Store or Shred?

Q For how long should I keep financial documents? — C.W., Asheville, North Carolina

A Some financial records should be kept indefinitely, just to be on the safe side. These include your tax returns, insurance policies (if still in effect), pension-related or IRA contribution records, and estate-related items such as wills. Keep supporting documents for federal returns (such as receipts and brokerage statements) for seven years (or longer if you didn’t file a return). As long as you own your home, and for at least six years after you sell it, keep mortgage documents, records of any major work done on the home and paperwork related to buying and selling it. Keep receipts for costly purchases as long as you own them, in case you need to prove their purchase price to insurers. If your bank and credit card statements seem correct, you probably don’t need them, but keep them for at least a year — perhaps download and store them online. Keep paycheck stubs long enough to make sure your end-of-year W-2 form is correct, for tax purposes. Keep brokerage statements and trade confirmations as long as you own the securities, to document your cost basis. When discarding financial papers, consider shredding them to prevent any snoopers from taking advantage of your account numbers, Social Security number, birth date or other identifying information. When archiving records, be sure to back up all digital documents, and store papers in places that minimize the chance of theft or damage.

Q What’s a “basis point”? — H.C., Chicago

A It’s 1/100th of a percentage point, or 0.01%. One hundred basis points make up 1%. So if an interest rate has fallen by 50 basis points, it’s down half a percentage point.