There are different fund types, and you should choose the fund you wish to invest in depending on your investment horizon, risk appetite and returns expected. The most frequently purchased categories of funds are:Large Cap: These funds invest in large companies with proven track record, ideal for investors seeking stable returns over 3-5 yearsMid Cap : These funds invest in mid-sized companies. Suitable for investors seeking high returns over 5-7 years, funds have higher risk than large cap but lower risk than small cap fundsSmall Cap : These funds invest in young companies, ideal for investors with high risk appetite and seeking high returns over 5-7 yearsMulti Cap : These funds invest across companies of all sizes, ideal for medium to high risk takers looking at medium to high returns over 5-7 yearsTax saver : Save up to Rs. 46,800 in taxes by investing in tax saver funds. These are also known as ELSS (Equity Linked Savings Scheme) and they offer twin benefits - tax saving and wealth creation. ELSS has the lowest lock-in period of 3 years.Balanced Funds : These funds invest in a mix of stock market and bonds, Ideal for investors seeking higher returns than liquid / debt funds with moderate risk appetiteLiquid Fund : Park your surplus cash here, withdraw anytime and earn relatively better returns than conventional savings options.