Investment Portfolio MOT: How to Maximise Your Money in 2025
By Boring Money
1 May, 2025
Spring. The days are longer, the air is warmer, and half the nation suddenly remembers they own a garden. It’s also the time of year when savvy investors should give their portfolios the same attention they give their wardrobes - out with the old, in with the profitable! Welcome to your 2025 investment portfolio spring clean.
The start of the new tax year is the perfect opportunity to take stock (pun fully intended). With trade wars making headlines and a global recession on the cards, the macroeconomic backdrop is shifting rapidly. If your investment strategy looks like it's been asleep since 2022, it might be time for a shake-up.
Here's how to dust off your portfolio, rebalance your assets, and make the most of your ISA allowances in this new financial year.
1. Start with the end in mind
Before you do anything, your first step should be to take a step back and revisit your financial objectives. What are you actually investing for? Are your goals the same, or have your long-term plans shifted over the last year?
Every investment has a purpose, whether it's early retirement, reduced working hours, funding education for your children, or a personal dream. Revisit your goal: has it changed in cost, timing, or importance? Review your original plan - how much you needed, your timeframe, and expected returns. Are you still on track, or do you need to adjust your strategy or invest more? Life changes, and so should your plan. Setting a goal is important, planning to reach it is smarter, but regularly reviewing and updating that plan is essential to ensure you’re still moving in the right direction.
Many of us treat investing as a proxy for saving for retirement, and if this sounds like you, it can be tricky to know if you’re actually on track to save enough. With people living longer and the cost-of-living increasing every year, calculating if your investments will get you over the line can feel like trying to hit a moving target.
If retirement is your goal, use our retirement income calculator to assess what you’ve saved already, if you’re on track to achieve the size of pot you need, and what you can do if you’re falling short.
2. Are you taking the right level of risk?
Risk isn’t just numbers and volatility charts. It’s personal. Emotional, even. And very real. Some people can watch their portfolio drop 20% overnight and shrug – they’re in it for the long run, after all. Others will toss, turn and lose sleep over a bad week in the markets – seeing your portfolio in the red can be scary.
Neither response is right or wrong, but knowing where you sit on that scale is crucial.
Risk tolerance is personal and emotional. Some investors stay calm through market swings, while others feel anxious or panicked. If market fluctuations make you uneasy, it may be time to reduce your portfolio’s risk level. However, if you're comfortable with volatility, you may benefit from higher long-term returns. Understanding your emotional response to risk is key to building a portfolio you can stick with through ups and downs, helping you stay on track toward your financial goals.
If anxiety about market swings is something you identify with (and recent stock market wobbles have forced many investors to confront this feeling), it might be time to reduce your risk exposure with a more defensive asset mix - that might mean fewer shares, more low-risk products like bonds or cash, or a tilt towards income-producing investments.
Conversely, if you’re comfortable riding out the bumps, a slightly riskier allocation might reward you with better long-term returns. The key is building a portfolio you can live with - so you don’t abandon ship in a panic when markets get choppy.
3. Review your asset allocation
Asset allocation refers to how you split your investments across different types of assets to help balance risk and reward. The main asset classes include shares, bonds, property, cash, and commodities. Each reacts differently to economic conditions, so a mix can help smooth out returns if and when stock markets take a wobble.
A common approach is the 60/40 split - 60% equities, 40% bonds - but that isn’t a one-size-fits-all formula. Younger investors with decades until retirement might lean more heavily into shares to capture long-term growth, while those nearing retirement may prefer the steadier hand of bonds and cash-like products to minimise risk.
Remember, regardless of how much time you have and what you’re investing for, “diversification” is your best defence when it comes to investing in an uncertain world. This doesn’t just mean holding 10 different tech stocks and calling it a day. It means spreading your investments across industries, geographies, and asset types, so a downturn in one area doesn’t sink the whole ship.
Recent events have shown that every market can become volatile. While it doesn’t guarantee profits or eliminate all risk, diversification builds resilience into your portfolio. In an unpredictable market, this strategy helps protect your investments and keeps you on track toward your financial goals. Simply put, diversification is a smart, essential tool for navigating the ups and downs of investing.
4. Use your ISA allowance (seriously!)
It wouldn’t be a personal finance article without banging the ISA drum. So here it is:Your 2025-26 ISA allowance is £20,000. This means you can invest up to £20,000 every single year without having to pay tax on any interest or returns you earn.
Remember, outside of an ISA, your investment income may be liable for Income Tax, Capital Gains Tax and/or Dividend Tax – so it’s a bit of a no-brainer if you’re not already using one!
5. Don’t forget about your pension
ISAs may be the eye candy of personal finance, but pensions deserve your attention too.
If you're a higher or additional rate taxpayer, pension contributions come with serious tax relief as high as 45%. Plus, with the Lifetime Allowance officially scrapped as of 2024, there's even more flexibility for high earners to stash the cash for the future.
For the 2025-26 tax year, the total allowance for pension contributions per year remains at £60,000 (or 100% of your earnings, whichever is lower),with a separate tapering system for the very highest earners.*
Think about increasing your pension contributions this year, especially if your employer is able to match them. It’s basically a pay rise with future-you in mind.
Final thoughts: Clean portfolio, clear mind
A messy portfolio is like a messy house. You can ignore it for a while, but eventually, you trip over something. By taking the time to spring clean your investments at the start of the tax year, you're setting yourself up for a calmer, more confident financial future.
So grab a cuppa, log into your investment accounts, and get sorting. Because when it comes to your money, a little maintenance goes a long way.
Post a comment:
This is an open discussion and does not represent the views of Boring Money. We want our communities to be welcoming and helpful. Spam, personal attacks and offensive language will not be tolerated. Posts may be deleted and repeat offenders blocked at our discretion.
