How does inflation impact risk-free investments?

Inflation can have an impact on the real return of riskfree investments. While riskfree investments are designed to offer a guaranteed return, the inflation rate can erode the purchasing power of the returns earned on such investments. For instance, if the inflation rate is higher than the return offered by a riskfree investment, the investor's real return will be negative. Therefore, it is essential to consider the inflation rate while choosing a riskfree investment option. It is advisable to look for investment options that offer a return that is higher than the inflation rate to ensure that the investor's real return is positive.