What is your first step when studying for an actuarial exam?
Buy study materials? Develop a study schedule? Tell your friends and family that you’ll be a
Roy surprised me with an unconventional and insightful answer during our recent webinar.
“I start by asking myself, ‘What is the number one concept that I need to master, that the exam writers are really aiming for me to learn?’… the key is just thinking in the mind of the exam writers. They’re focusing on just one or two fundamental concepts that all syllabus topics will relate to.”
For Exam FM, that unifying concept is discounted cash flows. Every reading, formula and definition ties back to this concept.
The interest theory sections teach you how to discount and why it’s important. The basic annuity introduces a simple case of discounted cash flows. Increasing and decreasing annuities throw in an extra twist. Loans and bonds show you how discounted cash flows apply in a business context.
It sounds simple, but I never connected the dots until after I took Exam FM. I blindly jumped in, memorized formulas, and drilled practice problems. It worked, but I didn’t grasp the bigger picture.
The process above may be the biggest contributor to Roy’s rapid exam success. He focused on understanding over memorization. By grasping the bigger picture, he didn’t need to memorize disparate formulas; they were intuitive extensions of the main theme.
Roy isn’t the only one who emphasizes this approach:
“I think most people can learn a lot more than they think they can. They sell themselves short without trying.
One bit of advice: it is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.” – Elon Musk
Before diving into your next exam, build the foundation of your knowledge tree. It’s much easier to learn the details when you can latch on to a central theme and put them in context.
(Check out the first section of Actuarial Exam Tactics for more tips on how to identify fundamental principles and build your knowledge tree.)
Study Smart, Pass Fast, Live Life
Mike & Roy