Ask Terry Questions investment account’s prospectus

investment account’s prospectus

By Terry Savage on November 11, 2014 | Wild Card

Do I need to save all the prospectuses and backup documentation that come for my investment accounts? And how long do I need to save the statements?

Thank you.

Terry Says:  That depends on whether it is in a taxable account, or sheltered inside an IRA.  If it is a taxable account, you need to keep all your records until you sell the investments — to prove that you are allowed to take long term capital gains (for assets held over one year).  And to prove the cost basis on which those gains will be taxed.  Since anything inside an IRA will come out as ordinary income, the cost basis is not particularly important.  The prospectus is designed to show you the risks and explain the investment.  If you have mutual funds, you will get a new or updated prospectus every year.  Just keep the latest one.



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