True story: A family member recently asked me the best way to invest the $8,000 that, for the past few years, has been safely stashed away under a mattress. This family member -- let's call her "Mom" -- wanted to put the money aside for her grandchildren but did not want to expend a lot of time and effort actively managing this relatively small amount of money (which probably explains why it was stuffed under her mattress in the first place).

The answer, as you might have guessed, is: "It depends." Generally, the answer lies in the details of each individual investor's specific situation. One size definitely does not fit all.

In Mom's case, she wanted to set up a single account, invest the money "aggressively," and let time and the market work their magic. These requests, together with her estimated investment period of 20 years, helped me come up with a strategy for putting the money to work.

The magic of mutual funds
To the fund geeks over at Motley Fool Champion Funds -- yes, I'm including myself here -- the nuts and bolts of mutual funds are near and dear to our hearts. Comprising the industry's best and brightest minds, mutual fund managers stand at the ready to do the heavy lifting when investing our money in a universe of mutual funds that runs the gamut of diverse investment strategies. Whether you favor U.S. or foreign companies, bonds, or narrowly focused industry sectors, there's almost certainly a mutual fund out there that will appeal to you.

The key for the individual investor is in assembling a portfolio of investments that span multiple asset classes. It's crucial to come up with a broad asset allocation plan before trying to identify specific investments. The percentages set aside for each asset class within a plan determine its overall risk level. Shannon Zimmerman, fund geek extraordinaire at Champion Funds, has assembled a set of model portfolios from the select set of funds that have met his stringent criteria, giving subscribers a valuable tool for meeting their investing goals.

Unlike individual stocks, mutual funds impose minimum initial purchase requirements. The minimum purchase amounts established for each fund are, in general, lower for tax-advantaged accounts than for taxable accounts. For most mutual funds, you can expect to find minimum purchase requirements ranging from $1,000 to $3,000 in a taxable account.

So you can see that trying to assemble a diverse portfolio of mutual funds on a limited budget can present something of a challenge. One approach is to fill a portfolio with index funds. They're an inexpensive way to get exposure to a broad range of investments. However, I'm a firm believer in the theory that a diversified portfolio of actively managed funds can outperform a portfolio of index funds. With any index fund, you're pretty much guaranteed to underperform the index by the expense ratio of the fund you choose to track it.

Building the perfect beast
With all this in mind, I took Mom's mattress fund and opened a brokerage account. There's a broad range of respectable brokerage firm choices out there, but in order to minimize fees, I ultimately chose Firstrade for its rich set of no-load mutual funds -- all available with no transaction costs.

Because I was going to be limited in the total number of funds I could ultimately purchase -- as a result of each funds' minimum purchase requirements -- I limited my search of U.S. equity funds to those with a "blended" investment strategy. As the name implies, a "blend" fund category is one with an investment strategy that's a mix of growth- and value-oriented styles. Many mutual funds fall into this category.

The funds I wound up investing in sport holdings in a diverse group of quality companies, including Berkshire Hathaway, Texas Instruments (NYSE:TXN), Scientific-Atlanta (NYSE:SFA), and Novartis (NYSE:NVS). A good dose of broad international exposure was obtained with companies like GlaxoSmithKline (NYSE:GSK), Sony (NYSE:SNE), and Dodge & Cox International (FUND:DODFX). Dodge & Cox's minimum purchase requirement of $2,500 was a little rich for the amount I had to work with, but it's such a stellar fund that I just had to incorporate it. These limitations also forced me to exclude exposure to fixed-income funds (which was fine for a long-term aggressive investment) and sector funds (which would be too aggressive for a portfolio of this size).

Ultimately, I wound up investing in six different mutual funds and assembled a portfolio with the following asset-allocation percentages: large cap, 31.25%; mid cap, 25%; small cap, 12.5%; and international, 31.25%. The portfolio sports a miserly weighted expense ratio of 0.96% and an average management tenure of 9.9 years.

Low expenses, low turnover, and lots of manager tenure -- that's Shannon's secret to mutual fund success. To date, his Champion Funds recommendations are ahead of the market by 12 percentage points. Click here to take a 30-day free trial and get on the way to building your own perfect portfolio. (A free trial also gives you access to the subscriber-only discussion boards, where I'll be discussing Mom's portfolio in more detail -- including the specific funds I chose.)

As for Mom, well, I think we've built her a winning combination.

GlaxoSmithKline is an Income Investor recommendation.

The only thing under Mark Evangelisto's Mom's mattress these days is a thick layer of dust bunnies and dog hair. Mark owns shares of Dodge & Cox International Fund. This message is sponsored by the Fool's disclosure policy.