Having set up a few hi-fi rigs over the years, and listened to a few more, I've generally found that the diminishing returns effect on sonic performance sets in very early and rises sharply on most electronic equipment.
In particular this generalisation applies to DACs, amps, cables and cd players. Often a more expensive product is not a discernable and measurable sonic improvement over a merely adequate product. Hi-fi magazine talk about expensive amplifiers having better "timing" and "rhythm", but frankly I've never heard an amplifier with poor timing in my life, and I can't imagine a scientific explanation for an amplifier having bad rhythm.
Speakers on the other hand, tend to consistently yield discernible improvements as you spend more. Sure, there are diminishing returns, but it's not at all hard to hear the improvement right up to the ultra-premium bracket.
So I propose an ultra-pragmatic approach to hi-fi shopping: Take whatever budget you have and allocate the absolute minimum amount to merely adequate electronics. Let's say an entry-level Yamaha receiver with adequate power supply, sony CD player and some cheap low resistance cables.
Therefore if your budget is $2000, you spend about $400 on electronics and $1600 on speakers.
If your budget is $5000 you spend $400 on electronics and $4600 on speakers.
My theory is that this approach will always yield better sonic results, dollar for dollar.
Many hi-fi "experts" say you should spend between 50% and 100% of your speaker cost on an amp. And sure, that may yield some improvement. But I'm starting to think this is just the industry trying to make money on speaker peripherals (amps, dacs etc). If all you care about is getting the best sonic performance for your dollar, how can anyone argue against the ultra pragmatic approach?