Your return is usually calculated both in terms of current yield and yield to maturity. Do not confuse the bond's interest rate with its yield. Yield depends upon the rate. Keep in mind that as interest rates rise, the market value of bonds typically fall. To help minimize the risk, examine the best and worst returns over one-year holding periods.
All investments face inflation risk.
C ash Equivalents . . . These investments have very little risk of losing value and can be easily converted into cash. There are short-term investments, usually less than one year. The average annual returns for the entire period, average annual growth and the average income figures can be used to help assess your growth and annual income needs. You could invest for maximum total return, keep a portion in cash for liquidity and sell stock when necessary.