When starting out in investing, most people rely heavily on "other people's advice." I was no different. In the beginning, I consumed investment-related content from influencers on X (formerly Twitter) and YouTube, paying close attention to their recommendations. However, I now rarely refer to such sources. The reason is simple: in today’s world of overwhelming information, failing to filter and select what’s truly important can drown you in noise and make you lose sight of what matters.
This article explores how to navigate the sea of information, identify "truly essential insights," and develop an investment style tailored to your own goals.
1. The Risks of Information Overload
From social media to YouTube, investment advice is everywhere. For beginners, this abundance of information can lead to several pitfalls:
① Being Easily Influenced by Others
Constant streams of opinions from influencers or analysts can make it hard to discern what’s accurate. Worse, the pressure to act quickly—driven by the fear of missing out—often leads to impulsive decisions.
Example:
- Advice like “Buy this stock now!” or “Act fast before it’s too late!” can tempt you to act without verifying the source or logic behind the recommendation.
② Following Advice That Doesn’t Fit Your Situation
Most investment advice is designed for a broad audience, which means it often isn’t practical for people in specific circumstances.
Example Scenarios:
- For singles: Advice on managing household finances may not apply to families with children, as their financial priorities differ.
- For high-income earners: Recommendations for taking on greater risks may not suit individuals with average incomes or limited savings.
Lesson: Don’t blindly copy someone else’s investment style. Instead, tailor your approach to align with your personal goals and circumstances.
2. Why I Don’t Rely Solely on Index Investing
Index investing—such as regularly contributing to funds that track the S&P 500 or global markets—is often touted as an ideal, low-risk, and efficient investment strategy for most people.
While I also utilize index investing, my portfolio primarily focuses on high-dividend stocks. Here’s why:
- I prioritize dividend income: This aligns with my strategy of building consistent income (also known as income investing).
- I accept the risk of dividend cuts: But I manage this risk carefully to maintain cash flow.
However, I recognize that this strategy isn’t for everyone. The feasibility of any approach depends on factors like your risk tolerance, household situation, and total assets.
| Aspect | High-Dividend Stocks | Index Investing |
|---|---|---|
| Returns | Focus on dividend income (income gains) | Long-term capital growth (capital gains) |
| Risks | Risk of dividend cuts, price fluctuations | Market-dependent performance |
| Management Effort | Requires stock selection and portfolio adjustments | Easy: automatic contributions and minimal oversight |
| Goals | Stable cash flow | Long-term wealth accumulation |
| Examples | AT&T, Procter & Gamble (P&G) | S&P 500 or global market index funds |
3. How to Select the Right Information
So, how do you navigate today’s information-rich environment and find what truly matters? I focus on three key principles:
① Don’t Take Everything at Face Value
Always remember that influencers and their audiences come from varied backgrounds. Ask yourself, “How does this information apply to my situation?”
Example:
Many people fail by blindly buying stocks recommended by influencers. It’s vital to treat their advice as a starting point and conduct your own research. (I learned this lesson the hard way early in my investing journey!)
② Prioritize Primary Sources
Instead of relying on secondary opinions, examine primary sources such as company financials and investor relations (IR) materials.
Examples of Primary Information:
| Type | Details | How to Use It |
|---|---|---|
| Company IR Materials | Dividend history, revenue structure, key metrics | Identify stable, dividend-paying companies |
| Financial Statements | Balance sheet, income statement, cash flow report | Assess profitability and debt levels to evaluate risk |
| Official Market Reports | Economic indicators (GDP, inflation, etc.) | Understand broader market trends |
By focusing on primary data, you can make informed decisions rather than relying on second-hand interpretations.
③ Avoid Overloading Yourself with Information
Too much information can paralyze decision-making. Stick to what’s essential and act decisively based on your research.
4. How to Handle Influencer Content
There was a time when I closely followed investment influencers. Over time, however, I realized that most of their advice didn’t align with my goals.
Why?
- Their objectives differ from yours: Most influencers aim to gain followers or views—not to ensure your financial success.
- Extreme content is common: To gain attention, they often emphasize sensational successes or overhyped risks.
Still, influencer content can be useful if you keep the following in mind:
- Only trust information with clear and credible sources.
- Use their advice as a supplement, not a substitute for your own research.
5. Common Investment Scams and How to Avoid Them
The rise of online investment content has also led to an increase in scams. Beware of promises like “guaranteed principal with high returns,” which are often too good to be true.
Typical Scams:
- Example: Offers claiming “20% guaranteed annual returns” often turn out to be Ponzi schemes (where returns for early investors are paid using funds from new investors).
How to Avoid Scams:
- Be skeptical of combinations like “guaranteed principal + high returns.”
- Verify that investment firms are registered with the appropriate financial authorities.
| Red Flags | Legitimate Investments | Potential Scams |
|---|---|---|
| “Guaranteed High Returns” | Bank deposits, government bonds (low yield) | “20% annually with no risk” |
| Transparency of Sources | Registered financial advisors | Unverified social media posts |
| Rushed Decisions | Encouraged to evaluate thoroughly | Pressured to “act now” |
6. Finding Your Own Investment Style
Ultimately, the most important step is to define your own financial goals. Rather than imitating others’ success, craft a strategy tailored to your lifestyle and aspirations.
My Approach: High-Dividend Stock Investing
- Goal: Achieve stable cash flow and surpass my annual salary through dividend income.
- Method: Build a risk-controlled portfolio while accepting the possibility of dividend cuts.
No matter your strategy, remember: investment success begins with choosing the right information and focusing on your own goals.
Conclusion: The Essence of Information for Investors
- In a world of abundant information, the ability to filter and prioritize is critical.
- Differentiate between generalized advice and strategies that suit your unique situation.
- Stay vigilant against scams by questioning promises of “risk-free” or “high returns.”
Investing is a journey toward your personal goals. Along the way, value the lessons and experiences you gain, and continue striving for growth.