When was the last time a friend or coworker told you about a hot stock tip? The truth is, tips are for waiters. It’s not that you shouldn’t seek out great advice, but much of the time, it’s just hype. Getting the right information about investing is essential to your potential for success. But that doesn’t mean it’s easy. In fact, it’s very difficult to filter out the noise between credible advice and hype. So how can you get the right information? Imagine this, through hard work and discipline.

I always suggest starting your search with your interests and things you enjoy understanding. Start by reading the annual report of a company that grabs your interest. There certainly isn’t one way to analyze a company, but starting with the annual report might give you some great insights to the health of the company. All those news headlines you hear about are most likely uncovered in the annual reports; high CEO pay, frivolous corporate vacations and spending, it’s all there. Don’t forget to diversify your portfolio as well. It may be an effective way to help manage your risk in the event that there is something you missed.* A good rule of thumb you should also follow that may help make reading the annual reports simple and rewarding…If you can’t understand it, don’t invest in it. This is a time consuming effort but we believe it will be well worth it. Informed investors read these reports cover to cover and so should you.

If digging through annual reports doesn’t seem like your cup of tea, then get a professional who does spend the time. So the next time someone tells you about a stock tip, ask them if they read the annual report.

*There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.