How do I compare mutual funds with fixed deposit?

A Fixed Deposit gives you fixed interest on your investment for a fixed time (tenure). There are two issues:

1. But you have to pay income tax on the returns each year which drags down compounding of your money.
2. The interest rate will likely change when your term is over.

With a cash mutual fund or liquid mutual fund:

1. You get an interest which is slightly higher than bank interest.
2. Tax is due only when you redeem. This helps in compounding growth.
3. If you redeem after 3 years, then tax is much less as your gain is offset against inflation.

Also read more on why banks are like clearing desks and not piggy banks: https://www.jama.co.in/bank-savings-accounts-are-like-working-desks-not-piggy-banks/