Are Your Long-Term Investments Sending Money Down The Toilet?

You might

your long-term investments are safe. But are they? Just as easily as money can be made, it can be lost if you don't have the right plan. To help you overcome some of the obstacles surrounding long-term investments, we've compiled a list of plans that you should avoid at all costs.

– Stocks move up and down for many reasons. If the reason is because the underlying company is weakening, it is time to get out. It is better to pull out and re-invest the money in a good company than it is to sit on the current (dangerous) investment and hope for a recovery.

– Another problem with long-term investing is rooting for stocks that were once successful. You wouldn't invest in a company that once had explosive growth from sales of parachute pants, would you? There is no sense in buying a once-successful company if its time has come and gone.

– Airline stocks fall in and out of favor at the drop of a hat. Difficulty hedging fuel prices and production delays from aircraft manufacturers can send airline stocks from hero to zero. It's one thing to profit from a company that is having near-term success; it's another to think the success will last forever. Avoid airline stocks!

– Selling stocks into natural disasters or other panic scenarios will almost never make you money. If anything, buying appropriate companies at the right time (such as Caterpillar

, during the Japan disaster) can position you in a great company at a great price. Selling on a panic is the quintessential meaning of buying high and selling low.

– Diversification is the key to a successful portfolio. Even the most successful companies always run the risk of failure, and it makes no sense to put all of your money at the mercy of one stock. A typically well-balanced portfolio consists of five key parts: 1. Cash – If all of your money is tied up at all times, you have no way of taking advantage of buying opportunities on a down day in the market. 2. Precious metals – Gold and Silver are terrific stores of value, and do not lose their value as easily as fiat (paper) currencies do. If you do not own the physical metals, the Gold ETF

and Silver ETF

are good bets. 3. Dividend stocks – More than 40% of the returns on stocks come from dividends. Many companies pay out portions of their quarterly earnings in the form of dividends, some paying out amounts north of 5% of their stock price. Why not take advantage of companies that pay YOU to own their stock? 4. Growth stocks – Although growth stocks carry more risk and volatility than defensive stocks, it can still be very profitable to have some exposure to super-star technology stocks, or up-and-coming pharmaceutical companies. As long as you believe the growth stock(s) you own have sustainable growth, there is no reason not to own them. 5. Defensive stocks – Defensive companies are generally those that sell everyday goods and have little growth. Although companies like Colgate-Palmolive

and Coca-Cola

can be snoozers, these companies make their money regardless of the economic environment, in addition to paying out reasonable dividends. After all, people still brush their teeth and drink soda in a recession.