The Key to Investing Is Diversification | American Funds

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The Key to Investing Is Diversification

American Funds investor Rick Vredenburg discusses risk and how he manages it for his investments through diversification.



Rick Vredenburg


Recorded January 2013

Rick Vredenburg: Every job is different but every job is the same when it comes to risk. The risk for a project is not finishing it on time for a client. The risk on a job is getting somebody hurt. As a superintendent, if you don’t take control of your projects they just run away and you never get it back. You have to control everything about your projects — everything from safety, quality control, to scheduling, your subcontractors.

In my mind, risk is probably the number one thing that you have to control on your projects. Risk goes hand in hand with the money side — the financial side — of any project. Sometimes on the personal side, in your pensions and managing your funds, you decide on the category of risk that you want to take on. And then you have to depend on other people like our fund managers.

I think the key to my investments is diversification. In the American Funds, I am probably in 9 or 10 of the different funds, and not more than 15% in any one of them.

I started buying property in my early 30s. My brother and I currently own 160 acres in northern Minnesota that we harvested some wood on and basically paid for the property — and we still own it, and replanted it.

Long story short, I put a lot of money in my homes and properties. So over the years, I’m one of those people that you could describe as being cash poor, house rich, if you will. My home and the property that it sits on is worth quite a bit of money, and all of those properties will become part of my ultimate pension retirement fund.

Neither of my folks come from wealthy families, they were working class people, and that’s the way we were brought up. You don’t get nothing for nothing, you know. You had to earn what you…(laughs). When my dad could afford it, we got an allowance; otherwise we worked for whatever we got.

When I went to work in ’72 as a laborer, $7.25 an hour was pretty big money coming off the farm. So I was enjoying life. 

I got married at a later age, I think I was 34, 35, something like that. And longevity in my family isn’t that great, so I expect my wife to outlive me by probably 20 years, so I wanted her and the kids to be able to be taken care of.

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Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice. 

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