Asset allocation must primarily match an investor's investment objectives, risk tolerance, and time horizon.

• Investment Objectives: What the investor hopes to achieve with their investments (e.g., retirement, down payment on a house).
• Risk Tolerance: The investor's ability and willingness to withstand potential losses in exchange for higher returns.
• Time Horizon: How long the investor has to achieve their investment goals.

These factors determine the appropriate mix of asset classes (e.g., stocks, bonds, real estate) in a portfolio.

Source: U.S. Securities and Exchange Commission - Asset Allocation