The CFA exams are so near and your preparations would have entered into the last leg now. It is now time to accelerate and revise & a widely used tool is a Mind Map.
What should a Mind Map do?
- Provide you with a concise version of the topic at hand
- Outline all the fundas at one place
- Help you ‘revise’. Remember Mind Maps aid in ‘revision’ & are not a ‘replacement’ for understanding the topic
Great! I have so many Mind Maps available from different sources (Videos, Notes, Forums).
Let me download a few and I can save so much time!
Watch out for falling to this temptation. While it is definitely easy to download, it would be good make the Mind Maps for yourself. Here’s why:
- It will be customised to your areas of weakness & strengths.
- It will have a better recall value as you will be writing it instead of just reading.
- It can be in the language of your choice
Here are a few tools & techniques that would help you in making your own FRA Mind Map
- Funnel Approach
Treat the Income Statement and Cash Flow Statements as a Funnel. It will help you remember various measures of profit & associated ratios
- Cycle Approach
The operations of a business can be looked at it as a wheel which needs to keep turning to keep generating cash (liquidity). This is a good way to recall the working capital linked formulae & the turnover ratios.
- Cause & Effect Method
Once you link the impact of the Inventory valuation method on any one of the profit measures; rest can be derived automatically. This will greatly reduce the number of formulae you need to remember
You can similarly link the price of a bond as a comparison between what is the asking/discounting rate in the market versus what is the promised coupon on the Bond.
- Hierarchy Table
Use a simple hierarchy table to capture various factual data.
- Branching Method
This can be effectively used to concise large volume readings.
Here’s another example of how you can concise a few paragraphs into a single line
Keep the following tips in mind while making a Mind Map of your own:
- A visual representation helps faster recall of the topic.
- Use a logical flow of points – Half the burden of remembering stuff will be gone if the underlying logic is presented properly.
- Use multiple colors for better impact – eg. Incomes or Positive effect in Blue & Expenses or Negative effect in Red.
- Keep it simple & neat – Clutter Confuses.
- Go by the flow in which you have understood the topic so that revision will follow the same flow. If you remember a particular example while learning, use the same in your mindmap.
- Shrink the material to 1/10th its size. For eg, if FRA reading is 300 pages try to restrict the mind map to ~25-30 pages. This will make the volume monster seem ‘tame’ able.
- Highlight areas that you find difficulty in recalling while running through the mind map – It means there is a gap here in your understanding and needs further readings.