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Introduction Inflation is defined as a sustained increase in the general level of prices for goods and services. We measure it as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service (IEA,1972). The Fed tries to sustain an inflation rate of between 0-3%. Inflation affects different people in various ways. The impact inflation has on your portfolio depends on the type of investment you hold. There is now a widely-shared consensus, that high inflation does substantial damage to the economy, that moderate inflation does rather less damage, and that low inflation or price stability enables economies to work most effectively. With an open economy and low inflation bedded-in, it is necessary for investors to pay attention to real return from any investment, not nominal return (Alexander, Sharpe &Bailey, 2001). 1.my own home All investments have some level of risk, even money in...

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