General Investment Risks
Before investing in any securities or financial products, it is important to understand the risks involved. This Risk Disclosure Statement highlights some of the key risks associated with investing. This is not an exhaustive list, and you should carefully consider your own circumstances and seek professional advice before making investment decisions.
Market Risk
The value of investments can fall as well as rise due to market conditions, economic factors, political events, and other circumstances. You may get back less than you originally invested.
Specific Investment Risks
Equity Securities (Stocks)
- Price Volatility: Stock prices can be highly volatile and may decline significantly
- Company Risk: Individual companies may underperform or go bankrupt
- Dividend Risk: Companies may reduce or eliminate dividend payments
- Sector Risk: Specific industries may face adverse conditions
Fixed Income Securities (Bonds)
- Interest Rate Risk: Bond prices typically fall when interest rates rise
- Credit Risk: Issuers may default on interest or principal payments
- Inflation Risk: Fixed payments may lose purchasing power over time
- Call Risk: Bonds may be redeemed early in falling rate environments
Options Trading
- Total Loss Risk: Options can expire worthless, resulting in complete loss of investment
- Leverage Risk: Small market movements can result in large gains or losses
- Time Decay: Options lose value as expiration approaches
- Complexity: Options strategies require significant knowledge and experience
Mutual Funds and ETFs
- Management Risk: Fund performance depends on manager decisions
- Tracking Error: ETFs may not perfectly track their benchmark
- Liquidity Risk: Some funds may have limited trading volume
- Fee Impact: Management fees reduce overall returns
International Investments
- Currency Risk: Exchange rate fluctuations affect returns
- Political Risk: Government actions may adversely impact investments
- Regulatory Risk: Different legal and regulatory frameworks apply
- Information Risk: Less transparency in some foreign markets
Important Considerations
Past Performance
Past performance is not indicative of future results. Historical returns do not guarantee similar future performance. Markets and economic conditions change, and past success does not ensure future gains.
Risk Tolerance
Before investing, you should honestly assess your risk tolerance—your ability and willingness to accept investment losses. Consider factors such as:
- Your investment time horizon
- Your financial goals and objectives
- Your current financial situation
- Your need for liquidity
- Your emotional response to market volatility
Diversification
While diversification can help reduce risk, it does not eliminate the risk of investment losses. A diversified portfolio can still decline in value during market downturns.
Seek Professional Advice
We strongly recommend that you consult with a qualified financial advisor, tax professional, and legal counsel before making investment decisions. Your advisor can help you understand the specific risks associated with your investment choices and determine if they are appropriate for your situation.
Contact Us
If you have questions about investment risks or need assistance understanding specific products, please contact us at (212) 847-9600 or risk@kommnz.com.