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Josh Schmidt Financial Case: Financial Strategies


Financial planning is an important tool in establishment and achievement of personal and organizational goals. It is important that an individual plans his or her life’s financial well being in order to establish the financial position at the retirement time. Josh Schmidt planned his financial plan that has been examined in this paper regarding its strengths and weaknesses as well as the validity of some items in the plan.

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Financial SWOT Analysis of Josh Schmidt

The SWOT analysis involves examination of Josh Schmidt’s internal environment that involves establishment of his strengths, weaknesses, opportunities and threats that he has applied in his financial plan. Through the establishment of these parameters, it is possible for Josh to establish the best strategies that can suit his plan.


To begin with, Josh’s investment plan has the strength of knowledge and skills. Josh is a graduate in HBA from Richard Ivey School of Business. This means that Josh is already skilled in administration and investment of his funds and he does not need to hire another broker or third party to do the investment on his behalf. His knowledge in financial investment is an asset to him because it will enable him to determine the best investment ventures to venture into without struggling. For instance, he is knowledgeable about the Canadian securities and he has acquired pragmatic experience in investment before the recession (European Studies, 2011, p. 2).

In the short run period, Josh has an advantage of minimizing costs by staying and working in St. John’s Newfoundland in an asset management company. This location is good because he will be able to minimize his costs. To begin with, he will be staying at home thereby saving on the money that he would have spent by moving out to a new place or apartment. By staying in St. John, he will qualify for a $20,000 refund from the school in its graduate retention rebate program. These funds can be used for investment rather than spending.

Josh has an advantage point because he is not beginning from scratch. He has some investment that he had made before. For instance, he has an approximate amount of $51,700 that is comprised of $9,000 cash and $42,700 in equity while owning 32.1% as net worth in a newly established firm that is valued at $1 million.


Josh is making some assumptions that he is not very sure that they will be true. For instance, he stays at home in the short run thinking that when the economy will begin to expand, there will be increased inflation and interest rates which will affect investment. However, it is not clear the time when the economy will begin to expand.

Another weakness is that Josh has some plans such as investment and personal family life that have conflicting interests especially regarding the use of funds. For instance, while investment objectives would require funds to invest and increase his net worth, the family will require more funds for up keep thereby reducing his available funds to invest. In addition, the family will demand his time that he should be allocating to work. This will minimize his full maximization of opportunities and therefore reduce his chances of meeting his financial objective (European Studies, 2011, p. 4).

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Josh can only invest in financial organizations in which he knows the management team in person or by employing a broker. Therefore, any form of limitation regarding this could impair his investment vision. Lastly, all these investments require active participation of Josh. However, he has not factored in his ill health that could permanently impair him in achieving them. Therefore, despite the form of insurance undertaken, he may not achieve the set financial goals.


Josh has an opportunity of completing his master’s program immediately in the short run period by enrolling in a university in St. John. The program will be funded by taking a student loan. By increasing his education, his financial knowledge will be doubled and therefore increase his expertise in accomplishing his set objectives. He has the opportunity of establishing other ventures with other firms through joint ventures and partnerships rather than own venture. This is a good opportunity in cases of inadequate capital.


Josh has an objective of acquiring a man cave and a helicopter in the short term period so that they can help him in the mid life crisis and after his retirement. This is a good strategy but it is poorly timed. The valuation of the assets is at the current price and by the time he acquires them, their prices may be higher. In addition, the assets are not income generating and will take a lot of his cash that could be useful in investment and increasing his net worth. Further still, Josh plans to purchase expensive toys for his children. These toys will still increase his financial burden that may affect his financial plan (European Studies, 2011, p. 4).

Time is another threat to Josh’s financial plan. While much time will be taken up by the family, more time will be eaten up by his commitments to the financial services company that he will be working with. While working with The Rock managed investments, he will not be allowed by the organization to practice by trading in Canadian or U.S. equities. Therefore, it will be difficult for Josh to continue doing it by and he will be required to hire a broker, which is an extra cost to him.

Interest rates are always volatile based on the prevailing market conditions. Low interest rates are a threat to Josh financial investments and there continuity to the long term could affect his financial plan since he may not realize increased returns hence not achieving set objectives. Moreover, this may avail no investment opportunities for him. Capital is a significant aspect to establishment of an organization. Josh Schmidt faces challenges of inadequate capital especially the time he will be establishing his own firm. This could be caused by his invested funds in Canadian securities being tied up in a private venture thereby offering him no liquidity (European Studies, 2011, p. 7).

Which Variables of Plan can Fail and Why?

Josh has included many variables in his financial plan some of which their viability is not guaranteed. To begin with, Josh has included the interest rates that determine the earnings on investments as well as the level of borrowing. The interest rates that Josh is working with are volatile and cannot be trusted to last for long. Although Josh argues that he will adjust his incomes with the interest rates, any reduction in interest rates will mean reduced earnings on his investments and the overall effect will be reduced income. The interest rates may fail because of the policies of the federal government that need to increase economic activity or reduce appropriately so that it can achieve some objectives such as reduce inflation, or maintain low rates among others.

