There’s no fixed benchmark of how to study for the CFA Level 1 exam, simply because a lot depends on the strengths and weaknesses of different candidates in the subjects. However, the best way to prep for the CFA Level 1 is to give yourself enough time to study the curriculum in your preferred learning style.
Studies conducted by the CFA Institute show that on average, successful candidates spend around 300 hours to crack the Level 1 CFA exam. Moreover, 50% of candidates who have passed the Level 3 exam have passed the other two on the first attempt. These are some of the factors that should be considered when you plan your CFA level 1 prep.
Before diving into how to study for the CFA Level 1 exam, a quick look at the structure of the exam. It consists of 180 multiple-choice questions divided into two sessions of 135 minutes each with an optional break between the two.
The first session covers Ethics and Professional Standards, Quantitative Methods, Economics, and Financial Statement Analysis while the second includes Corporate Issuers, Equity, Fixed Income, Derivatives, Alternative Investments, and Portfolio Management.
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How to Study for CFA Level 1 Exam
The annual pass rate for the CFA exam Level 1 has hovered around 44%, and as recently as May 2022 dropped down to 38%. This proves that only dedicated students are likely to pass the exam, so be prepared to make plenty of sacrifices for six to seven months.
Here are some tips on the best way to study for CFA Level 1 exam.
Understand the CFA Level 1 Topic Weighting
Your study path will cover a wide range of material. Before you dive in, take a few minutes to understand the various core topics the CFA level 1 exam covers.
For example, the Ethical and Professional Standards topic has a weighting of 15-20%, while Equity Investments, Derivatives, and Alternative Investments each have a relative weighting of 5-8%. Knowing this, you’ll want to make sure you have Ethical and Professional standards down solid before sweating about the less heavily-tested topics.
Plan a Realistic Study Schedule
Developing a realistic study plan is critical to success. If you can clear 350+ study hours in 6 months, great. If you think it’ll take 9 months, that’s OK too.
By spreading the work over a timeframe that fits your schedule, you’ll be more likely to stick to a routine and avoid burnout when you’re in the thick of it. If you fall behind, you’ll also have some buffer time to catch up on your studies.
Choose a Good CFA Prep Course
There are several great exam prep materials for the CFA Level 1 exam, with some companies having decades of experience in this field. Select one that best matches your learning style, stays up to date with the latest CFA exam changes, and offers plenty of practice material. Some courses even provide an access-till-you-pass guarantee.
Investing in a good CFA prep course will help keep you organized and on track. Look for one that offers a strong mix of simulations, practice questions, and mock exams that will help you prepare optimally for the exams.
Focus on Understanding Concepts
The CFA Level 1 exams are today increasingly tilted towards concepts and less on mathematical formulas. Hence, you’ll be much better served by studying more intently and thinking through the underlying concepts rather than simply memorizing topics.
Block out Distractions
Let’s face it, studying for the CFA level 1 exam is a beast. To get the most out of your study time, you’ll need to block out distractions so you can fully focus during your CFA study sessions. Avoiding distractions is half the battle, and being unable to is one of the top reasons candidates fail.
Study Smart
Studying is all about maximizing recall and retention. The best way to master your CFA level 1 material is to focus hard on practice questions and mock exams. The more you practice and work on end-of-chapter questions, the more you’ll gain mastery over the subjects.
Study Hard
Studying smartly doesn’t mean you don’t have to study hard. Completing (and understanding) a high volume of practice questions is one of the most effective ways to study for the CFA level 1 exam.
The best CFA prep courses have over 1,500 practice questions and two full Level 1 mock exams, but don’t overlook the free study material from the CFA Institute. Using various sources of practice material will expand your knowledge of the material and give you extra reps before exam day.
Allocate Your Time Wisely
Time is your most critical resource for earning the CFA charter, so use it wisely and efficiently.
The CFI Institute’s data shows that those who pass the CFA exam Level 1 typically spend around 323 hours studying, and the Institute suggests studying for at least 300 hours.
For a 6 month study schedule, it’s better to focus extensively on preparation for 4-5 months, and leave the last month for reviewing, practicing with questions, and taking mock exams.
Don’t Overlook End-of Chapter Questions
Working on end-of-chapter questions is critical for studying for CFA Level 1. It’s tempting to blow by these, but devoting time to them at the end of your lessons will be beneficial for recall and moving concepts to your long-term memory.
Write down your results so that you can monitor the progress made later in your course. These questions give you an overview of the areas that will be tested in your exams and hence, you can estimate how well you are prepared for D-Day. Further, your answers will help you understand your weak areas that need to be focused on.
Studying for CFA Level 1 – What To Do in the Last Week
What should you do during the last week before the exam? You’ll probably be exhausted from all the studying and hard work and starting to feel anxious about exam day.
To optimize your performance on exam day, try to follow these tips during the last week before the CFA level 1 exam:
Keep Regular Hours
If you’ve been staying up late or getting inconsistent sleep, now is the time to get back on track. 90% of your performance is pretty much locked in at this point, and cramming won’t do a ton of good. Start sleeping earlier and getting up on time to be fresh on exam day.
Eat Healthy
Avoid foods and meals that will deplete your energy, like carb-binges, and avoid drinking heavily. Depleting your energy will reduce your cognitive performance, and could take days to fully recover from.
Take Off From Work (if You Can)
Not everyone can do this, but taking a week off from work will give you plenty of time to go through last-minute revisions and flashcards. It’ll also ease the pressure on yourself that invariably arises from worrying about a job.
If a full week isn’t possible, aim for at least 1-2 days before the exam.
Plan Your Logistics
Gather the items you have to take to your computer-based CFA exam day ready. The last thing you want to do the morning of the exam is stress about trying to find you ID or other items.
Plan your route to the exam center, and add buffer time to account for possible traffic jams. If traveling out of town, double-check hotel reservations and flight tickets.
Focus on Practice Questions
Keep working on practice questions throughout the week. It is not necessary that you should give a lot of importance to the scores, it is just to keep you in the loop of the feel of the exams. Re-doing earlier ones will do just as well.
Difficult as it may sound, do try and be as relaxed as possible. Have the confidence that you are well-prepared for the exam.
Summing Up
Knowing how to study for the CFA Level 1 exam is critical to passing the exam. Studying for the CFA Level 1 will require a smart approach paired with a strong commitment.
Slow and steady will win the race, but you’ll also need to push yourself at times. Just be sure to regularly check your progress and don’t be afraid to adjust course if you need to re-allocate time to certain topics, and manage your stress leading up to exam day.
