I'm trying to compare the performance of monthly income plan at banks and in mutual fund, not considering any other risks and hoping the performance stays steady. An example for my understanding:
- The N.A.V. price per unit for a mutual fund on 1st April 2016 was 14 credits.
- It has a face value of 10 credits per unit.
- It has declared on an average 0.0451 credits per unit dividend for each month of last year.
- Expense ratio for the fund is 1.42%.
- This is not an exchange traded fund.
So if someone would invest 14000 credits on 1st April 2016, he'd get monthly dividend = ((14000 ÷ 14) × 0.0451) × (1 - 1.42 ÷ 100) = 44.459 credits, right?
Whereas for a MIP at bank where the interest rate was last year 6.5% per annum, the same 14000 credit would earn a monthly interest of = (14000 × (6.5 ÷ 100)) ÷ 12 = 75.833 credits.
So am I calculating the dividend correctly? Can I then consider the bank deposit earning a higher income per month than the mutual fund scheme?