In your quest to be financially free, what are your sources of information? Do you get investing information from books, blogs or your friends? Is it from relatives or the taxi-driver who tells you that “company XYZ” share price “sure go up one” because of reason ABC?

Perhaps it is your broker who tells you that, “DEF company” is the next big thing to invest as a potential multi-bagger (i.e. a company whose share price will go up a few times the initial price) or “sure make money one!”

Noise is everywhere

In this age of internet, television news channels and Google, there is an overload of information. Before search engines and Google, there were public libraries and older-wiser friends or relatives who dispensed wisdom on what you should do in personal finance. “Put money in fixed deposits, very safe one,” goes your grandmother. “Buy property,  Singapore got so little land, property sure make one,” adds your aunt on your mother’s side. “Work hard, save money, everything is bull*shit, except money,” intones your mother in cantonese.

Everyone and anyone has an opinion on the markets, on personal finance and on how to ben financially free. Some think of using the lottery as a means towards financial freedom. Others believe the tried-and-tested way of working hard and saving every other dollar is the one-true-path. And yet some think it’s totally LUCK and all RANDOM, so let’s kick back and enjoy life a bit more.

In the midst of all this noise and increasing more information on the markets through Bloomberg, Reuters and CNBC, you realise that the more you know, the more confused you get.

Reading Widely, Listening Selectively

As your brain seeks to make sense of the nonsense that floods your eyes and ears, you start to rely on filters to sieve out the noise and allow you to extract the essence or the principles in which to guide yourself towards your goal of financial freedom. You know that you need to learn and grow, to find out more about how you can live within your means, save and invest. You want to learn how to grow and protect your means.

The way to overcome this information overload may be counter-intuitive. It is to read widely but to listen selectively. Why is that?

Reading widely is important to broaden your sources of information about the things you want to learn about. By all means use Google but read not just the first search result you get but read the others. This gives you a quick breadth of the subject matter. Wikipedia is also a good first location but in order to understand for instance treasury bills,  you need to look for more in-depth sources of information. The ability to browse and scan different sources of information efficiently to gleam the territory of the subject matter is important. This is how you get the overview and know where to zoom in to focus on the exact things you need to know specifically about, say blue chip equities.

Listening selectively is important. Who are the trusted references for that particular subject matter. Why is he/she or the book/blog/article the trusted reference or “guru” for that particular area? (If you read Fooled by Randomness or The Black Swan, you would rethink what it means to be a guru or expert but that is digressing.)

The other day, my mother-in-law SMS’d me to say that “Maybank was collapsing and to consider taking out any deposits with them.” When I queried her in detail, it happened that she heard from her sister who heard from her son who heard from someone (whose references and credibility cannot be determined) that Maybank was undergoing some trouble. Because my mother-in-law’s sister trusted her son, she went to spend half a day queuing at Maybank to withdraw all her monies. It turns out that the rumour is completely false and Maybank is still solvent and under the supervision of the Monetary Authority of Singapore.

“Who do you trust” is an important factor that determines who you listen to. But listen selectively to people who have earned your trust through giving competent and fair (presents both sides of the story) views. Establish what is fact and what is opinion. There are many opinions out there that pose as fact. Even as you are reading my blog, make up your own mind if what you think I’m saying makes sense or is bullshit.

How you can distinguish between information and noise

To exercise your brain muscles in determining the good stuff from the nonsense, here are some steps you can take to get your little grey cells all pumped up:

1. Read Widely

Reading widely using the public library, the internet, Google, RSS feeds, Wikipedia, mainstream news and periodicals are useful but scan and skim. Get the feel of what is happening and what is the context of events and things happening.

Read a variety of books. Don’t just read that ONE personal finance book and that’s it. I try to read at least one to two books a month related to personal finance and also fiction. If I don’t read, my brain starts to stagnate as not many new ideas enter my brain.

Reading widely is important to broaden your sources of information about the things you want to learn about. By all means use Google but read not just the first search result you get but read the others. This gives you a quick breadth of the subject matter. Wikipedia is also a good first location but in order to understand for instance treasury bills,  you need to look for more in-depth sources of information. The ability to browse and scan different sources of information efficiently to gleam the territory of the subject matter is important. This is how you get the overview and know where to zoom in to focus on the exact things you need to know specifically about, say blue chip equities.

Listening selectively is important. Who are the trusted references for that particular subject matter. Why is he/she or the book/blog/article the trusted reference or “guru” for that particular area? (If you read Fooled by Randomness or The Black Swan, you would rethink what it means to be a guru or expert but that is digressing.)

2. Read in depth to Understand

Read in depth. Understand enough about personal finance and the principles of financial freedom to make informed choices in your life. Would you have invested in DBS High 5 Notes or Pinnacle Notes</a> or Lehman Brothers’ Minibonds if you knew now what you knew then about the credit events and what was the underlying assets of these derivative products?

3. Listen Selectively
The more you read widely and in-depth, the more you will realise that some people are mostly charlatans while others are true experts. The more you read, the more you realise true experts tend to be humble and also let you know their limits whilst charlatans use mother-hood statements to mask their lack of expertise. Even as I write this, I make no claims to be an expert and in all my posts I just share with you my experiences in journeying towards financial freedom including the mistakes I made and lessons I learnt.If you are interested to learn how you can be sceptical, read Nassim Nicholas Taleb’s “Fooled by Randomness” or “The Black Swan”. They are not easy books to read but those who can go through Taleb’s prose will find it
deeply rewarding. Listening selectively takes time and experience to sieve out the true voices from the charlatans. Was it Mencius or Confucius who said that one could learn from any person no matter his intellectual capacity. We as human beings, learn from each other all the time. But we sometimes also learn the wrong things

4. Be Open
Being open doesn’t mean believing everything you hear. It’s about having an open mind and to think about the various facets to any issue or subject. It is not easy to have an open mind and that is why I push myself to read something new every month. It’s to push through what I thought I knew about the world just that inch more to know who much I am really ignorant about the world around us.

How Do You Overcome the Noise and Find Information?

In your quest towards learning stuff to help you on your way towards financial freedom, what are your ways to overcome the noise and find information?<br>Who are your trusted sources for information?

Share with Panzer in the comments section!

Be well and prosper.

Dear friends

I have emailed a few personal finance bloggers who listed on thefinance.sg to contribute their views on:

What is the single most important lesson you learnt in personal finance?

Their answers will be compiled on 8 August 2008 as we celebrate Singapore’s 43rd National Day.

Besides catching the National Day Parade on television, while not spend some time going through personal finance blogs to celebrate your own efforts to achieve financial freedom by learning and sharing from like-minded friends this weekend.

You are also cordially invited to email me your submissions via rod.loh [at] gmail.com and I feature them on my blog carnival on 8 August 2008.

Be well and prosper!

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