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Investment ABC

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Financial instruments and related risks

Each investor is willing to maximise the returns on investment. However, there is always a risk that the overall return on investment may be negative, which means that the result of the investment in such a case would be a loss.

SEB Bank in its investment offering includes financial instruments that are divided into five risk categories.   

Financial instruments are classified according to their type, complexity and investment risk. Very low risk financial instruments tend to have a fairly simple structure, and the risk they involve is the lowest, whereas very high risk financial instruments tend to have a more complex structure and involve the highest risk.

Equities

An equity (also called a share, stock) is a security that represents a proportional share in the equity capital of a company and provides its owner – the shareholder – with certain rights. There are two main types of equities: common stock and preffered stock.

Bonds

Bonds are debt instruments with which an investor loans money to an entity for a defined period at a floating or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities.

Exchange traded products

An exchange-traded fund (ETF) is similar to an investment fund because it is a pool of funds provided by investors which are used for investment into underlying assets, but unlike a regular investment fund ETFs are traded on the stock exchange similarly to equities.

Investment Funds

An investment fund is a pool of assets established for collective investment and generally with no maturity. An investment fund usually has numerous investors and the fund is managed by a management company. When investing in a fund, your assets are usually placed into many different asset classes, such as equities, bonds or alternative asset classes. It reduces the effect of a single investment in the asset pool.

Derivatives

Derivative instruments, such as options, forwards, futures, etc., is a contract between two or more parties to buy or sell underlying assets including equities, bonds, commodities, currencies, price indexes etc. Derivative contract may or may not include delivery of the underlying asset.

What should I know before I start investing if I am married?


Invested assets and other property belonging to spouses is considered to be a joint ownership (except for cases when when the spouse proves that the property belongs to him / her by personal ownership.)

Orders regarding alienation or restraint of rights in respect of financial instruments offered publically and/or trade listed in a regulated market and/or multi-party trade system may be submitted by the spouses jointly, except for cases when one of the spouses provides a power of attorney granted by the other spouse.

The authorization of a spouse to enter into a transaction in respect of the transfer of securities admitted to trading on a regulated market and / or an MTF by attachment or application for redemption of a unit or shares of a collective investment undertaking may be issued in simple written form.

An ordinary written power of attorney is suitable, provided it is signed in front of a bank’s employee or is signed digitally remotely. A spouse’s power of attorney authorising to execute transactions regarding the alienation or restraint of rights in respect of financial instruments must be duly notarised.

Authorisation of spouse

Methods of providing the autorization

Taxation of investment return



Income from investments must be declared with relevant tax authorities.

The taxation depends on client personal situation. Taxation regimes may vary depending on for instance, on the investor’s tax residency, legal form,  income type or  other circumstances.  Taxation rules may provide favourable tax incentives for investing in some type of securities.

For more specific instructions, consult the tax office of your country of residence or contact a tax advisor. You can also find information on taxation of investments from the following source.

Learn more

We recommend that before you sign any financial service agreement you read the service terms carefully and consult the staff of the bank if you need to.

This is promotional information about the saving and investing services available from SEB Bank. It cannot be construed as a personal recommendation, order or invitation to buy or sell specific financial instruments and may not constitute any basis or part of any subsequent transaction. Although the content is based on sources deemed to be reliable, SEB Bank cannot be held responsible for any inaccuracies or losses which may be incurred when investments are made relying on such information.

Before you decide to invest in specific financial instruments, you must, either yourself or with help from our consultants, take due account of the fact that your investments may fall in value due to inflation, changes in market interest rates or certain events beyond the control of SEB Bank. If you invest in financial instruments denominated in foreign currencies, changes in the exchange rate may affect the return on investment.

You are responsible for your investment decisions. Therefore, before you make a decision to invest you must, either yourself or with help from our consultants, consider whether these risks are acceptable. For advice please visit a SEB bank unit of your choice or call our private customer information line +370 5 268 2800 or business customer information line +370 5 268 2822.

Please note that the services described here are not intended for investors within the jurisdiction other than that of SEB bank units providing these services and investment opportunities, authorisation to invest and investing in locations of certain jurisdictions, including the United States of America, Canada, Japan and Australia, may be unlawful. SEB bank may not advise on investment issues, promote investments, solicit or offer investments where any such may be unlawful. If you live or read information on this website at a location within the jurisdiction other than the one of the SEB bank unit which provides this information, you are responsible for compliance with the laws and other legal acts which may be applicable to you. If you need more information, please contact your SEB bank account manager or any SEB bank unit.