If You Could Make Only One Investment ...

Music geeks tend to be big fans of the BBC's "Desert Island Discs" game: If you were stranded for the rest of your life, which eight albums would you want for company?

Investing geeks can't resist changing the question and raising the stakes: If you could make only one investment for the rest of your life, how would you proceed?

Better living through cheating
Me? I'd cheat. When it comes to music, box sets like, say, The Glory of Russian Opera are the only way to go. And with investments, mutual funds should be your vehicle of choice. Why place all of your hard-earned moola on a single horse when you can spread your bets around and sleep peacefully with a top-notch fund?

On that front, Vanguard 500 Index (VFINX) and the SPDRs (SPY) exchange-traded fund are viable options -- low-cost S&P 500 trackers that rise and fall with a benchmark that counts Procter & Gamble (NYSE: PG) and Microsoft (Nasdaq: MSFT) among its top 10 holdings.

And these days, you can easily track other bogies. Value hounds may gravitate toward iShares Russell 1000 Value (IWD), an ETF with top holdings of ExxonMobil (NYSE: XOM) and AT&T (NYSE: T). If you're looking for a growthier vehicle, that's not a problem, either. The iShares Russell 1000 Growth (IWF) ETF is a simple way to dial up your exposure to racier plays such as Apple (Nasdaq: AAPL) and Intel (Nasdaq: INTC), which have earnings-growth estimates greater than 17% for the next five years.

That said, investing in even rock-solid index funds means that you're destined to lose to the market: The most you can realistically expect is for your funds to lag their benchmarks each year by about the amount of their expense ratios.

The good news
Fortunately, you can do better than that. There are world-class actively managed funds out there with fortunes that aren't tied to an index, and managers who have shellacked the market over the course of many years. The question is how to find them.

Amanda Kish, advisor of Motley Fool Champion Funds, often focuses on managerial tenure because it goes a long way toward helping you zero in on a short list of worthies. A fund may have a stellar track record, but if the stock picker who earned those high marks isn't still in charge, that performance history doesn't tell you a thing about the fund's forward-looking prospects.

A fund's price tag is a critical piece of the puzzle, too. Expense ratios come right out of your returns, after all. All else being equal, the lower they are, the bigger your nest egg.

But all else isn't equal
There are plenty of other variables, of course, but starting with those will take you a long way.

Of course, if you're pressed for time or ideas, Amanda and team consider all those data points and more at Champion Funds, the Fool investment newsletter dedicated to mutual funds. So far, nearly 90% of the team's picks have made money for shareholders since being recommended, and that's amid less volatility than you'd experience with a portfolio of stocks -- much less a single pick! For a sneak peek at our lineup, click here to take Champion Funds for a risk-free spin.

This is adapted from a Shannon Zimmerman article originally published Oct. 3, 2006. It has been updated.

Claire Stephanic does not own any of the stocks mentioned. Microsoft and Intel are Inside Value recommendations. The Fool has a disclosure policy.