Mutual funds offer some of the easiest vehicles to invest money into the stock, bond or commodities markets, and by maintaining a low cost of entry and a high-level of diversification, they allow the average investor easy access to markets that he or she would not have had otherwise. But how do you, as a serious wealth builder, take advantage of mutual funds to amass a massive portfolio? In other words, how to build wealth using mutual funds? The answer, it turns out, comes down to selection, selection, selection.

As you know by now, to make serious money in the stock and bond markets requires you to take large positions in the stocks and bonds you favor. For example, if you wish to earn a million dollars on a stock that is expected to be a ten-bagger, you need to invest $100,000 in that stock! If that scares you, and you instead diversify across ten different stocks ($10,000/stock), your net worth at the end of that single stock's 10X run would probably be about $200,000-$220,000 (depending on how the other nine stocks do). To get to a million dollars, you will need to continue to find more big winners, and hold on for the ride. And it will take you much longer overall to get there. This is exactly why Warren Buffett advocates putting all your eggs in one basket and watching it closely. But mutual funds offer an escape path - a way to get your diversification and to own a large position as well.

But to do that, you need to pick a mutual fund that will be your fund of choice for a very long period of time. You must love the manager(s), love the management style, love the past results, love their performance through bull and bear markets - overall like them enough that if you were to ever run your own mutual fund, that is whom you would like to run it like. Given that kind of love, start contributing regularly to that mutual fund - choosing monthly, quarterly or annual methodologies for adding more money. We would not recommend moving all your assets in one fell swoop - but to spread it out over time. This allows you to observe the fund's behavior as well as its price action over a period of time, and gives you the benefit of dollar cost averaging as well.

Track the management behavior and portfolio changes over a period of time to verify that nothing has changed significantly from your expectations. And keep adding to your portfolio. Soon enough, you will be holding a significant portfolio at this mutual fund, whose managers will be hard at work protecting your capital in tough times, and growing it in good times. One mutual fund is all you really need to get as much diversification as you need to protect your portfolio - but you must make sure to make it a good one.

We are fans of value investing, and that is where our comfort zone is and where the majority of average investors should be. But holding onto a "boring" value stock fund requires time and patience.

Good luck with your selection!