The first question is, what do you want from your hi-fi? Do you want to play LPs, CDs, or an occasional movie? Next, where will you put the speakers, and how large or small do they need to be? I'm writing this blog post for folks trying to put together the best-sounding hi-fi they can on a fixed budget. That's why I won't be covering wireless systems, because dollar for dollar, the better wired speakers always sound better than wireless models.
Setting the budget is the next logical step. I've written about an amazing-for-the-money, but if you really love music, investing $1,000 on a system would be a great place to start. Put roughly half into the speakers and the other half into the amplifier and digital-to-analog converter/CD player, or a turntable. If you're lucky enough to have a brick-and-mortar shop nearby, go listen to some gear. Better yet, call ahead and talk with a salesperson and discuss your needs. Bring some of your favorite music to the store; it really helps to audition gear with music you know best.
If you can't audition gear, read reviews. Rather than try to research a wide range of products on the market, narrow your focus as much as possible. For example, search for tower speakers for under $500 a pair, a stereo receiver for under $300, and a USB digital-to-analog converter for $200 or less.
Some hi-fi shoppers waste a lot of time trying to find "the best" speaker, amp, turntable, and so forth. There's no such thing as a "best" that everyone agrees on; there are too many variables to consider. With speakers you have to factor in room size, speaker size, placement restrictions, bass capability, how loud do the speakers need to play, what kind of amp will the speakers be partnered with, what kind of music will be played, and the speaker's appearance. So one person's best $500 speaker might be completely unacceptable to other buyers. I'm unaware of any universally praised speakers, and if you can't listen to a speaker before you buy it, you have to let other people -- reviewers or users -- be your guides.
With amps or receivers you again need to focus on your needs, what features you require, how much power you need, and your budget. The same logic applies to turntables: what features do you need?
So we're back where we started, determining what's important for your system will eliminate a lot of choices. Once you narrow your focus as much as possible, it will be a lot easier to decide what to buy.