Monthly withdrawals from Growth Combined Fund

A policyholder had about 47,500 units units of the Growth Combined Fund with a value of $87,700.

She wished to make monthly withdrawal of $400 opr $500 from this fund. Assuming that the investment grows at 5% per annum, the money will last as follows

monthly withdrawal $400 - total of 45.7 years
monthly withdrawal $500 - total of 25.6 years

By increasing the payount by 25% (from $400 to $500), the payout period is reduced by 44%. It could be due to the effect of a shorter period of compounding.

The policyholder was happy with the return on the Growth Combined Fund, and the long period for which the payout is projected to be available. She thinks that this scheme is suitable for retirees.