utual funds can be intimidating to beginners. One of the most frequently asked is, "Where do I start?" Whether you're just finishing college, newly married, freshly divorced or ready to retire, people simply don't know how to take the first step.

With the number of mutual funds approaching 10,000 - and most of them carrying minimums of $2,500 or more to get started - it's a good question. But don't despair. With as little as $50, you can build a portfolio on a shoestring. We'll show you how.

But what is a portfolio anyway? A portfolio is a collection of investments like stocks, artwork, bonds, gold and real estate. Your portfolio consists of all the assets you own. It represents the choices you've made with your money.

A real estate developer might have a portfolio of real estate. Your portfolio might only be equity in the house where you live and a savings account. Or perhaps all you have is a portfolio of compact disks - or used athletic shoes. Never mind. It's not too late to get started.

Each mutual fund represents a portfolio, too. In this case, it's a portfolio of securities. When you look at the prospectus or read about the mutual fund, you'll find out what kind of securities the manager buys. It might be small-company stocks, stocks in developing markets or municipal bonds.

When you invest in mutual funds, one fund is rarely enough because each fund specializes in a certain type of investment. One notable exception is the Spectrum Growth fund offered by T. Rowe Price, which invests in up to nine different T. Rowe funds, providing a diversified portfolio in a single fund. You can invest in Spectrum Growth for as little as $50, provided you agree to participate in what is called an automatic investment program. That means you arrange to have regular deposits made into the fund from your bank account or paycheck.

An automatic investment program is a great way to invest because it takes advantage of a strategy called dollar-cost averaging, which allows you to buy more shares when the market is down and fewer when it's up. Regular, systematic investing also imposes an important discipline.

One of the biggest mistakes novice investors make is buying and selling with their emotions. When the market soars they buy. When it sinks, they sell - just the opposite of what a successful investor does.

Signing up for an automatic investment program puts you on automatic pilot and removes the temptation to try to time the market. It works for beginners and pros alike. Don Phillips, chief executive at Morningstar Mutual Funds, the rating company in Chicago, uses an automatic investment program when he buys mutual funds. So do fund industry executives like Steve Norwitz at T. Rowe Price.

If you're a subscriber to Microsoft Investor's premium service , you can use its "Finder" to select the fund that meets your criteria. For instance, we ran a screen for funds that required a minimal initial purchase, the highest possible rating from Morningstar's fund-rating service, management tenure of five years or more, and the highest possible return. The result? Fidelity Destiny I, which is available with only a $50 initial purchase yet provided a 23 percent average annual return over the past five years. A caveat, however: Its manager just retired after nearly 20 years at the helm and Destiny requires you to sign up for a long-term investment plan. But what the screen shows is that there are funds available that have performed well over time that require only minimal up-front investments.

Sadly, many mutual funds have raised their initial minimum investments over the past several years because they've discovered that it costs a lot to service a small account - more than the fund gets in expenses from a small investor. Most still welcome beginners, though, so many of them have established automatic investment programs to accommodate them.

Out of the 553 fund families tracked by Morningstar, 220 of them offer such a program, according to Michael Bass, a Morningstar researcher. He adds that the number "may be a bit misleading," however, "because a family may offer only one of its funds to smaller investors."

That is the case with the Vanguard Group. Vanguard's known for offering good, solid fund choices at low expense ratios - an average of 0.3 percent, compared with an industry average of 1.43 percent.

In order to keep expenses low, Vanguard raised its initial minimums to $3,000. When an investor wrote to chairman John Bogle complaining that the new minimums would shut out small investors, Bogle relented - sort of. He kept the minimum at $500 for just one fund - Vanguard STAR, which invests in eight different Vanguard stock and bond funds.

To find out some additional good choices for beginners, we did a search of the Morningstar database looking for those funds that permit investors to start with just $50. To narrow the field a bit, we specified only funds with a five-year track record, ranked by return.

The search turned up 698 funds, including some top-notch choices and a couple of hundred lemons. Many of them are load funds, or funds that charge a commission. Some of these are very fine choices, such as Kemper-Dreman High Return Equity, the excellent Guardian Park Avenue and a number of funds from the American Fund group, such as Washington Mutual Investors. If you plan to use an adviser to help you invest, these funds are for you.

For those investors who plan to pick their own funds, the top fund on our list is a relatively new one, Excelsior Value and Restructuring. It's a mid-cap blend fund, which means it invests in medium-size companies - in this case those that manager David Williams believes will profit from change. The fund has returned a stunning 27.19 percent average per year over the past five years, which is precisely how old it is.

Number two on the list, Legg Mason Value Trust-Primary Class, with an average annual gain of 24.66 percent over five years, is a large-cap value fund. American Century-20th Century International Growth would add a growth-focused foreign player to this beginner portfolio.

For investors who want to use just one fund family, you should consider T. Rowe Price & Associates. This Baltimore-based family of mutual funds offers top performers in many different categories, making it an easy matter to put together a portfolio on a shoestring.

Some of the better ones include its Price Dividend Growth fund, its Equity-Income fund and its Mid-Cap Growth fund. Each has had average annual returns of about 20 percent or more over the past five years, exceeding Standard & Poor's 500 index.

Beginners who want to set up a starter portfolio at T. Rowe should pick either Equity-Income or Dividend Growth as a large-company fund. Both use a value strategy. The mid-cap growth fund makes a nice complement. If you can choose just one more fund, make it one that invests outside the United States.

Whichever funds you choose, you must use iron will. Successful investing requires discipline. It requires a plan. Due diligence can help achieve your goals.