Ford Motor Company (F), General Electric Company (GE): Pension Funds Are Fleeing Stocks. Should You?

By contrast, once you stop working, you won’t be in a position to add any more contributions to your retirement savings. Given that most people can’t save enough to provide for a secure retirement with ultra-safe bonds, taking a more aggressive stance toward retirement investing is pretty much a necessity.

Moreover, you don’t benefit from the same accounting rules that pensions enjoy. A rise in interest rates may reduce pension-fund obligations, but it can also crush the value of a bond-rich portfolio. If you take on a lot of bonds in your portfolio, rising interest rates could create capital losses — the opposite result of what you would have intended.

Follow your own path
Doing what pension funds do may make sense intuitively, but moves from Ford Motor Company (NYSE:F) and others to sell stocks aren’t an implicit call for an imminent stock-market crash. Rather, they reflect specific accounting rules that don’t apply to you, and so following their lead could have much less attractive consequences for your retirement savings.

The article Pension Funds Are Fleeing Stocks. Should You? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford and United Parcel Service. The Motley Fool owns shares of Ford, General Electric, and Lockheed Martin.

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