Asset Return Overrides

Every fund in the catalog comes with a default return built from its own history: a long-run average return, the yield it pays out, and how that yield splits across tax types (returns and distributions). An asset return override lets one scenario replace that default with its own assumption for a single fund. For example, “I think total-market stock returns 7% with a 2% yield from here, taxed mostly as qualified dividends.” An override is an assumption you make, not a rule FinZot checks. FinZot reports your number as confidently as any historical figure, so it is only as good as the guess behind it.

An override applies to the fund everywhere the plan holds it, in every account and every lot. To change a fund in one place but not another, hold a custom asset based on it there instead.

Two overrides, set independently

A fund’s override has two parts. You can set either one on its own.

Override	What it changes	Which runs it reaches
Return rate	The fund’s total return, the yield it pays, and optionally the spread of its trial returns	Detailed projection and Monte Carlo trials
Tax mix	How that yield is split across tax types	Every run

Why the return-rate override reaches only two runs while the tax-mix override reaches all of them is explained below.

The return-rate override

A return-rate override sets two numbers that always go together: the fund’s total return and its yield. It may also carry a third, a volatility target for the trials (The volatility setting). Price growth is what is left after the yield. A 7% return with a 2% yield means the fund’s price grows 5% a year and pays 2% out as distributions. You give the return and the yield, and FinZot derives the growth. You can change just one by leaving the other at the fund’s historical value. For example, keep the historical return and only raise the yield.

An override applies to every year of the projection. It cannot be scheduled to change over time. To vary the blended return across the plan, change the account’s mix with an allocation glide path instead (allocation, lots, and selling).

Which runs it reaches, and why

A return-rate override changes the runs built around an expected return. The runs that replay the actual size of specific historical years drop it.

• Expected returns, the default. This path uses each fund’s long-run average return every year (Projections & Monte Carlo). A return-rate override is simply a different average, so it applies directly and moves the headline numbers.
• Monte Carlo trials. Each trial replays a sampled slice of real history. For an overridden fund, the sampled returns are recentered on your override. FinZot shifts each sampled year by one constant so the fund’s compound average lands on the return you set. The year-to-year ups and downs keep their historical shape, so the volatility and the sequence of good and bad years are preserved. If you also set a volatility target, that spread widens or narrows to match. The yield is recentered the same way. A trial still carries real sequence-of-returns risk, but around your expected return rather than the fund’s historical one.
• Historical replay. The override is dropped for the replayed years. A replay exists to show the actual return of chosen years, such as 2008 at its true depth. Recentering them on an assumption would defeat the purpose. A single Monte Carlo trial viewed in full detail is not a replay in this sense. It recenters on the override exactly as the trial did.

So a return-rate override does move your success rate. The trials are recentered on it, so a higher or lower return raises or lowers the survival rate. Only the historical replays ignore it, because they exist to reproduce real history.

The volatility setting

A return-rate override can also carry a Custom Volatility: the standard deviation of the fund’s year-to-year returns, the same number a fund fact sheet reports. US total-market stock history runs about 18%. Left alone, trials keep history’s spread. Set it, and FinZot stretches or shrinks each sampled year’s distance from average until the spread matches your number, while the compound average stays pinned on your return. The two settings never interact. Changing the volatility does not move the return the plan compounds at, and changing the return does not move the volatility.

Every sampled year keeps its place. Years keep their order and their relative distances from an average year, and two funds sampled in the same trial year keep their historical co-movement. The stretch does not skew anything toward gains or losses. For example, with a 10% return and 30% volatility, the spread is stretched by about 1.64 times and then shifted down by about 3.2 points. The 1931 return of −44.1% becomes about −75.6%. The 1933 return of +57.2% becomes about +90.6%.

The setting has a per-fund maximum. A stretch extreme enough can only be satisfied by pushing the window’s worst year toward a total loss while lifting every other year to compensate. Nobody intends that distribution. FinZot rejects any combination whose worst stretched year lands below −95%. The editor caps the volatility per fund at the largest value guaranteed to clear that floor at any return of 0% or higher. For US total-market stock history, with a spread near 18% and a worst year of −44.1%, the cap lands near 34%. The cap does not move with your return. Only a negative return override can push a near-cap target past the floor. That run fails with an error naming the fund rather than produce the distribution.

Volatility only means something where returns vary, so the setting reaches only the Monte Carlo trials. On expected returns the detailed projection compounds at your flat return and has no spread to widen. A historical replay shows actual years and drops the volatility along with the rest of the rate override.

Your return is a compound average. When returns vary there are two different “average returns”, and the volatility setting makes the gap between them visible. The return you enter is the compound average: the rate money actually grows at, and the rate the middle of the trial cloud tracks. The arithmetic average is the simple mean of the yearly returns. It is always higher when returns swing, because losses hurt more than equal gains help. A +50% year followed by a −50% year averages to 0% but leaves you down 25%. The gap is roughly half the variance, so it widens as you raise the volatility. Trials that compound at 10% with 30% volatility have yearly returns that average about 13.8%. FinZot shows this implied arithmetic average beside the volatility setting.

Use that figure to translate whatever source your assumption comes from.

Your source quotes	What to enter
A compound growth rate, such as a fund fact sheet’s average annual return or a historical CAGR	That number as your return. The implied arithmetic average is for information only.
An arithmetic expected return, such as academic building blocks or most plain Monte Carlo tools	A lower return, chosen so the implied arithmetic average matches the source’s number.

Entering an arithmetic figure directly as your return double-counts the drag between the two averages. The plan then runs more optimistic than the source intended.

The tax-mix override

The tax-mix override leaves how much a fund returns and yields untouched. It changes only how that yield is taxed. A fund’s yield divides across four tax types: qualified dividends, non-qualified dividends, long-term capital gains, and interest (returns and distributions). The override re-slices that split into percentages you choose, and they must add to 100%. Each year, each tax type receives your percentage of that year’s total yield.

Moving a fund from 95% qualified and 5% non-qualified to 50/50 shifts income out of the lower long-term rate and into ordinary income. The point is to model a fund whose payouts are taxed differently than its history assumes. You can only assign tax types the fund actually pays. You cannot route its yield to a type the catalog says it never distributes.

Unlike the return-rate override, a tax-mix override travels with the fund into every run. A trial replaying a real past year still splits that year’s actual yield by your percentages. So do the reconstructed pre-history years before a fund’s own record begins.

Combining both

When a fund carries both overrides, they stack. The tax mix re-slices the yield, and the return-rate override sets the yield it re-slices. On the expected-returns path, a 4% yield with a 25/75 qualified/non-qualified split on a $500k holding pays $20k of distributions: $5k qualified and $15k non-qualified. In a trial the yield is recentered on that same 4% target and the split still applies, so each trial year’s distribution is your recentered yield, split 25/75. Only a historical replay drops the yield override. There the distribution is that year’s actual total, still split 25/75.

What a fund lets you override

Not every fund can take a return-rate override. Each catalog fund declares how far its return is open to change, and an override can go only as far as the fund allows.

A fund may permit	Effect
Nothing	The fund’s return is fixed at its historical value.
Return and yield	Both may be replaced.
Return only	The yield stays at the historical value.
Yield only	The return stays at the historical value.

This limit applies to the return-rate override. The volatility setting follows the return’s permission. Any fund whose return may be replaced can also take a volatility target, up to that fund’s own maximum (the volatility setting). The tax-mix override is available for any fund that both permits overriding and pays more than one kind of distribution.