Final answer:
Warren Buffett stands as a successful example of long-term investing, exemplifying the merits of focusing on undervalued companies and relying on the power of compound interest. Most investors, however, struggle to outperform the market consistently, indicating that a long-term, market-focused investment strategy is typically more reliable for wealth accumulation.
Step-by-step explanation:
One notable example of an individual who has succeeded with long-term investing is Warren Buffett, CEO of Berkshire Hathaway. Buffett's approach of investing in undervalued companies with strong fundamentals and holding them for the long term has proven immensely successful. He emphasized the value of compound interest and the importance of starting to save and invest early. For instance, if you save $3,000 at age 25 and invest it at a 7% real annual rate of return, after 40 years, this would grow to $44,923 due to the power of compound interest.
Despite the success stories like Buffett's, it is essential to note that the majority of financial investors do not consistently beat the market. Half to two-thirds of the mutual funds attempting to outguess the market end up performing worse than the market average. This indicates that trying to pick stocks for exceptional future gains is risky and often not the path to wealth. Instead, adopting a long-term investment strategy and relying on the regular market growth can be more beneficial for the average investor.