At the moment, it seems a lot of people are talking about interest rates going up. In a way, that’s understandable as if you have a look in the media, there’s a lot of doom and gloom on the horizon being sold. I remember when I started investing, I was fixated on interest rates too. The best thing I learnt though, was that if you actually move away from the interest rates, and instead focus on the big picture – on growing your portfolio – you will end up achieving a much better goal overall. So, when it comes to investing, how do we realise the big picture?

First, we need a lay of the land… The most recent Omicron outbreak has impacted our economy, but not thwarted it. We’ve shown ourselves to be resilient and consumer confidence is anticipated to increase as Covid numbers decline. In a statement made by Philip Lowe, from the RBA on the 1st February, “Inflation has picked up more quickly than the RBA had expected, but remains lower than in many other countries.” Alongside this, the Australian Bureau of Statistics, announced on the 20th January, our rate of unemployment has fallen to 4.2% with employment up by 65,000.

Inflation and the unemployment rate drive the rate of cash or interest rates afforded to us by the RBA. So, if these are bouncing back – or remaining palatable – at a rate that’s relative to each other, as an investor, that’s something to consider.

As an investor, the first step in growing your property portfolio, becomes simply, getting in the game. From there, you can really assess external variables as they relate to your specific portfolio, individually. Interestingly, there’s another major influencer in this equation of relativity, in addition to inflation, unemployment rates, and interest rates – for investors, is rental income.

While interest rates may be on the rise, data released from property data firm CoreLogic, showed residential rental income increased by 9.4% over 2021. So, as an investor where you especially should be taking a longer term view, the market is already preparing you to take any hit. Yes, any increase to rental income will inevitably be an attempt to stabilise following previous shifts. But once again, the needles are shifting in a broader sense, in sync. At a macro level, for an investor, what’s most important and can be seen is that it is all relative.

This fixation around interest rates likely stems from the banks as they try to advertise lower fixed rates over time. Interest rates going up by 0.5% is in my experience not going to break the bank for most people – certainly not, a budding or savvy investor market. Where interest rates are no longer 1-2%, but 3.0% or more, if you look at history, rates in the 3.0% range are still very low. If you look at 5-6 years ago, they were relatively higher at 5-6%.

At the end of the day, I find myself trying to educate people around not focussing so much around interest rates. The interest rate is important but it’s just a very small piece in the whole investing journey. As investors, we need to get out of the weeds and focus on the long term. Interest rates will go up, but post-pandemic as we’ve seen, they’re also currently at historically low levels.

Not as many people are talking about connecting all these dots as they probably should. The media headlines are left negative, and the readers are pulled in. When in reality, assessment should be tailored to you.

Just like inflation, interest rate rises will happen. It’s inevitable but also manageable, especially as an investor, in the scheme of things, with a growing and active investment portfolio. I put the emphasis on active there – because that’s just it, it’s changing. Expanding and contracting, within a portfolio’s overall long term trajectory toward growth. Bolstered by a focus on leveraging existing home equity to expand into your next property, and so on, again and again. Smart investors become increasingly disinterested in inflammatory headlines, and invested in the overall picture.

No one has a crystal ball. No one can tell you what’s going to happen in the short term. But we do have historical patterns to gauge a sense of how best to play the long term. Other factors like, the type of bank or lender you’re going to go with, and partnering up with a trusted industry professional, we should focus on.

Interestingly, especially as an investor, it becomes that you have more control and options than you might realise. The picture as we’ve learnt, is more about your individual situation and interest rates are just one part of it. Ultimately, a theory of relativity is just as important to property investing, as it is science.