The decision to appear for the CFA Level 1(Dec 2008) was impulsive and hasty. Little, I knew how tough it was before registering for the exam, I registered it before the second deadline. But, whatever happened, the exam is over now, I feel as free as a butterfly which blew out of its cocoon, flapping its fragile wings and started flying. So, people, now you could imagine how hectic it was for the last few months. This happiness is just for the exam being over, I donno how I would be if the result turns out to be good.
This post would describe how a beginner to world of finance felt while he embarked on his endeavor to crack the Level 1 examination.
I flagged off with a flaw, my approach was sequential. I did not see the curriculum, percentage weights for each chapter or any other damn thing. I was like a brainless, burly warrior who thought just trampling could win me a victory. The flaw was starting the prep with Ethics and Standards chapter. It was a worst start ever, how could a person who doesn’t know any thing about finance understand what it means to being ethical in the profession related to finance. I thought that I should start with a plan constituting sequence of chapters, setting timelines so on. I decided not to track the number of hours required, but complete the first round of preparation in 10 weeks dedicating as much time as I can for preparation in this time period.
The skeleton of the curriculum is a three tier hierarchy consisting of volumes on the top, study sessions in the middle and learning outcome statements at the bottom.
After a lot of introspection, analysis of the curriculum, study sessions, learning outcome statements and my apparent levels of comfortableness when I glanced through the books I decoded the sequence that needs to be followed which would help me in achieving my first target set. I decided to follow schwesers and in case if I don’t understand stuff, i would go back to the books sent by CFAI. I started with my new plan in the 2nd week of June. Here goes the sequence I followed.
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Sequence
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Chapter
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Weightage
|
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1
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Quantitative Methods
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12
|
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2
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Financial statements & Analysis
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20
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3
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Corporate Finance
|
8
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4
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Equity Investments
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10
|
|
5
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Portfolio Management & Wealth Planning
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5
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6
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Fixed Income
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12
|
|
7
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Derivatives
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5
|
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8
|
Alternative Investments
|
3
|
|
9
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Economics
|
10
|
|
10
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Ethics & Professional Standards
|
15
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Substantiating the Sequence:With an engineering background, my forte being quant skills, I thought of starting with the quantitative methods. The concepts in quant are primarily used throughout the curriculum, so it might help me in comprehending concepts well. I considered FSA second for its percentage weight in the exam and that being easy for a non finance guy to understand. Learning it early would make you feel powerful in a way that you completed 20% of the whole portion. Corp Finance was third in the queue. The NPV and IRR concepts from quant would help you drive off the first half of the chapter and the rest half was more of Gyaan (Which you need to memorize). Then came the asset valuation, I considered staring off with Markets & Equities because I was quite comfortable and then moved to portfolio management. The most irksome topic was fixed income. You need a blend of memorizing and analytical skills to become a pro in this area. I moved to the derivatives in spite of not understanding FI properly. Alternative investments was more of gyaan, I felt like I was going through a novel. It was a kind of lullaby for me. Economics is something which can’t be related to any other chapter conceptually, it’s totally a standalone. We can even start it after quant methods, but I kept it at last because FSA was important to me. Ethics and standards, the enigmatic and listless zombie was pushed to the last.
Implementation:
The first leg of my plan took around 11 weeks against the estimated 10 weeks. I hurried up in last two weeks to ensure that things should go as per the plan. Little I cared whether I understood the concepts or not, I have set a destination and I should reach it in time, which was the only thing I had in my mind. But, that’s wrong. This mistake should not be repeated by anyone preparing for the exam. Ensure that you understand each concept crystal clear while you are reading it. The first reading lays the foundation for ones success, that’s my interpretation. Take as much time as you can to understand. If you feel the concept is intricate or messy, take a break and come back. Don’t leave it until confidence kicks in your ass that you are clear about it. It was around August last week when I was done with my first reading. I felt powerful, ambitious and a sense of content that the first hurdle is leapt.
I presumed that the second round of reading wouldn’t be as thorny as the first. I was totally wrong. Every thing seemed new when I was reading the old stuff again. I realized that my retention rate was pretty bad. The only good thing I did in my first reading was I kept a track of notes for what I was reading. The different thing I did in my second reading was problem solving. Whenever I was done with a study session in the second round of reading, I instantly solved the questions from the schwesers pro bank associated with that session. I intuitively felt that I was doing better and I could improve my retention rate. I read through the solutions they gave for each question, so fabulous and informative. I felt it was a perfect way to solidify the concepts. I appended my notes if something was new and with baits that are normally put in the questions where people could possibly go wrong while answering. It took a lot of time, but this has to be done for a good retention rate. I completed this whole exercise by the second week of October, that was the time I thought I needed a break. I was kind of lifeless, needed to rejuvenate myself. So, I went on for a vacation to tirupati along with my family. I got my head tonsured, donned a totally new look.
I remember the exact date when I started the third leg of my plan, it was October 17th. Just around 45 days left for the D-day because I thought of keeping myselves free for the last week. I started going through the notes I made and every study session from schwesers. I went through many blogs and forums regarding the CFA Prep. I understood that one should be perfect with FSA and FI from Level 1 curriculum, because you need the basics of those in your level2. Considering the big picture for Level2 and doing the SWOT analysis for the percentages obtained while solving problems from schwesers pro, I found that I was terribly bad at Ethics & Professional standards, Fixed Income, Macroeconomics, Few study sessions from FSA and Quantitative methods. I went back to the study sessions, got my concepts straightened. One good thing about schwesers pro is customizing your own test. I used to write tests from a mix of study sessions I am bad at. This exercise thrust me to Nov 17th
Just 13 more days left. I registered the test with Singapore as the center. I was almost done with my visa processing and air ticket booking. It was a bit weird and exciting. Never had I imagined that I would be travelling to some other country to write an exam and this being my first flight travel, it occupied significance. Now came the mocks, I picked 6 mock papers from schwesers practice volume 2 and sample mocks from CFAI. The whole two weeks were just problem solving and analyzing the errors made. It was a panic situation. I was doing problem solving during travel, meetings, lunch hours, office hours so on. The last exam I did was the mock exam sent to us from CFAI, a 60 question, 90 minutes format. I scored a good percentage. I should be able to emulate the performance in the real exam. It was Dec 4th.
I decided to sign off the preparation but could not. There was always something going on in my brain when I was idle, I felt that my head would burst off if don’t have any study material in my hand. I took a printout of schwesers secret sauce, kept browsing it until I boarded the flight.
