An investment strategy of spreading investments across various assets to reduce risk.
Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security. Diversification can be achieved across asset classes (stocks, bonds, real estate), within asset classes (different sectors, company sizes), and geographically (domestic and international markets).
Instead of investing all your money in a single tech stock, you might allocate 60% to stocks (across different sectors), 30% to bonds, and 10% to real estate, reducing your exposure to any single investment's poor performance.