Any kind of paperwork dealing with investments must be kept for as long as you have that investment. If you trade it in, roll it over, or carry it forward, you must keep the old original documentation as part of the required history for the new item.
There are generally tax consequences when investments are sold. Sometimes it’s a loss, sometimes a gain. In either case, you have to be able to establish what you paid for
that investment, including enhancements to, or changes in, it. That’s called the “basis.” The gain or loss is calculated by subtracting the basis from the sale price. Therefore it’s extremely important to know exactly what that basis is.
Typical financial investments are stocks, bonds, and mutual funds. Each type has a constantly changing value that is different. Stocks may split, there are many varieties of bonds, and mutual funds change in share value on a moment by moment basis.
Rental property is another common investment. What you pay for the building, plus closing costs, plus improvements, less depreciation taken gives you a running total of the basis. When you sell, you’ll need to be able to go back to those original closing documents, and add the cost of the improvements you’ve made.
There is an infinite variety of other kinds of investments that one might make. Each case may be slightly different. The basic requirement, no matter what kind of investment, is that you know when you bought each investment, and how much you paid for it. In other words, you must know your “basis.”
