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As a beginner, what funds should I choose?

Dhirendra Kumar advises against small and midcap funds for a first time investor

I have selected 3 mutual funds where I want to invest for 5 years through SIP. They are DSP BlackRock Micro Cap Fund, SBI Magnum Multiplier Fund and SBI Magnum Midcap Fund. Given my time horizon, are these funds fine?
- Santosh, U.P.

Transcript: Start with balanced funds for a time-frame of 5 years or more. Picking a fund based on last years' performance is risky. Even with time-frames of 2-3 years, investors made little money in the period ending in 2013 and actually incurred losses in the period ending in 2008. For time-frames above 5 year, go for 1-2 multi-cap funds. Microcap funds will give good returns but can go down by 30-40% over short spans of time. This can utterly derail the investment plans of first time investors.