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CNN Live Saturday

Interview With Jerry Idaszak

Aired January 26, 2002 - 14:11   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: The apparent suicide of a former Enron executive is the latest twist in the ongoing investigation into the company's collapse. A source tells CNN J. Clifford Baxter would likely have been interviewed by House investigators this coming week.

We're joined by CNN financial news reporter Fred Katayama with more on that -- Fred.

FRED KATAYAMA, CNN CORRESPONDENT: Well, Fredricka, Clifford Baxter's lawyer tells us that his client had been subpoenaed by at least two congressional committees, a subcommittee of the House Energy and Commerce Committee and the Senate Governmental Affairs Committee. His physical presence was required in order for him to submit the requested documents.

His lawyer adds that there were no signs of foul play in his client's death.

Baxter was found dead at 2:30 a.m. Friday just outside of Houston with a single gunshot wound to his head.

Right now, police have found his suicide note, but they're not divulging the contents of that note. His body has been handed over to county medical examiners and police hope to get a progress report on the autopsy and have a statement at 10:00 a.m. local, 11:00 a.m. Eastern on Monday.

Clifford Baxter's friends describe him as having been disappointed, depressed, over Enron's recent collapse. His friends say, however, that he didn't mention any disappointment over any congressional investigations or investigators requests.

They describe their friend as shocked, and as a family man, a person who really loved the sport of Yachting. Over at the Houston Yacht Club, where Baxter was a member, flags are flying at half-mast today in remembrance of him.

His lawyer tells us that Baxter will be buried in his home state of New York sometime this coming week.

And finally, over in Washington, the White House is ordering all agencies to review all federal contracts involving Arthur Anderson and Enron. They number more than 100 contracts valued at more than $70 million -- Fredricka.

WHITFIELD: All right. Thanks very much -- Fred Katayama, coming from Houston, Texas, updating us now on the Enron debacle. Thanks very much.

When energy trader Enron collapsed, pieces of the company fell, knocking out the life savings of thousands of employees. In the wake of the Enron debacle, people are now taking a closer look at their 401(k)s.

Here to talk about taking stock on your own retirement plan, Jerry Idaszak, an associate editor for "Kiplinger's Personal Finance Letter (sic)."

Thanks for joining us.

Well, this certainly has been a lesson learned for everyone out there. And we're hearing more and more from people who are now starting to backpedal that perhaps 401(k)s are not the best answer. What do you advise people out there right now?

JERRY IDASZAK, "KIPLINGER'S PERSONAL FINANCE": Oh, that would be a big mistake. There's about $1.7 trillion in 401(k)s. The alternative, if you don't put money in there, is you get money in your paycheck, but Uncle Sam takes a chunk out in taxes.

In contrast, if you put the money into a good investment, you can get a good return, compounded, and you don't pay taxes until you take it out when you retire.

You don't have to put it in company stock. In fact, we suggest that you put no more than 10 percent of your total 401(k) in company stock. But you should have it really in the stock market. It's historically delivered the best returns on any class of investment and it would be a mistake to read the Enron debacle as a lesson to exit from 401(k)s.

WHITFIELD: But it's understandable why this is so discouraging to so many people. We've read in one "Business Week" report recently that in the year 2000, on average Americans lost nearly $5,000 from their 401(k)s. So given that kind of discouraging news, in addition to Enron and now K-Mart also filing for bankruptcy, making a lot of workers out there uneasy, how do we kind of boost the confidence of Americans who want to have some confidence in the companies they work for as well?

IDASZAK: Well, in the March issue, which is not out yet but will be out soon, of "Kiplinger's Personal Finance" magazine, there are some excellent articles about how to split up your money into different kinds of stock market investments. Mutual funds.

One thing to keep in mind is patience. If you put in -- if you had $1 million, which is a lot of money, in the market in Standard and Poor index funds at the beginning of 2000, that was down to $800,000 at the beginning of this year. But if the stock market comes back and returns about 10 percent a year, which has been its historical return going back to 1926, you'd be back at $1 million by the spring of 2004.

So, the key again is diversity among stock market mutual funds, between growth companies and value companies, between big companies and small companies. And if you diversify, then you'll be shielded from the Enrons, the K-Marts and much of the collapses that you mentioned.

WHITFIELD: All right. Thanks very much, Jerry Idaszak of "Kiplinger's Personal Finance." We'll be talking a lot more over the next few weeks and even months to come about 401(k)s and the best advice, so we may be asking you to join us again. Thanks very much for joining us.

IDASZAK: You're welcome.

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