I’m currently a junior in high school, and I want to become a financial analyst, pass the CFA exam, etc. My interest is in derivatives, and more specifically the application of mathematical models to derivatives (I really love math). To this end, I’ve been studying Hull’s book on derivatives.
What can I do to prepare myself for this?
I’ve tried to find some answers to this question myself. For one, I’d like to do an internship in the field this summer - however, the ones that I know of require at least an undergraduate degree. Is it possible for me to do an internship in this field now, or will I have to wait until I become an undergraduate?
The second possibility is for me to take a course in derivatives and risk management at some point before I’m in twelfth grade. It would probably be preferable for me to do an internship, however.
Also, what preparation would I need for the CFA exam? What sort of knowledge is required, beyond a knowledge of economics, corporate finance, and derivatives?
If anyone has some general (or more specific) advice for me, it would really be appreciated. Thank you in advance!
I think you’re reallllly ahead of schedule here. Not that its a bad thing, I mean its good to have a plan, but I don’t think you’re going to be able to make meaningful headway on this until mid way through college. Few points, and to add some context, I’ve been out of school a bit over 2 years.
A legit internship in finance are generally going to go to people between their junior and senior years of college. You might be able to get one as a sophomore but its not very likely (I interviewed for a number that year and didn’t get one). Not to say you shouldn’t look for one, but in my experience, those internships don’t go to people that young. My first real internship was summer after junior year of college.
Derivatives are a relatively small part of the CFA exam. Not sure how much that matters at this point, just FYI.
Just let school and experiences take their natural course. You’re really young to have any idea what your interests will turn out to be.
First off, I’m really impressed that you’re even asking this question at your age.
I pretty much agree with everything that krazykanuck and ohai said, but I’ll also try to share some random advice with you in no specific order:
Even though you have a strong interest in derivatives and mathematical models, keep your mind open to other career possibilities as you go through school. Don’t make the mistake of putting “derivative trading” on an imaginary pedestal before you start college
Forget the CFA, which should not even be on your radar right now. You should focus on rocking your SAT and demolishing all your courses in you senior year of high school. You want to focus on gaining admission into the best Economics/Business program you can (Wharton, Sloan etc.) I’m not an expert on American schools, so you’re going to have to do your research as to undergraduate business programs
Your love of math might possibly lead you towards engineering, physics etc. don’t close that door. In fact through your research you’ll find that many highly quantitative roles actually require a PhD in Math or Physics
As for internships, krazykanuck was bang on. I’ve never seen or even heard of someone getting an internship before college. Getting an internship for the summer after freshman year is very rare, but I’ve seen it done, you’re going to have to be an exemplary candidate for that possibility. Try finding some small/local investment companies and see if they will let you volunteer in some capacity.
Though internships might not be possible yet, you can definitely start networking. Start with the people you know, family and friends. Ask them if they know anyone who works in capital markets, ask for introductions etc.
I have no personal knowledge in this, but you might want to research if any of the FINRA exams can be written without a degree and employer sponsorship. They would look great on the resume of a freshman in college. This method is very popular is Canada, students always register for courses administered by the Canadian Securities Institute in their freshman/sophomore years
Virtually all the internships that I saw require that you be in the process of obtaining your college degree. Some of the more formal banking internships are offered as I mentioned above exclusively to people between junior and senior year because they make full time offers and then you come back full time the following summer.
These days, I’ve seen high schoolers get internships (doing what, I don’t know, but at least one of them did it at a financial firm). However, it seems that the requirement was to have a relative at the firm, at least a fiancial firm. The relative (typically a parent) knows how important experience is and so wanted to make darned sure that there was some on the high schooler’s resume. Thus the internship appears (to me) to be a trade of favors by people in the firm, one of whom is a relative of the internee. That seems to be how it happened from where I stand.
From the point of view of the place offering the internship, it’s hard to see what’s in it for them with someone quite so junior, but it’s worth trying for if you can do it.
It’s good that you’re thinking about all this stuff, but you can overprepare for some things. The world will likely change quite a bit between now and 10 years from now, and you may find yourself with the perfect skill set for something that is no longer profitable. Be aware of things like the CFA, but don’t design your life around it until it looks like the next logical step. By the time you get there, it may no longer be the next logical step.
Although there is absolutely nothing wrong with having a plan - get focused on banging chicks and drinking jaeger bombs kid. Before you know it your time will have passed and you’ll have missed the best bits!
Buy last years level 1 schwesernotes off craigslist. This is your new recreational reading - read it as many times as you have time for. (Put Hull away - you want to gain an understanding of the whole industry, not just one small piece of it)
If you have an investment club at school, join it. If you don’t, consider founding it. Also, if you have a students union, run for VP Finance.
Finish HS with straight A’s, nail the SAT, and get into a top UG.
If you can score any kind of job at an asset management firm, take it, even if you’re just delivering mail. Just to help you network, and get an eye for how things work in that environment.
Read financial blogs and news. There’s always a big difference between education and application.
Note: These days, getting into top colleges requires a LOT more than simply a 4.0 and a 2300+ on the SAT (I already have both of those anyways). An internship would really help with college admissions.
Also, please tell me that BigStudMuffin1 and Spunboy are trolls. This forum does have trolls, right? (If you weren’t trolling, read the note above).
If you want to focus on derivatives alone, you could get the “Alternative investments” volumes for CFA L1, L2, L3 and read all about options, futures, forwards, swaps, swaptions, caps, floors and spreads. But you’d be missing out on the fun in the fundamentals like TVM, financial statements, stocks and bonds evaluations. After all the derivatives are based on something (the underlying) so you’d need to know a little bit about them.
I don’t mean to discourage you from the internship route because our industry puts a premium on experience over all other qualifications; however, I’m concerned that you are too young to obtain any sort of meaningful experience. Have you thought about about enrolling in summer school? I’m not even 10 years removed from high school, but I understand that most schools are adopting some type of summer enrichment program. My 7 year-old niece, for example, is enrolled in a math applications class for June (after her normal class lets out for the summer). A local university or technical college may also permit you to entroll in a math class for credit.
My general advice to you would be the following: Are you a baseball fan? It’s common for top prospects to play the most difficult defensive position (catcher, second base, etc) until they prove incapable of doing so and are moved to a less difficult position (first base, left field, etc). Their value as a prospect is closely tied to their ability to play the field. A decent catcher in the major leagues can get by batting .250, whereas a first basemen must bat closer to .300 in order to make a MLB roster. Math is your defense and you’re still a prospect. You will need to treat it as your most important subject in college. Sure, you may have a decent batting average (industry knowledge, teamwork, communication, etc), but math might be your ticket to the big leagues.