Fund vs Savings account

Ok, I admit I'm a moron, and I'm ugly, fat, smell of elderberries, wear combat boots, yadda, yadda, yadda... oh wait, where was I going with this?

Oh yeah, so I'm trying to understand how buying shares in a fund is better than putting the money in my savings account. I hear folks say "more risk = more return", that's great... way to hold up the party line and all that. So, doing a simple experiment using my monkey brain....

1. I deploy $500 to buy 50 shares of an "income" fund on the market. (I think that means its an ETF, "exchange traded fund". If not, please correct me so I can sound smarter at parties.)

2. Similarly, I deploy $500 into a money market account at the ole' credit union ...at an embarrasing 2% APR. (But hey, I can get a loan at 9%, wow, isn't that awesome, how can I go wrong! Spider man, spider man, does what ever a.... doh, monkey brain.)

OK, now the back side of this happy little equation...

1. Each month my fund returns a "whopping" .09 dividend per share. Holy cow, every month... not every quarter (4 times a year), but every month (12 times a year). So, at .09 a share each month, times my 50 shares, I'll receive $4.50 a month assuming the dividend holds each month.

2. To get apples to apples, my CU returns $10 a year (500 * .02). Then I divide that into 12 in order to see it in similar monthly increments, so I can compare it to the ETF. That means each month I'll receive roughly 0.83 for that parked money in the money market account.


So, based on my simple experiment, it certainly would seem that $4.50 a month for that $500 is better than .83 a month for the $500 at the CU. Where am I going wrong here? I'd love some input from anyone who has been burned using this line of thinking.

And now, back to the important stuff.... "spider man, spider man, does whatever a spider..."