Market volatility can give even the most risk-tolerant investors a bad case of the willies, so it's worth remembering that stuffing money under a mattress carries risk, too. Thanks -- or no thanks, really -- to pesky inflation, a mattress account will lose value year in and year out, dragging your purchasing power down with it.

That said
Make no mistake: Volatility comes with investing like fleas come with a dog, so savvy types will want to take steps to cushion the fall when Mr. Market throws one of his periodic temper tantrums. Kohl's (NYSE:KSS) and Harley-Davidson (NYSE:HOG), for example, boast double-digit earnings-growth prospects over the next five years, yet during the past 12 months through Monday's market close, both have suffered stock-price declines.

How to proceed? Well, for my money, a smart way to own racy growth vehicles like those is to offset them intelligently with more buttoned-down plays such as Home Depot (NYSE:HD) and Goldman Sachs (NYSE:GS)  -- two companies with price-to-earnings (P/E) ratios that clock in below the broader market. Time Warner (NYSE:TWX) and Safeway (NYSE:SWY) strike a similarly discounted profile.

Better yet, you could have the best of both worlds. You could own all the aforementioned stocks in the context of a carefully calibrated portfolio, one assembled by a talented team of money managers and sporting a price tag considerably less than 1%. I'm talking about a world-class mutual fund, of course, one that includes each of the stocks I've called out above. Since I tapped this fund as a recommendation for the Fool's Champion Funds investing service, shareholders have been treated to a gain of roughly 58% -- and far less volatility than they would experience with a stocks-only portfolio.

Why funds?
I'd argue that even investors of the stock-jock persuasion should at least contemplate laying a foundation of funds before taking on the additional risk that comes with individual stocks. Doing so can help keep you in the game when the market hits the skids, which means that you'll be there for the all-but-inevitable rebound when it occurs.

Not just any fund will do, of course. That's why Champion Funds zeroes in on top-shelf picks that can help increase and protect your nest egg -- and let you get your beauty rest as you work toward financial independence. That's a winning combination, and so far, so good: Despite all the market's ups and downs, all but one of our picks are "in the green."

If you'd like to sneak a peek at our Champion Funds winner's list, just click here for a completely free 30-day guest pass. There's no obligation to subscribe.

This article was originally published on March 27, 2007. It has been updated.

Shannon Zimmerman does not own shares of any company mentioned. Symantec and Home Depot are Motley Fool Inside Value recommendations. Time Warner is a Stock Advisor pick. You can check out the Fool's strict disclosure policy by clicking right here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.