Risk and consequences

Any investment entails a certain risk. While some securities have performed very well over a long period, others have performed poorly. Historical returns provide no guarantee for future returns. Share prices may fluctuate from day to day, and some fluctuate more than others.

Margin account is a powerful financial tool which can increase your potential returns, but also cause greater losses. If the value of your portfolio declines, your potential losses will be higher than if you had not borrowed funds to invest. DNB Luxembourg may be forced to sell your positions if there is a sharp drop in share prices.

If there is a significant stock market decline, the borrowing value of your portfolio may be lower than the loan balance. We recommend that you always have an available credit line representing minimum 20 per cent of the pledged securities’ borrowing value to ensure that you have a buffer against changes in market values and/or borrowing ratios, as well as capitalised interest. 

Your credit limit may also be exceeded if the borrowing ratio for a security is reduced and thus reduces the borrowing value of your portfolio below the amount drawn on the credit.