsheet would appear to be the best way to organize her data and make the projections.

The problem is that, while my friend has very good records and knows exactly how many shares of each stock and mutual fund she owns, she has no experience in designing spreadsheets.  Since I have some experience in designing spreadsheets she asked me to help.  But I don’t  have access to her data.  She is willing to let me see her data, but no one else.

I suggested we collaborate together using a Google Docs spreadsheet.  I explained the concepts of cloud computing to her and she decided to create a Google account so she could use Google Docs. Besides the ability to collaborate on a spreadsheet in near real-time, Google Docs had an additional attraction.  It contains functions that can look up the price per share of both stocks and mutual funds.  So my friend only needs to enter the number of shares she owes for each investment and the spreadsheet will look up the current price per share and multiply the two to calculate the current value of each investment.

I created a spreadsheet and made my friend a collaborator.  We both opened the spreadsheet.  She entered the name of the first investment and I could see it on my screen a second or two later (we were talking on the telephone as well).  I entered in the formulas to obtaining the share price for that investment and for calculating the dollar value.  Next I replicated this row several times and she editing the stock symbols and number of shares for each of her other investments.  While I watched these entries pop up on my screen I was entering in the formulas to sum each asset class.  On her screen she could now see the totals and for the first time had an accurate idea of how her assets were distributed.
Next I created a place for my friend to enter her “desired” asset allocation and the formulas to compare the actual asset allocation with the desired allocation.  While I was doing this she was entering in her desired allocation and we both saw how much the actual asset allocation differed from the desired allocation.  The final step was for me to enter the formulas to tell her how much money to move from one category to another so that the actual asset allocation matched her desired allocation.  This is called rebalancing.
The whole process took about an hour.  If we had been emailing spreadsheets back and forth it would have taken days.  Because we could both see what the other was doing in near real-time, if one of us did something wrong the other would notice and comment on the phone.  So we never wasted a lot of time doing things that would have to be redone when the other one saw it.  Real-time collaboration provides huge advantages over emailing documents back and forth.  If you have more than two people collaborating, the advantages multiply.

A Cloud Computing Example

Can you give me an example of  the advantages of cloud computing over desktop computing?  Why, for example, would I want to create a Google Doc file in the cloud rather than a Word Document on my computer?

Suppose you had a Word Document on your computer and, just to play around, you uploaded that document to Google Docs. If you flew from your East Coast home to Los Angeles to visit with a friend, you’d see the cloud advantage (once your flight finally left the ground).  The Google Doc file is available from your friend’s computer (PC, Mac, Linux).  Your Word file is still sitting on your PC at home, completely useless to you in LA.

Your friend, who is looking over your shoulder, says, “That document is pretty good, but it needs to be polished.  Too much use of the passive voice, too many pronouns with indefinite antecedents”.  At this point you remember your friend majored in English.  “Let me have a go at it and I’ll fix it up”, says your friend.  So, you tell the cloud (Google Docs) to let your friend have access to the file as an editor so he can muck around with your prose.

You fly home (after another interminable wait at the airport) and pour a glass of wine, since those airport delays always leave you frazzled. You open your browser to your Google Docs account.  You notice that your document now reads like it was written by an English major and you’re delighted with the changes your friend made.  The only problem is that on the flight back (or was it while you were still on the tarmac waiting those two hours to take off?) you thought of one more thing that should be in the document.  So you type, “It has been established by him that the cost of raw materials for this project is much higher than it needs to be.”

You go to refill your wine glass and  when you return to look at what you just wrote, you find it now says, “Professor Johnston established that the cost of raw materials for this project is much too high”.  Once again your friend has polished your file.

And working in the cloud is free, right?      Right!

Harvey Levine

harvey@cloudcomputingforfree.com

Is Cloud Computing the Same as the Internet?

What’s all this cloud computing hype about?  Isn’t cloud computing just another name for the internet?

The answer is: NO.  Cloud computing uses the internet — and in fact couldn’t exist without the internet — but cloud computing implies a lot more than just using the internet.  What makes a cloud differ from an ordinary website?

Characteristics of the cloud:

  • The Cloud provides storage space for your files
  • The cloud provides software to process your files (wordprocessor, photo editing, email, contact management,calendar, etc.)
  • The cloud automatically backs up your files; copies of your files are stored in different geographical areas
  • Data can be accessed by multiple users at the discretion of the creator of the data.

Cloud computing mirrors desktop computing.  On a personal computer, data files are stored on a hard disk.  The software to process these files is also stored on a hard disk.  You sit down at your computer and double click on a “.doc” file and Microsoft Word launches to display the data in the file and to allow you to change it.

In cloud computing you sit down in front of your computer and launch your browser (internet Explorer, Firefox, etc.).  You point you browser to a file in the cloud and select it, say a Google Doc file, and the Google Doc wordprocessing software launches.  Google Docs shows you the data in the file and lets you change it.

Harvey Levine

harvey@cloudcomputingforfree.com