Portfolio MOT: How to Protect (and Grow) Your Investments in 2025
By Boring Money
10 Oct, 2025
2025 has certainly been eventful - and it's not over yet. From tariff turmoil to incessant inflation, investors have been confronted with a series of financial challenges. Though global markets have weathered the storms with surprising resilience, the mood music remains apprehensive as we approach 2026. So, what can you do to protect your money and make sure it's got the best chance to grow?
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 below 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 like equity income funds.
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! Plus, with rumours awash that the Chancellor may tinker with certain ISA rules in the upcoming Autumn Budget, now is as good a time as any to make the most of the annual allowance.
5. Revisit your retirement plans
ISAs may be the eye candy of personal finance, but pensions deserve your attention too - especially since the Chancellor is rumoured to be examining the rules ahead of the Budget. However, all the uncertainty makes for a good reason to review your retirement strategy.
Already the government has announced that, from 2027, pensions will fall under the scope of Inheritance Tax (IHT). This means anyone with a substantial pension could easily eat up most or all of their IHT-free allowance - unless you plan ahead accordingly. If you're later in life or look set to have a punchy pension, it's a good idea to consider financial advice to guide you on the best way to pass on your wealth tax-efficiently.
Some experts anticipate the Chancellor may also change the rules for the 25% tax-free lump sum. This is already a pretty complex area, but any tweaks here could shake up your retirement strategy - or force you to put together a concrete plan. Once again, it's always wise to get advice before making any decisions, especially if retirement is on the horizon.
Final thoughts: Stay one step ahead
A messy portfolio is like a messy house. You can ignore it for a while, but eventually, you'll trip over something. By taking the time to revise and - if necessary - rejig your investments, you're setting yourself up for a calmer, more confident financial future.
So grab a cuppa, log into your investment accounts, and get sorting. And, a word of warning: keep an eye on the Autumn Budget 2025! There could be some big changes ahead.
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It's a good reading with details on how you can look after your investment as you approach retirement.
Narendrakumar
13 October 2025
Very useful Retirees should heed the messy house/portfolio comment - Put the bin out! Just need to take my own advice.
Roger
13 October 2025