I’ve been an individual stock investor for almost a decade now (starting out very small, while still an undergrad), but it’s taken me some time to revise my methods and learn what’s most important in terms of record keeping.  When I first started out, all I cared about was the excitement of the purchase itself and knowing that I owned part of a company that was going to make me a million dollars someday.

Now, I know that in order to properly chart your investment progress and in order to be able to calculate your exact returns (not to mention the info you will need for reporting capital gains and losses at tax time), you need to write a few things down each time you buy a position.

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Stock Purchase Record-Keeping

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Years later, when you want to figure out where it all went wrong (or right!), or when you need to know how much more you want to sink into a stock, you’ll benefit if you have the following on hand.

Investment Journal.

You could keep a log on your computer or on paper (I use a notebook), whatever works for you.  The point is to keep all the information in one place.  Write down questions you have, notes you take while talking to your broker, and information on any trades you are considering along with research on companies you’re interested in.

Treat it like a diary, with chronological dating, and it will be easy to go back later on and look up the information you need.  I also like having the journal because it shows just how much progress you make over the years.

Buy/Sell Transactions.

Each time you purchase or sell a stock, (or an ETF or a fund), write it down and keep track of the date as well as the number of shares/units bought or sold and the ticker symbol of your stock, ETF or fund.

But I also suggest keeping track of a few other key items along with the basic trade info:

Why You Bought It.

It’s a good idea to write this down, because over time you can easily forget.  Don’t shake this one off – if you build up a portfolio of 25 or more stocks, it can be good to know the reasons you got in in case they don’t pan out and you’re looking for a reason to keep holding or to sell.  Along with this, you might want to note your exit strategy: do you have a stop in place?  What would cause you to sell the stock?

Stock Yield.

If it’s a dividend-paying stock, it’s also handy to note the yield at the time of purchase.  You can always calculate this later using the price and dividend information on the company’s website, but it’s so much easier to just note yourself and save time.  Paying attention to the yield at time of purchase will help you determine your overall returns later on.

(the yield is = the total annual dividend amount (eg., $1.68) divided by the share price at time of purchase).

Dividend Amount at time of purchase.

Again, you can technically always find this information out later on, but it will save you time if you just write it down when you make your purchase.  Presumably, you’ve already done the research on the dividend, too – so this will save you from needing to look it up again later (handy, once you own 25+ stocks).

Currency Exchange Rate.

If you’re buying an international stock (any stock not headquartered in your own country), you should also note the exchange rate on the time that you make the trade.  This is true even if you’re buying an ADR.  It will help you determine your real overall returns later on and whenever there are sharp moves in either currency.  It’s especially important if, like many Canadians using USD checking accounts, you actually make a foreign exchange transaction first before purchasing the stock.

Commission Fees Paid.

Whether it’s zero or $29, make sure you note exactly what the buy or sell commission fee was.   This will help you figure out later on (1) when you’ve made the money back on your investment and (2) your overall return.

Total Price Paid.

A bit redundant if you know the share price and the commission, but again, might as well write it down to make it easier later – you can figure ratios out at a glance.  I always write both the commission fee and the total cost of my investment down.

I think that’s about it – what else do you keep track of?  What sort of record-keeping do you use, if any?  I’m a buy and hold investor so I generally only need to do this when I buy.  If you sell a lot too, you have more information to keep track of.  I’d love to hear your thoughts – happy record keeping!

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