The investment strategy that is individualized based on factors such as: age, risk tolerance, investment goals, and horizon. The allocation falls into three main asset classes: equities, fixed-income, and cash/equivalents. Each asset class has a different level of risk and return.

Allocation is the single most important decision an investor can make, second is the way you select individual securities after determining allocation. The process of selecting allocation then individual securities is a 'top-down' approach.