Inflation is the other variable that Josh has included in his planning. Inflation varies with time given the level of money supply in the economy and the level of economic activity. The variable may fail in the long term period because of the changing priorities of the Federal Reserve and the government. The need to stimulate economic activities by the government may entail increased supply of liquidity thereby increasing inflation and vice versa. On the contrary, reduced economic activities that could be attained through increased interest rates could lower the level of inflation. The fluctuation of the level of inflation frequently could affect expectations of Josh Schmidt’s financial plan with intended objectives being missed (Stoval & Maurer 2011, p. 57).

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Risks in Josh’s Plan

The risks in Josh plan arise due to his unrealistic nature of a few items. To begin with, Josh would like to attain much money within a short period. He hopes the funds that he will obtain from his four year period of employment at The Rock Managed Investments would be enough to enable him meet his financial investments, establish a company and still be left with some money for his family’s social life. It is quite unrealistic given that his current level of investment and net worth has been accumulated over a period of nine years. In addition, it will be difficult for him to achieve all these due to limited time (European Studies, 2011, p. 6).

The plan to purchase some assets such as a helicopter for the family in the middle term is not possible given the large financial responsibility that Josh has. For instance, he intends to establish at least five organizations with him being in charge of all firms. It is possible yes but given his financial position, it is not possible. Josh has assumed that the plan will work out perfectly without considering the business environment in which he will be operating. Therefore, establishing all these companies as well as personal assets together with financial wealth is not realistic.

Investment Alternatives to Josh

Establishing firms is not difficult. However, the most difficult part is establishing the best strategy to maintain the competitiveness of an organization. Josh seeks to establish his own firm, which is a good idea though full of many risks. However, he should minimize the risks involved and seek partnership or shareholding in a major firm in which he will be involved in management. This would guarantee Josh enough experience on running such an organization as well as enable him acquire enough capital for establishing his own. Therefore, being involved in a joint venture as well as partnerships is a good alternative that will minimize risks as well as enable him grow his investments (Stoval & Maurer 2011, p. 65).

Investment in government bonds is another suitable alternative for Josh since he seeks to maximize his investments without fluctuations. Government bonds are a sure form of investment since they generate a fixed income for a fixed period. Alternatively, Josh could invest in art objects. This investment alternative is good for him given his strategy of buy and holds which involves him purchasing the art object and holding on it for a minimum period of five years before selling it at a profit. The strategy is beneficial and it includes purchase of etching of popular artistes, prints and investing in emerging talent among others.

Financial strategies utilized by Josh in making the Plan

In order for the financial plan to be effective, there are many techniques that could be used. Josh has made use of such techniques in the development if this financial plan. To begin with, Josh has made use of the financial techniques for data analysis. The analysis tools include the elementary calculation tools that enabled him to calculate his investments. Others are sophisticated tools such as marginal analysis that could also be used to calculate ratios. Josh used simple yearly growth in his investments and net worth for his investments. He has used compound growth rates to establish the income to be earned in the medium and long terms basing on historical level of income.

In order to generate the data, Josh has used extrapolation to establish the future level of income until he retires and later dies at 90 years. The technique generates simple compound growth rates and smoothing techniques for the data for this plan. Depreciation and appreciation are other techniques that have been used to establish the level of investments. Josh expects his level of investments to increase over time and therefore appreciation technique has been utilized given different variables such as the interest rates and inflation among others.

Josh has used risk analysis to establish the different types of investment options. The methods involves analysis of a given venture in terms of all possible risks, a part from these methods, Josh used the cash flow investment waterfall techniques to establish the generated cash flows for his entire life time. The technique was relevant to his financial plan because it enabled him to generate cash as it occurred in each financial/calendar year. Through the technique, Josh prioritized each activity according seniority or the activity that comes first. For instance, he began by establishing the key revenues followed by expenses, tax and debt among others and thereafter establishing the net inflow of cash.

Buy and Hold is the other technique utilized in the financial plan. Under this technique, Josh purchased assets and help on them for some medium to long term without minding the short term effects. The strategy yield positive returns on his investments. However, the strategy is only good for investments made in growing firms that have potential of increasing their net worth in future.

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The financial plan of Josh was generated based on some assumptions such as perfect operation of every market and that the fluctuations in the market would be very limited with no eventualities. The plan shows how Josh can begin from graduating with a HBA to gaining a Master’s degree, establishing his own firm after a four year employment and accumulating wealth that he intends to leave for his grand children. While some items in the financial plan such as the accumulated personal net worth makes sense, some items such as purchase of a helicopter are not realistic given his responsibilities. It is therefore advisable to him to be realistic by including some eventualities such as his incapacitation.


European Studies, 2011, Josh Schmidt Financial Plan, Richard Ivey School of Business, Western Ontario.

Stoval, J & Maurer, T 2011, The ultimate financial plan: Balancing your money and life, John Willey & Sons, Hoboken.

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