Diversification means dividing the investment across a variety of assets. Diversification across asset classes is the foundation for long-term successful investment strategies. It can be achieved either by investing in one type of asset classification, such as buying stocks of leading companies across varied sectors, or in different types of asset classes such as stocks, bonds, money market, real estate, currency market, etc. Diversification across asset classes minimizes the volatility in the return achieved, as each asset class has different risks, rewards, and tolerance to economic events. By selecting investments from different asset classes, the risk gets minimized.