* Do diversify your portfolio. Your investment portfolio should include a mix of stocks, mutual funds, and bonds to give it balance. This kind of diversification reduces your risk of loss as the market swings up and down. For example, if one sector of your portfolio is performing poorly, the other sectors will likely offset it. Like the old saying goes, it's never a good idea to put all your eggs in one basket.

* Do compare brokers. Shop around before you settle on a broker to start handling your investments. You'll also need to decide how much involvement you want your broker to have. If you have knowledge of the stock market and how it works and feel comfortable making your own investment decisions, then a discount broker is probably what you'll want. However, if you're new to trading and not entirely comfortable making those important decisions, you may want the advice and recommendations of a professional full-service broker. Once you decide which type of broker you need, take a look at the fees that are required. Compare commission fees to help you decide which one will work best for you.

* Do calculate risk. Before you make an investment, examine the risk that's involved. Is the company performing well? What is their history of earnings growth and dividend yields? How is the market performing overall? These are all questions that will help you determine how much risk is involved with your investment.

* Do make informed decisions. This goes hand in hand with calculating the risk of your potential investment. You'll want to know as much as you can about the market and the stock you're interested in before you decide to purchase stock. Gathering as much information as you can will help you make the best decision.

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* Don't put all your money into one stock. Putting everything you've got into one stock is a risky move that can lead to disaster. Similarly, limiting yourself to just one type of stock (i.e, large cap domestic growth) is also not a good idea. It's better to spread your investments over several different stocks and types of investments you'll reduce your risk of loss and most likely make more money over the long term.

* Don't wait to start investing. If you're able to start investing, then do it as soon as possible. The sooner you start an investment portfolio, the sooner you'll start seeing your money expand. Procrastination and investing just don't go together; start early and get the most for your dollar.

Deciding to start trading stock and building an investment portfolio is a big deal that requires knowledge and competent decision making. Whether you've got the help of a full-service broker or are going it alone, you need to know what's best for you and your money, you need to understand the do's and don'ts of investing.

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