Could The Enron Disaster Hit Home?

Imagine owning stock in a company that a year ago was worth 81-dollars a share and now is worth lesss than 81-cents a share. That's exactly what happened to Enron shareholders, especially those who held Enron stock as part of their 401k retirement plan.

Biloxi financial planner Eddie Diaz says those shareholders are left with few options. "They really don't have too many options, here is a stock you can't sell and can't trade," says Diaz. He also points out, there are lessson to be learned from the Enron disaster " First, if you own a 401k, don't put all the money in your company's stock, that's the mistake a lot of Enron employees made. I think the lesson of not having all your eggs in one basket, you really have to do diversification when you invest."

Many employers are like Southern Company. The parent company of Mississippi Power, Southern offers employees a 401k  plan. Among the options they have is to invest in Southern Company stock. Brautigam says "I would be surprised if any have all in one fund or stock, or the parent company stock."

Brautigam says investing in Southern Company stock is just one of 20 investment options employees have. He also points out, a lot of potential problems can be avoided if, employees make an effort to understand what investing in their 401 k plan is all about.

By Jeff Lawson